Balls exploits the Tories' normality deficit

Calling for cheaper prices is an attempt to portray Cameron and Osborne as out of touch.

The big news line from Ed Balls's speech at the London School of Economics this morning is the call for an emergency tax cut. George Osborne's Plan A for the economy isn't working, the shadow chancellor argued. Again. The economy needs a jump start of fiscal loosening in the form of a temporary VAT reduction. Balls made a pretty robust case for cutting sales taxes -- it can be implemented immediately; it releases cash directly to consumers and company bottom lines. He also argued that the VAT cut introduced by Alistair Darling in the 2008 pre-budget report worked, citing an Institute for Fiscal Studies analysis for corroboration.

Labour got rough ride over that decision. In fact, it was widely ridiculed with jibes along the lines: "how does shaving a few pennies off the price of a new TV save the economy from crisis?" But that was before inflation had become an urgent concern for squeezed consumers and the government. When challenged on the effectiveness of the proposed cut in the Q&A after the speech, Balls had a deft political parry: Tory critics might not notice a VAT holiday (the implication being that they can afford higher prices) but ordinary folk would.

Both Labour and Tory private polling shows the public are wary of David Cameron and George Osborne as "not like ordinary people" -- distant, aloof. Balls and Miliband haven't yet found a way of really capitalising on the Conservatives' normality deficit, but calling for cheaper prices at the checkout is a try.

This was billed as a lecture rather than a speech -- a forensic critique of the government's macroeconomic strategy and not just another blast of political rhetoric.

But this is Ed Balls, we're talking about; the man who was once described to me by a senior Labour party strategist as "someone who wakes up every morning asking himself how he can destroy the Tories." The economic argument around the deficit was pretty familiar -- a rococo riff on the established theme of "too far, too fast". The political angle shone through in repeated references to the Tories' shambolic exit from the Exchange Rate Mechanism (ERM) in 1992. The argument is that George Osborne's single-minded determination to stick with fiscal Plan A is starting to resemble Norman Lamont's predicament, sticking with a fixed exchange rate as evidence mounted that it was an unsustainable arrangement. Whereas Lamont was institutionally locked into the ERM, Balls argues, Osborne could change course. There are alternatives. Lamont's hands were tied; Osborne's are not. That makes the rigidity all the more perverse and the Chancellor more culpable if things go wrong.

I counted ten references to the ERM. It was the unifying theme of the speech. Of course it was. The ERM exit -- Black Wednesday -- was famously the moment the Tories lost credibility on the economy. David Cameron was an advisor to Lamont at the time. No wonder Balls wants the analogy to stick.

An aside: Balls had a relatively contrite line about Labour's fiscal record. "Of course we didn't spend all of the money wisely. No government does." When I asked him to specify where there had been a lack of wisdom he cited Labour's multiple and wasteful reorganisations in healthcare, in particular the fiddling around with the structure of Primary Care Trusts. It's a good one to own up to, for pretty obvious reasons.

The spending line was one of a few very last minute additions to the speech, tacked on this morning, apparently; recognition perhaps that Labour needs to sound a little more penitent about the past before it can be trusted to talk about the future?

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

Ukip's Nigel Farage and Paul Nuttall. Photo: Getty
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Is the general election 2017 the end of Ukip?

Ukip led the way to Brexit, but now the party is on less than 10 per cent in the polls. 

Ukip could be finished. Ukip has only ever had two MPs, but it held an outside influence on politics: without it, we’d probably never have had the EU referendum. But Brexit has turned Ukip into a single-issue party without an issue. Ukip’s sole remaining MP, Douglas Carswell, left the party in March 2017, and told Sky News’ Adam Boulton that there was “no point” to the party anymore. 

Not everyone in Ukip has given up, though: Nigel Farage told Peston on Sunday that Ukip “will survive”, and current leader Paul Nuttall will be contesting a seat this year. But Ukip is standing in fewer constituencies than last time thanks to a shortage of both money and people. Who benefits if Ukip is finished? It’s likely to be the Tories. 

Is Ukip finished? 

What are Ukip's poll ratings?

Ukip’s poll ratings peaked in June 2016 at 16 per cent. Since the leave campaign’s success, that has steadily declined so that Ukip is going into the 2017 general election on 4 per cent, according to the latest polls. If the polls can be trusted, that’s a serious collapse.

Can Ukip get anymore MPs?

In the 2015 general election Ukip contested nearly every seat and got 13 per cent of the vote, making it the third biggest party (although is only returned one MP). Now Ukip is reportedly struggling to find candidates and could stand in as few as 100 seats. Ukip leader Paul Nuttall will stand in Boston and Skegness, but both ex-leader Nigel Farage and donor Arron Banks have ruled themselves out of running this time.

How many members does Ukip have?

Ukip’s membership declined from 45,994 at the 2015 general election to 39,000 in 2016. That’s a worrying sign for any political party, which relies on grassroots memberships to put in the campaigning legwork.

What does Ukip's decline mean for Labour and the Conservatives? 

The rise of Ukip took votes from both the Conservatives and Labour, with a nationalist message that appealed to disaffected voters from both right and left. But the decline of Ukip only seems to be helping the Conservatives. Stephen Bush has written about how in Wales voting Ukip seems to have been a gateway drug for traditional Labour voters who are now backing the mainstream right; so the voters Ukip took from the Conservatives are reverting to the Conservatives, and the ones they took from Labour are transferring to the Conservatives too.

Ukip might be finished as an electoral force, but its influence on the rest of British politics will be felt for many years yet. 

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