Don't underestimate Ed Balls

The shadow chancellor is repeating the trick that played so well before the 1997 election.

It's seldom a good idea to underestimate your opponent, so when I'd stopped hugging myself at what Twitter was telling me Ed Balls was saying over the weekend, I reasoned he isn't a fool and so there must be method to his apparent madness. Which of course, there is.

And so picture if you will the shadow chancellor luxuriating in a large armchair and stroking a white cat as I take you through his dastardly scheme...

There has of course been some misrepresentation of the facts. Ed Ball's speech actually positions him as the irritating local, replying to a request for directions with a lopsided grin and a sarcastic "I wouldn't have started from here'. This promise to map out a course from wherever he finds himself in 2015 conveniently saves him coming up with any solutions of his own for a while and at the same time allowing him all the wriggle room he needs over coming months.

And it's a trick he's seen pulled off before. It's from the Gordon Brown school of 'how to demonstrate economic competence if you're Labour' that played so well pre the 1997 election. Accept Osborne's sums, say you'll spend the money they leave you more wisely - spending is an area the electorate believes Labour does know something about -and you win. It's worked once before...

And it needs to work again. Because for all the distinctiveness of the shadow chancellor's Keynesian approach, the country seems more inclined to support the notion of belt tightening and austerity to dig us out of the economic mess we find ourselves mired in

There are also tactical advantages to all this. It's been Balls over the last few months who's been leading the doe-eyed flirting with us Lib Dems. What better way to lay the groundwork for a future potential pact, than to accept that all that has gone before cannot be undone? It's like the shadow chancellor is gearing himself up to come over, give us a big hug and say 'what's past is past'.

Of course, some people within the Labour movement are going to be upset by all this - especially the unions when they read about accepting the need for public sector pay freezes. But the unions weren't exactly supportive of Ed Balls during the leadership campaign were they? So not much to lose there. The only one who's going to suffer in that camp is poor Ed Miliband. As some idiot pointed out on Friday, Miliband is safe enough in the leadership while he's seen as playing the game by the rules of the party - but as soon as he starts going anywhere near the centre, the gloves are off, and he's in trouble. And that opens all sorts of doors.

Of course, I hear you cry, the man wielding the knife never gets to lead - Balls wouldn't be so obvious. Except of course, in the Balls household, it's not Ed's turn to go for the leadership - and Yvette is untouched by all this. Isn't it better when you sort out these potential family disputes about whose turn it is to be leader in a mature fashion behind closed doors? If only everyone took the same approach.

So all in all, the latest front in the battle for the economic high ground opens up all sorts of interesting possibilities for the Balls camp.

He's not stupid, is he....

Richard Morris blogs at A View From Ham Common which was named Best New Blog at the 2011 Lib Dem Conference

Richard Morris blogs at A View From Ham Common, which was named Best New Blog at the 2011 Lib Dem Conference

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.