Why Labour has not "surrendered" on public spending

Contrary to what conservatives suggest, Balls hasn't capitulated to Osborne. He supports stimulus now and investment after 2015.

Daniel Finkelstein is the latest fiscal conservative to hail Labour's apparent Damascene conversion to austerity. In today's Times he writes of Ed Balls's alleged "intellectual surrender", "the argument he once boldly made, that deficits don’t matter, has gone". 

Balls's speech last week was a significant moment. Not only did he reaffirm that Labour would have to keep most or all of the coalition's spending cuts, he stated that it would have to make its own (and suggested some too). But Finkelstein is wrong to present this as an epoch-defining capitulation to compare with 1976. 

To begin with, Balls's support for stimulus now remains unwavering. Under the political cover of the IMF, he called for the coalition to bring forward capital spending increases from 2015, "financed by a temporary rise in borrowing", in order to promote growth. Contrary to what Finkelstein suggests (recalling Jim Callaghan's famous words), he still believes that you can "spend your way out of recession". More borrowing, more spending remains the Keynesian remedy  prescribed by Balls. The consistent error of the right has been to equate support for stimulus with support for a larger state. As Balls has always acknowledged, a stimulus is, by definition, temporary. In the words of his hero Keynes, "The boom, not the slump, is the right time for austerity at the Treasury." The true intellectual surrender would be for Labour to endorse Osborne's strategy of piling cuts on cuts, a path it has rightly rejected. 

But Finkelstein also overstates the extent to which Labour has committed itself to austerity after 2015. For Balls, Osborne's spending limits are a "starting point", not a blueprint. With growth of just 1.1 per cent since 2010 (compared to 2.9 per cent in Germany and 4.9 per cent in the US), he has adopted the prudent stance of preparing for the worst. But should growth surprise on the upside, he will be able to raise the baseline.

Nothing in Balls's speech precluded the possibility of Labour spending significantly more once a genuine recovery is underway. After all, the surge in expenditure under the last government (an average annual increase of 3.4 per cent) only came after Gordon Brown had stuck to the Tories' "eye-wateringly tight" spending limits. In the case of capital spending, Balls has already hinted that Labour will pledge to invest more than Osborne. As he said, "And for the future, we need to invest in the homes, transport and infrastructure Britain needs and ensure a recovery made by the many. Of course, here too we will only set our plans for investing in Britain’s future in the light of the economic circumstances at the time, and the needs of economic growth". 

Last week was not an "intellectual surrender"; it was an attempt to give Labour the political cover to be radical. 

George Osborne and Ed Balls attend the State Opening of Parliament on 8 May, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How the Brexit referendum has infantilised British politics

Politicians like Boris are not characters in a fantasy show. If they aspire to high office then they must be held to high standards. 

Ancient Greece is the cradle of modern Europe.  From its primordial soup emerged so much of our culture, our language and our politics. Of the three, it seems to be the politics that has made the least progress over the centuries. In fact, if you dropped an Athenian into the middle of politics in the UK today, they would find themselves right at home. This is not because of the direct democracy, the demagogues or the xenophobia, though all are worryingly familiar, but because of the style of the debate itself.

To understand politics in ancient Greece you have to grasp that they had no concept of ‘the truth’. This is not to say that they were liars, simply that the framework by which we judge credibility was not one they would have recognised. The myths and legends that dominated their discourse were neither thought of as being ‘true’ or ‘made-up’, they simply were, and the fact of their being known allowed them to be used as reference points for debate and argument.

Modern politics seems to be sliding back towards this infant state, and nothing embodies this more than the childish slanging match that passes for an EU referendum debate. In the past six years the UK has had three great exercises of direct democracy and it is safe to say none of the campaigns have added a great deal to sum of human enlightenment. Who remembers the claims that babies would die as a result of the special voting machines needed to conduct AV elections? But the EU referendum has taken this to new extremes. The In campaign are executing what is a fairly predictable strategy, the kind of thing that is normal fare in politics these days. Dossiers of doomsday scenarios. Experts wheeled out. Statistics embellished to dazzle the public. One can question the exact accuracy, but at least you feel they operate within certain parameters of veracity.

What is happening on the Out side, in contrast, is the collective nervous breakdown of a large section of the political establishment. Just this week we have had Penny Mordaunt, a government minister, flat-out denying the UK’s right to veto new accessions to the EU. We have seen the fiercely independent Institute for Fiscal Studies denounced as a propaganda arm for Brussels. Most bizarrely, Boris Johnson even tried to claim that the EU had banned bananas from being sold in bunches larger than three, something that nobody who has actually visited a shop in the UK could possibly believe. These kind of claims stretch our political discourse way beyond the crudely drawn boundaries of factual accuracy that normally constrain what politicians can do and say. Surely the people peddling these myths can never be taken seriously again?

But they will. You just watch as Johnson, Mordaunt and the rest slide effortlessly back into public life. Instead of being ridiculed for their unhinged statements, they will be rewarded with plush offices and ministerial cars. Journalists will continue to hang on every word they say. Their views will be published in newspapers, their faces will flit ceaselessly across our TV screens. Johnson is even touted as a plausible future leader of our country, possibly before the year is out. A man who over his meandering career seems to have held every possible opinion on any topic you care to name. Or rather, perhaps it is more accurate to say that the character we call Boris has no opinions at all, simply interests. The public, who have scant regard for a political class they believe to be untrustworthy, seem to have taken a shine to a man who is perhaps the most fundamentally dishonest of Westminster’s denizens.

What does all this say about the state of our politics? If it is true that we are seeing the advent of ‘post-truth’ politics, as some have argued, then it has grown out of the corrosive relationship between politicians and the public. It is both a great irony and a great tragedy that the very fact that people distrust all politicians is what has permitted the most opportunistic to peddle more and more outlandish claims. Political discourse has ceased to be a rational debate with agreed parameters and, like the ancient Greeks, more resembles a series of competing myths. Claims are assessed not by their accuracy but by their place in the grand narrative which is politics.

But the truth matters. For the ancients it was the historian Thucydides who shifted the dial decisively in favour of fact over fiction. In writing his Histories he decided that he wanted to know what actually happened, not just what made a good story. In a similar vein British politics needs to take a step back towards the real world. Broadcasters launching fact-checkers are a good start, but we need to up the level of scrutiny on political claims and those who make them. At times it feels like the press operate as a kind of counterweight to Game of Thrones author George RR Martin, going easy on much-loved characters for fear of upsetting the viewers.

But politicians like Boris are not characters in a fantasy show. If they aspire to high office then they must be held to high standards. If politics is the art of the possible, then political discourse is the art of saying what you can get away with. Until there are consequences for the worst offenders, the age of post-truth politics will continue suck the life from our public debate.