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

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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.