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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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

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