Balls shows he's no "deficit denier" at the TUC

The shadow chancellor was heckled as he warned that Labour would cut too.

Those who denounce Ed Balls as Labour's "deficit-denier-in-chief" should have watched his speech to the TUC conference this morning. While the shadow chancellor made a typically persuasive case for short-term stimulus, he went on to use some of the toughest language we've heard from him on the need for spending cuts and other austerity measures to reduce the deficit in the long-term. To cries of "rubbish!" from trade union delegates (a rebuke that won't have troubled Balls in the slightest), he said:

We must be honest with the British people that under Labour, there would have been cuts, and that – on spending, pay and pensions – there will be disappointments and difficult decisions from which we will not flinch.

Balls went on to reaffirm the position he outlined in January - that Labour, based on current trends, will have to keep "all these cuts". He could not "make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts." Unlike Nick Clegg, he quipped, "we will not make promises we cannot keep".

When challenged in the Q&A session on Labour's failure to oppose George Osborne's public sector pay freeze (and the 1% cap from 2013), Balls replied that "you can't say pay before jobs, we've got to say jobs before pay"  ("shame on you!", one delegate shouted). Asked if the party would take the railways back into public ownership (a demand that prompted the loudest cheers of the session), Balls replied that the policy would cost billions and so the answer was 'no'.  "I’m not sure when we come into government in 2015 that expenditure on that scale is going to be a priority," he said.

Balls's speech was a reminder of why the next election will, in some respects, be more difficult for Labour than the Tories. Osborne likes to say that the coalition is cleaning up "Labour's mess" but, if elected in 2015, Labour will need to clean up his. When the Chancellor delivered his "emergency Budget" in June 2010, the newly-established Office for Budget Responsibility forecast a deficit of £37bn (2.1% of GDP) for 2014-15. But the failure of Osborne's plan to deliver growth (indeed, its success in delivering recession) means that, according to the latest independent forecasts, the next government will inherit a deficit of £96.1bn (5.8%), a figure that is only likely to rise as growth remains anaemic or non-existent.

Given these fiscal constraints, the biggest choice facing Balls and Ed Miliband is whether to pledge to stick to the Tories' spending plans for the first few years, as Labour did in 1997, or to offer a distinct alternative.

Shadow chancellor Ed Balls told the TUC, "we will not make promises we cannot keep". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Why Chris Grayling is Jeremy Corbyn's secret weapon

The housing crisis is Labour's best asset - and Chris Grayling is making it worse. 

It feels like the classic Conservative story: wait until the election is over, then cancel spending in areas that have the temerity to vote Labour. The electrification of rail routes from Cardiff to Swansea – scrapped. So too is the electrification of the Leeds to Manchester route – and of the Midland main line.

But Crossrail 2, which runs from north to south across London and deep into the capital's outer satellites, including that of Transport Secretary Chris Grayling, will go ahead as planned.

It would be grim but effective politics if the Conservatives were pouring money into the seats they won or lost narrowly. There are 25 seats that the Conservatives can take with a swing of 1 per cent from Labour to Tory, and 30 seats that they would lose with a swing of 1 per cent from Tory to Labour.

It wouldn’t be at all surprising if the Conservatives were making spending decisions with an eye on what you might call the frontline 55. But what they’re actually doing is taking money away from north-west marginal constituencies – and lavishing cash on increasingly Labour London. In doing that, they’re actually making their electoral headache worse.

How so? As I’ve written before, the biggest problem for the Conservatives in the long term is simply that not enough people are getting on the housing ladder. That is hurting them in two ways. The first is straightforward: economically-driven voters are not turning blue when they turn 30 because they are not either on or about to mount the first rungs of the housing ladder. More than half of 30-year-olds were mortgage-payers in 1992, when John Major won an unexpected Conservative majority, while under a third were in 2017, when Theresa May unexpectedly lost hers.

But it is also hurting them because culturally-driven voters are getting on the housing ladder, but by moving out of areas where Labour’s socially-concerned core vote congregates in great numbers, and into formerly safe or at least marginal Conservative seats. That effect has reached what might be its final, and for the Conservatives, deadly form in Brighton. All three of the Brighton constituencies – Hove, Brighton Kemptown and Brighton Pavilion – were Conservative-held in 1992. Now none of them are. In Pavilion they are third, and the smallest majority they have to overcome is 9,868, in Kemptown. The same effect helped reduce Amber Rudd’s majority in Hastings, also in East Sussex, to 346.

The bad news for the Conservatives is that the constituencies of Crawley, Reading, Swindon and in the longer-term, Bracknell, all look like Brightons in the making: although only Reading East fell to Labour this time, all saw swings bigger than the national average and all are seeing increasing migration by culturally-driven left-wing voters away from safe Labour seats. All are seeing what you might call “Hackneyfication”: commuters moving from inner city seats but taking their politics with them.

Add to that forced migration from inner London to seats like Iain Duncan Smith’s in Chingford – once a Conservative fortress, now a razor-thin marginal – and even before you add in the appeal of Jeremy Corbyn’s person and platform, the electoral picture for the Conservatives looks bleak.

(It should go without saying that voters are driven by both economics and culture. The binary I’ve used here is simplistic but helpful to understand the growing demographic pressures on the Conservatives.)

There is actually a solution here for the Tories. It’s both to build more housing but also to rebalance the British economy, because the housing crisis in London and the south is driven by the jobs and connectivity crisis in the rest of the United Kingdom.

Or, instead, they could have a number of measures designed to make London’s economy stride still further ahead of the rest, serviced by 5 per cent mortgages and growing numbers of commuter rail services to facilitate a growing volume of consumers from London’s satellite towns, all of which only increase the electoral pressures on their party. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.