Left and right agree: Ed Balls shouldn't fall on his sword

Anthony Seldon's New Statesman column provokes debate.

Anthony Seldon’s column in today’s New Statesman, calling for Ed Balls to resign, has provided plenty for the chattering classes to chew on.

Responding to Seldon’s piece, the Guardian's Jonathan Freedland defends Balls’s record and highlights his prescience in predicting a double-dip recession.

Balls is one of the very few people in politics able to utter those golden words: I told you so... Asking a politician to resign when they get things wrong is one thing. Demanding they quit when they get things right is a kind of madness.

Freedland also doubts whether the shadow chancellor stepping down would benefit Labour in the way the co-author of Brown at 10 envisages.

David Cameron turns a shade of puce every time he finds himself facing Balls. Why is it the Tories hate him so? In politics, such loathing is a compliment. It suggests Balls is one of the few Labour figures they fear. The same goes for the right-leaning commentariat's regular demand that Balls go, a chorus Seldon has now joined.

And he warns that, rather than ending factionalism in the Labour Party, Balls's departure would reignite it: "there will be a sizable group that believes it lacks a voice. Resentments will grow. Call it a team of rivals, pissing out of the tent or keeping your enemies closer – the idea is the same. It's best for Ed M to have Ed B on board."

LabourList editor Mark Ferguson is similarly unconvinced, describing Seldon’s article as "a piece that is character assassination just about dressed up in the faux-niceties of "advice". Ferguson also defends Balls’s economic credentials, praising his August 2010 Bloomberg lecture as "written by someone who understands the global economy – which should be the first thing Labour is looking for in terms of potential Chancellors." Although Balls "needs to articulate how he’d make Ed Miliband’s vision of a radically different type of economy a reality", Ferguson says he has been vindicated "on the fundamental call of the day." And he implores his party to "stop pretending that there are an array of alternative to Balls as Shadow Chancellor".

This view was echoed by the tweet that it "would be madness to dump either of the Eds. Please don't. Please, please, please." But given that the author was ConservativeHome editor Tim Montgomerie, perhaps that isn’t the support Balls needs.

The story was also covered by Guido Fawkes, Guardian politics and ConservativeHome

Update: Elsewhere, Iain Dale says he was "incredulous" when he read Seldon's piece and describes Balls as a politician "respected and feared by the Conservatives".

Dale writes: "They [the Conservatives] try to pretend that he is their biggest asset. Some may really believe that, but for most it is pure bravado. He knows how to needle Tories, he knows which buttons to press to rile them and his attacks invariably hit home."

Shadow chancellor Ed Balls speaks on the second day of the annual Labour Party Conference in Manchester on October 1, 2012. Photograph: Getty Images.

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR