Miliband doesn’t want to sack Balls – he just wants to steal the Treasury’s power

The Labour leader's plans for government can factor in the prospect of having Balls as his chancellor, but in a shrunken empire.

For three stagnant years, Labour failed to convince people that the country’s economic troubles were George Osborne’s fault. Now, Ed Miliband and Ed Balls want to persuade voters that the Chancellor has cooked up the wrong sort of recovery. The strength of this argument is that optimistic headlines belie household experiences of on­going hardship. The weakness is that Labour can’t prove that things would have been any better if it had been in charge. Opinion polls suggest that many think they would have been worse.

There is also a sound argument that the growth in Britain’s economy is uneven and unsustainable. The coalition promised a nationwide, export-driven manufacturing renaissance. Instead, we have a sugar rush of cheap credit, house-price inflation and consumer spending in the south-east. Again, that doesn’t help the opposition if it can’t be proved that Ed Balls would have presided over a higher-spec recovery.

Labour’s top team affects confidence that the coalition will be punished by the majority of people who will still feel worse off in 2015 than they did in 2010. But nerves are fraying. Privately, senior shadow cabinet ministers admit that the economy could hit a “sweet spot” for Osborne in time for the general election. The Tories don’t need voters to feel jubilant about their personal circumstances as long as they sense that things are moving in the right direction and think that it still feels a bit dicey to gamble on regime change.

Miliband is running out of time to persuade people that he knows how to secure a brighter tomorrow. The urgency breeds resentment in the leader’s office of time wasted by the shadow chancellor touting his “five-point plan for jobs and growth” – the abandoned recipe for a brighter yesterday.

That isn’t the only source of frustration with Ed Balls. He is resented by the left of the party for failing to hold the line against austerity. Activists smell treason in every move to reassure less partisan voters that an incoming Labour government wouldn’t go on a spending spree. Balls has accepted a public-sector pay freeze and a cap on social security spending. He has launched a “zero-based” spending review with an instruction to shadow ministers to identify cuts in their prospective departments. He has offered to have his plans vetted by the Office for Budget Responsibility. He has pledged to run a Budget surplus by 2020.

Balls gets little credit for those vows of frugality. The Tories are good at drowning out actual Labour policy with attacks on what they want the policy to be. And the opposition sounds its media horn louder when steering to the left: restoring the 50p tax rate or controlling energy prices. It also doesn’t help that Balls lacks friends in the corner of the party that was calling for more fiscal rigour back in 2010. This is the tribe that fashions itself as “Labour modernisers” since “Blairite” has become a term of abuse.

They want Labour to say more about failures of the state as the counterpart to Miliband’s attacks on failed markets. In that context, Balls is seen as a repository of risk-averse Treasury orthodoxy; an obstacle to public-sector reform. That perception fuels suspicion of the zero-based spending review. In theory, it is pro-reform, because it invites shadow ministers to consider innovative ways to deliver services without spending more money. Yet it gives Balls a licence to meddle in every nook of Labour’s agenda. Viewed from the leader’s office, this looks like empire-building. Enough Labour people see Balls as an encumbrance to sustain a constant level of chatter about his prospects of being sacked. It is a theme loved by Tories who like to imagine his relationship with the Labour leader as a B-list sequel to the blockbuster Blair-Brown schism.

It is no secret that Balls was not Miliband’s first choice. The appointment was made in January 2011, when the Labour leader’s authority was at a low ebb. Since then, he has shored up his position, managing rival factions, co-opting Balls’s old allies where necessary. Last October’s shadow cabinet promotions of Michael Dugher to a roving Cabinet Office brief and Vernon Coaker to the Defence portfolio are widely interpreted this way. The need to signal beyond doubt which of the Eds is in charge has been a routine preoccupation in the leader’s office.

No one who has closely observed the way Miliband operates doubts his capacity to be ruthless. Shadow cabinet ministers speculate that he would get rid of Balls without hesitation if he believed it was a condition of getting over the threshold of No 10. For the time being, the calculation must be that sacrificing the party’s most experienced political economist would signal panic and allow the Tories to boast that Labour’s capitulation to the Osborne plan was complete. Even shadow ministers who don’t much like Balls say his contributions are usually the most insightful in shadow cabinet meetings.

That doesn’t mean the Labour leader trusts his shadow chancellor to run the party’s economic policy. The case that Miliband wants to make flows from his conviction that insecurity and uneven reward are hard-wired into British capitalism. He wants to “rewrite the rules” – an ambition that ranges far beyond fiscal management to cover an interventionist industrial policy, corporate governance reform and devolution of power to local level. A notable feature of that agenda is how thoroughly it would dilute the dominance of the Treasury. In other words, Miliband’s plans for government can factor in the prospect of having Balls as his chancellor, but in a shrunken empire.

It has taken three years for Miliband to win the right to decide what Labour’s economic offer should be. It has taken skilful, subtle manoeuvring. Now control of the message is his. The challenge is getting anyone beyond the party to listen.
 

Ed Miliband and Ed Balls at the Labour conference in Brighton last year. Photograph: Getty Images.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 29 January 2014 issue of the New Statesman, The seven per cent problem

Photo: Getty Images/AFP
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Is Yvette Cooper surging?

