What motivates Ed Balls? He needs to tell us

The shadow chancellor must answer the question, "what made you want to do this in the first place?"

Ed Balls is caught in a pincer movement, although not a very coordinated one. The left pince is applied by trade union leaders, appalled by the shadow chancellor’s increasingly assertive commitment to budget discipline. Paul Kenny was on the radio yesterday mocking Balls’s acceptance of the need for public sector pay restraint. “He would give an aspirin a headache,” the head of the GMB union said.

Ed Miliband has communicated exactly the same austerity-lite message and, although he comes in for similar criticism, dissenters on the left are not quite despairing or self-destructive enough to go all out for the Labour leader. (Perhaps the really wanton sabotage is being saved for closer to an election). Besides, the major unions backed Miliband for leader. Their bosses now need to think of reasons why the candidate they plugged isn’t speaking the language they want to hear. Identifying villains who might be steering the Labour leader away from the path of righteousness is safer than admitting to union members that they were (from a staunch left perspective) ill-advised by their chiefs.

Then there is the right pince. This consists of shadow cabinet ministers and MPs who are frustrated with what they see as Balls’s small “c” conservatism on economic policy and, especially, public sector reform. The criticism is that the shadow chancellor, while suitably diligent in signalling future spending restraint, will not permit any specific policy discussion of how Labour’s ambitions for effecting social progress can be achieved when splashing cash isn’t on the menu.

In fact, this complaint divides into three sub-gripes. First, there is the way Balls insists on vetting shadow cabinet announcements for any hint of fiscal profligacy. The stated intention is to avoid surrendering political hostages to the Tories, in the form of uncosted spending pledges. But Balls’s message-discipline gatekeeper function also serves as a device for exerting control over colleagues and for stifling policy initiatives generated by underlings. (Interestingly, in that respect a certain generation of Conservatives voice private sympathy for their shadow cabinet peers, remembering how George Osborne used the same device in opposition.) 

The second sub-gripe is that Balls is cautious in his attitude towards the City and the financial services sector. He is pointedly reluctant to throw his political weight behind the Miliband theme of “responsible capitalism” and to engage with the project to “rebalance the economy.” This is partly the natural and reasonable response to a professional lifetime spent in and around the Treasury, where grandiose ambitions for UK plc to find something new to do for a living rub up against the practical obligation to nurture and protect the few things we are good at already – and on a global scale. Balls will also have noticed that the Tories are not as popular with the business community as they would like to be. When that support – and the economic credibility that it brings - is up for grabs, why risk frightening everyone with loose  talk of re-engineering the whole of capitalism?

Balls’s wariness of the new economic vision leads to the third sub-gripe. This is the fear that the shadow chancellor is too closely associated in the public imagination with the last Labour government and with Gordon Brown in particular. Miliband was as much at Brown’s side as Balls, but was a lesser known figure. He has also made more effort to distance himself from the whole New Labour operation, speaking (somewhat implausibly) as if he is a maverick outsider, thrust into leadership despite his earnest and modest demeanour. He seems to picture himself as Moses confronted by the burning bush; the prophet onto whose shoulders unexpectedly falls the burden of leadership to a brighter future. He would like to be seen as the flag-bearer for a new generation, opening a new chapter in Labour history. It is an optimistic pitch; a fantasy some would say. Miliband loyalists worry that the whole page-turning, paradigm-shifting portrait of the leader is spoiled when Balls keeps popping up in the frame.

Up against all of that there is the indisputable fact that Balls is one of the most intelligent, financially literate, motivated, effective and substantial figures in British politics. He also made one of the toughest economic calls of recent times – that the economy would double-dip - and got it right. (That he gets little credit for this outside the party could either be because the public mood hasn’t fully turned against the coalition, or because too many voters, seeing him as an emblem of the bad old days, just don’t want him to be right.) Balls is also powerful and influential within the party, having built up a network over many years working in the engine room of the Labour machine. But that kind of loyalty is based on patronage and power. It is a different kind of political glue to the shared set of ideas or vision that binds followers to effective leaders.

One of the lessons of Gordon Brown’s bungled transition from Chancellor to Prime Minister was the way that his support base melted away once the going got tough. There were plenty of people cheering him on and when he looked certain to be leader. He managed to get himself anointed unopposed. But as soon as he looked weak and the power started draining away, the loyalty evaporated. He was left friendless. There was no consolidating mission of Brownism around which a wounded party could rally. There was no shared purpose; just Gordon.

Balls is in danger of falling victim to a similar dynamic. He is formidable and powerful and, in person, engaging and impressive. Those characteristics all sustain each other in a feedback loop. The vulnerability lies in questions that probe what really drives this political phenomenon forwards, aside from raw ambition. Why did Ed Balls become an MP, join up with Gordon Brown, stand for leader, stick around in Ed Miliband’s shadow cabinet?

Miliband is justifiably coming under pressure this week to tell the Labour party a bit more about who he is and what he believes. That, as I wrote in my column last week, is an essential step towards making people more comfortable with the idea of him their Prime Minister. By all accounts, filling in those gaps is the explicit ambition of his speech to Labour conference later this week. It is one of the most penetrating questions in politics: What made you want to do this in the first place? What is it all for? David Cameron and George Osborne have never found an adequate answer. Ed Miliband is making a start, filling in some of the blanks. Perhaps it is time Ed Balls had a go too.

Shadow chancellor Ed Balls plays in the Labour Party vs media football match. Photograph: Getty Images.

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

Photo: Getty Images
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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 50p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits. It's not easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough.

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