Ed Balls rails against cuts to manufacturing

“Curtailing ambition”.

Ed Balls used his address to yesterday’s EEF Manufacturing Conference, perhaps unsurprisingly, as a platform to rail against spending cuts in advance of the delivery of the budget in two weeks’ time.

Playing straight to his manufacturer audience’s fear of Britain sliding into industrial obscurity, he warned that the government’s obsession with deficit reduction at the expense of long-term investment would “curtail ambition” in business and “militate against” the UK’s ability to compete with Europe (read, Germany).

His appearance at the conference coincided with the publication today of a labour-commissioned report by Sir George Cox, Overcoming short-termism within British business, which argues for executive pay to reflect success over longer cycles, tax changes to favour equity markets, and a mechanism to make infrastructure investment decisions independent of political cycles.

Despite a fantastically awkward bit of audience Q&A, in which Balls avoided verbally signing his party up to Sir George’s proposals even though the report author was sitting just feet away in the front row, the rhetoric seemed to go over well with delegates.

But in terms of a demonstration of long term-thinking, the Sturm & Drang over the budget’s treatment of British business paled in comparison to the day’s opening presentation, delivered by Jim “BRICs” O’Neill, Goldman Sachs’ chairman of asset management.

As one might expect from the man who coined the now ubiquitous acronym for emerging markets, O’Neill had very little to say directly about the state of British industry, and even the UK’s fortunes in the context of the Eurozone crisis.

Instead he spoke frankly, and backed by some very big statistics, about the overwhelming importance of emerging markets, particularly China, to both the UK and world economies over the decades to come.

Professing himself to be an optimist, O’Neill predicted the world economy would grow close to 4 per cent in the current decade, largely thanks to China which, he reminded us in words notoriously borrowed by David Cameron, grows the equivalent of Greek GDP every twelve and a half weeks. To underscore the point, O’Neill mentioned in passing that China had, since the end of 2010, grown by approximately the current size of the Indian economy.

He said that if the US and China could partially reverse their traditional roles with regard to production and consumption, so that China ended up “spending more and producing less” and the US vice versa, “it would be a very good sign – and this appears to be happening.”

In response to audience anxiety over the Eurozone, he acknowledged that while Europe was still the single most important export region for the UK, the percentage of UK exports going to the Eurozone had fallen from 55 per cent to 45 per cent over the last decade, and would likely fall further to 39 per cent by 2020.

By the same point time, he argued, 17 per cent of UK exports will likely be destined for the BRICs, while Germany will probably be exporting twice as much to China as to France. If we had known that in the early 1990s, he posited, there might never have been a Eurozone in the first place.

When drawn by session chair Krishnan Guru-Murthy on what he would do if he were chancellor in two weeks, his answer said more through understatement than Balls did through twenty minutes on the soapbox:

“Those nations with more emphasis on long-term fiscal consolidation rather than a "cut debt now" mentality tend to be recovering better… It’s entirely understandable to want to lower debt and to shrink [the financial services] sector… but trying to do both at once? It could be very difficult, and I think I’ll leave it at that”.

Ed Balls. Photograph: Getty Images

By day, Fred Crawley is editor of Credit Today and Insolvency Today. By night, he reviews graphic novels for the New Statesman.

Photo: Getty
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Who will win the Copeland by-election?

Labour face a tricky task in holding onto the seat. 

Too close to call, neck-and-neck, down to the wire. Pick your cliché for a close-run thing, and that’s what the parties are saying about Copeland.

No governing party has won a seat in a by-election since 1982, and the seat has been Labour-held since 1935, but the circumstances could scarcely be more favourable to the Conservative Party. They are well ahead in the opinion polls and Labour’s electoral coalition is badly split over Brexit.

To add to the discomfort, Jeremy Corbyn, the Labour leader, has a long history of opposing nuclear power, though he has sounded a more supportive note since becoming leader. Sellafield is the main employer there, so regardless of the national picture, that would be an added complication.

Given the competing pressures from the Liberal Democrats on one side and the Conservatives and Ukip on the other, Labour should expect significant erosion in the 42 per cent of the vote they got in 2015. To win, all the Conservatives have to do is tread water. And it's worth noting that so far in this parliament, the results in by-elections have been what you'd expect according to the current state of the parties in the polls - which would mean you'd back Labour to win Stoke but the Tories to win Coepland. 

That Theresa May has visited the seat attests to the closeness. Privately, neither party can be confident of winning. For the Conservatives, that makes it worth putting Theresa May, currently the most popular politician in Britain if the polls are to be believed, into the fray, because what have they got to lose? For the Labour leadership, there is nothing to "win" if they hold a seat in opposition, but there is something to lose if they cannot hold it and Corbyn has visited in the final week. 

What is keeping Labour competitive is the state of the health service in Cumbria. If West Cumberland, the hospital, is closed, then residents will face a two hour drive to the nearest hospital.

The local “success regime” is the cause of significant public opposition. "There are a lot of people who are angry about Jeremy, angry about Trident [the submarines are made nearby]," says one MP, "But they also understand that if they vote Labour they will not be bringing in a government that closes Sellafield but they can send a message about West Cumberland [the hospital that is under threat of closure]."

So Labour have reason to be more cheerful than the bookmakers are concerned. The outcome will come down to what the question that voters are asking when they vote is: if it is nuclear power, the Tories will win. If it is healthcare, Labour will triumph.

In that, May’s visit has probably helped Labour on balance. She could have decisively shifted the contest by making a commitment to keep West Cumberland open and to secure the future of the Moorside nuclear plant. But she did neither, and instead that meant that the local newspaper splashed on her refusal to confirm that the hospital was safe. Which, in a close election, may well be the difference as far as winning and losing are concerned. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.