The bookmakers and Westminster are in a flurry. Is Yvette Cooper going to win after all? I'm not convinced. 

Is Yvette Cooper surging? The bookmakers have cut her odds, making her the second favourite after Jeremy Corbyn, and Westminster – and Labour more generally – is abuzz with chatter that it will be her, not Corbyn, who becomes leader on September 12. Are they right? A couple of thoughts:

I wouldn’t trust the bookmakers’ odds as far as I could throw them

When Jeremy Corbyn first entered the race his odds were at 100 to 1. When he secured the endorsement of Unite, Britain’s trade union, his odds were tied with Liz Kendall, who nobody – not even her closest allies – now believes will win the Labour leadership. When I first tipped the Islington North MP for the top job, his odds were still at 3 to 1.

Remember bookmakers aren’t trying to predict the future, they’re trying to turn a profit. (As are experienced betters – when Cooper’s odds were long, it was good sense to chuck some money on there, just to secure a win-win scenario. I wouldn’t be surprised if Burnham’s odds improve a bit as some people hedge for a surprise win for the shadow health secretary, too.)

I still don’t think that there is a plausible path to victory for Yvette Cooper

There is a lively debate playing out – much of it in on The Staggers – about which one of Cooper or Burnham is best-placed to stop Corbyn. Team Cooper say that their data shows that their candidate is the one to stop Corbyn. Team Burnham, unsurprisingly, say the reverse. But Team Kendall, the mayoral campaigns, and the Corbyn team also believe that it is Burnham, not Cooper, who can stop Corbyn.

They think that the shadow health secretary is a “bad bank”: full of second preferences for Corbyn. One senior Blairite, who loathes Burnham with a passion, told me that “only Andy can stop Corbyn, it’s as simple as that”.

I haven’t seen a complete breakdown of every CLP nomination – but I have seen around 40, and they support that argument. Luke Akehurst, a cheerleader for Cooper, published figures that support the “bad bank” theory as well.   Both YouGov polls show a larger pool of Corbyn second preferences among Burnham’s votes than Cooper’s.

But it doesn’t matter, because Andy Burnham can’t make the final round anyway

The “bad bank” row, while souring relations between Burnhamettes and Cooperinos even further, is interesting but academic.  Either Jeremy Corbyn will win outright or he will face Cooper in the final round. If Liz Kendall is eliminated, her second preferences will go to Cooper by an overwhelming margin.

Yes, large numbers of Kendall-supporting MPs are throwing their weight behind Burnham. But Kendall’s supporters are overwhelmingly giving their second preferences to Cooper regardless. My estimate, from both looking at CLP nominations and speaking to party members, is that around 80 to 90 per cent of Kendall’s second preferences will go to Cooper. Burnham’s gaffes – his “when it’s time” remark about Labour having a woman leader, that he appears to have a clapometer instead of a moral compass – have discredited him in him the eyes of many. While Burnham has shrunk, Cooper has grown. And for others, who can’t distinguish between Burnham and Cooper, they’d prefer to have “a crap woman rather than another crap man” in the words of one.

This holds even for Kendall backers who believe that Burnham is a bad bank. A repeated refrain from her supporters is that they simply couldn’t bring themselves to give Burnham their 2nd preference over Cooper. One senior insider, who has been telling his friends that they have to opt for Burnham over Cooper, told me that “faced with my own paper, I can’t vote for that man”.

Interventions from past leaders fall on deaf ears

A lot has happened to change the Labour party in recent years, but one often neglected aspect is this: the Labour right has lost two elections on the bounce. Yes, Ed Miliband may have rejected most of New Labour’s legacy and approach, but he was still a protégé of Gordon Brown and included figures like Rachel Reeves, Ed Balls and Jim Murphy in his shadow cabinet.  Yvette Cooper and Andy Burnham were senior figures during both defeats. And the same MPs who are now warning that Corbyn will doom the Labour Party to defeat were, just months ago, saying that Miliband was destined for Downing Street and only five years ago were saying that Gordon Brown was going to stay there.

Labour members don’t trust the press

A sizeable number of Labour party activists believe that the media is against them and will always have it in for them. They are not listening to articles about Jeremy Corbyn’s past associations or reading analyses of why Labour lost. Those big, gamechanging moments in the last month? Didn’t change anything.

100,000 people didn’t join the Labour party on deadline day to vote against Jeremy Corbyn

On the last day of registration, so many people tried to register to vote in the Labour leadership election that they broke the website. They weren’t doing so on the off-chance that the day after, Yvette Cooper would deliver the speech of her life. Yes, some of those sign-ups were duplicates, and 3,000 of them have been “purged”.  That still leaves an overwhelmingly large number of sign-ups who are going to go for Corbyn.

It doesn’t look as if anyone is turning off Corbyn

Yes, Sky News’ self-selecting poll is not representative of anything other than enthusiasm. But, equally, if Yvette Cooper is really going to beat Jeremy Corbyn, surely, surely, she wouldn’t be in third place behind Liz Kendall according to Sky’s post-debate poll. Surely she wouldn’t have been the winner according to just 6.1 per cent of viewers against Corbyn’s 80.7 per cent. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.