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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The problems with ending encryption to fight terrorism

Forcing tech firms to create a "backdoor" to access messages would be a gift to cyber-hackers.

The UK has endured its worst terrorist atrocity since 7 July 2005 and the threat level has been raised to "critical" for the first time in a decade. Though election campaigning has been suspended, the debate over potential new powers has already begun.

Today's Sun reports that the Conservatives will seek to force technology companies to hand over encrypted messages to the police and security services. The new Technical Capability Notices were proposed by Amber Rudd following the Westminster terrorist attack and a month-long consultation closed last week. A Tory minister told the Sun: "We will do this as soon as we can after the election, as long as we get back in. The level of threat clearly proves there is no more time to waste now. The social media companies have been laughing in our faces for too long."

Put that way, the plan sounds reasonable (orders would be approved by the home secretary and a senior judge). But there are irrefutable problems. Encryption means tech firms such as WhatsApp and Apple can't simply "hand over" suspect messages - they can't access them at all. The technology is designed precisely so that conversations are genuinely private (unless a suspect's device is obtained or hacked into). Were companies to create an encryption "backdoor", as the government proposes, they would also create new opportunities for criminals and cyberhackers (as in the case of the recent NHS attack).

Ian Levy, the technical director of the National Cyber Security, told the New Statesman's Will Dunn earlier this year: "Nobody in this organisation or our parent organisation will ever ask for a 'back door' in a large-scale encryption system, because it's dumb."

But there is a more profound problem: once created, a technology cannot be uninvented. Should large tech firms end encryption, terrorists will merely turn to other, lesser-known platforms. The only means of barring UK citizens from using the service would be a Chinese-style "great firewall", cutting Britain off from the rest of the internet. In 2015, before entering the cabinet, Brexit Secretary David Davis warned of ending encryption: "Such a move would have had devastating consequences for all financial transactions and online commerce, not to mention the security of all personal data. Its consequences for the City do not bear thinking about."

Labour's manifesto pledged to "provide our security agencies with the resources and the powers they need to protect our country and keep us all safe." But added: "We will also ensure that such powers do not weaken our individual rights or civil liberties". The Liberal Democrats have vowed to "oppose Conservative attempts to undermine encryption."

But with a large Conservative majority inevitable, according to polls, ministers will be confident of winning parliamentary support for the plan. Only a rebellion led by Davis-esque liberals is likely to stop them.

George Eaton is political editor of the New Statesman.

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