Balls contradicts Miliband as he backs third runway over HS2

Asked to choose between a third runway at Heathrow and High Speed 2, Balls replies: "third runway". Miliband would say the reverse.

The most significant line in Ed Balls's Times interview today has gone strangely unnoted by the paper, which splashes on the news that he was part of a "macho Brownite cabal".

Asked in a "quick fire" section whether he favours a "third runway or HS2", the shadow chancellor replies: "third runway". Why is that striking? Because it is the reverse of the answer that Ed Miliband would give. As Damian McBride's memoir reminds us, Miliband "effectively threatened to resign from the cabinet" over the planned third runway at Heathrow, a move that successfully torpedoed the policy. Since then, shadow transport secretary Maria Eagle has said that the idea is "off the agenda" on account of Miliband's past opposition.

On HS2, while Balls is increasingly sceptical of the new high speed line, warning that there will be "no blank cheque from a Labour Treasury", Miliband remains personally supportive of the project, which was launched by Andrew Adonis, the party's shadow infrastructure minister and man he has appointed to lead Labour's economic growth review.

It has long been an open secret in Westminster that Balls believes Labour should prioritise airport expansion over HS2 but his decision to put this fact on record is significant.

Shadow chancellor Ed Balls speaks at the Labour conference in Manchester in 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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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.