Balls pulls it off

He had the spirit and confidence of a man who knows he is winning the argument.

Ed Balls's speech to Labour conference was perhaps the most confident and memorable he has ever given. His delivery was faltering at times but his well-honed message was as clear as ever: George Osborne's plan is hurting but it's not working. With growth down and unemployment up, Labour's Keynesian rottweiler had plenty to get his teeth into.

As an alternative, Balls offered his own five-point plan for growth, the most eye-catching part of which was a one-year National Insurance holiday for all firms that take on extra workers. In the most effective line of his speech, he declared: "Call it Plan A plus, call it Plan B, call it Plan C, I don't care what they call it. Britain just needs a plan that works".

The section on Labour's "new fiscal rules" was less detailed than some expected but Balls set out his intention to offer "fiscal responsibility in the national interest", a message we haven't heard from his party for some time. The next Labour government will, he promised, "get our country's current budget back to balance" and set "national debt on a downward path." The timeline for doing so, however, remains unspecified (rightly, Balls refuses to set arbitrary targets).

Sounding a note of contrition, he also offered a fulsome list of Labour's "mistakes", namely the 75p pension rise, the abolition of the 10p tax rate, the failure to get "all employers to train", and the weak controls on migration from eastern Europe. But he rightly refused to accept that Labour was "profligate" in office, reminding the hall that "we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan." (As a percentage of GDP, debt fell from from 42.5 per cent of GDP in 1997 to 36.5 per cent in 2007.)

Not all of what Balls said went down well with the party faithful. There was silence as he insisted that Labour could not promise to reverse particular Tory spending cuts or tax rises, and as he warned that pensions strikes this autumn would play into George Osborne's hands. Significantly, he added that under Labour "contributions and the retirement age would be rising too." His pledge to use any windfall from the bank sell-off to reduce the deficit, not to cut taxes, won applause, although some on the left would prefer a radical commitment to mutualise the banks and turn them into engines of growth.

But he finished strongly with a rhetorical assault on Osborne's boast that Britain is a "safe haven". It might be a safe haven for David Cameron and George Osborne and Boris Johnson and their friends, he said, but it is not a safe haven "for the 16,000 companies that have gone out of business in the last year". Unlike Vince Cable (who spoke of "grey skies" in his conference speech), he ended on a positive note, promising to show that "there can be a better future". And rightly so. History shows that progressive parties don't win elections unless they offer a hopeful vision of the future.

Balls had the energy and spirit of a man who knows that he is winning the argument. With even the IMF now warning that Osborne may have to slow the pace of the cuts if growth continues to disappoint, the consensus is slowly turning against austerity. As the economic data continues to worsen, Balls will win further converts to his approach.

George Eaton is political editor of the New Statesman.

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The Brexiteers have lost battles but they are still set to win the war

The prospect of the UK avoiding Brexit, or even a “hard” version, remains doubtful. 

Before the general election, the Brexiteers would boast that everything had gone their way. Parliament had voted to trigger Article 50 by a majority of 372. The Treasury-forecast recession hadn't occurred. And polls showed the public backing Brexit by a comfortable margin

But since the Conservatives' electoral humbling, the Leavers have been forced to retreat on multiple fronts. After promising in May that the dispute over the timetable for the Brexit talks would be "the fight of the summer", David Davis capitulated on the first day.

The UK will be forced to settle matters such as EU citizens' rights, the Irish border and the divorce bill before discussions begin on a future relationship. Having previously insisted that a new trade deal could agreed by 29 March 2019 (Britain's scheduled departure date), the Brexiteers have now conceded that this is, in Liam Fox's words, "optimistic" (translation: deluded). 

That means the transitional arrangement the Leavers once resisted is now regarded as inevitable. After the eradication of the Conservatives' majority, the insistence that "no deal is better than a bad deal" is no longer credible. No deal would mean the immediate return of a hard Northern Irish border (to the consternation of the Tories' partners the DUP) and, in a hung parliament, there are no longer the votes required to pursue a radical deregulatory, free market agenda (for the purpose of undercutting the EU). As importantly for the Conservatives, an apocalyptic exit could pave the way for a Jeremy Corbyn premiership (a figure they previously regarded as irretrievably doomed). 

Philip Hammond, emboldened by the humiliation of the Prime Minister who planned to sack him, has today outlined an alternative. After formally departing the EU in 2019, Britain will continue to abide by the rules of the single market and the customs union: the acceptance of free movement, European legal supremacy, continued budget contributions and a prohibition on independent trade deals. Faced with the obstacles described above, even hard Brexiteers such as Liam Fox and Michael Gove have recognised that the game is up.

But though they have lost battles, the Leavers are still set to win the war. There is no parliamentary majority for a second referendum (with the pro-Remain Liberal Democrats still enfeebled), Hammond has conceded that any transitional arrangement would end by June 2022 (the scheduled date of the next election) and most MPs are prepared to accept single market withdrawal. The prospect of Britain avoiding Brexit, or even a "hard" version, remains doubtful. 

George Eaton is political editor of the New Statesman.