Why the return of growth doesn't prove that Balls was wrong

The shadow chancellor never said that there would be no recovery, only that it would be painfully slow. And he was right.

When the GDP figures are published tomorrow morning at 9:30am, the cry will go up from the Tories and their media allies that Ed Balls's credibility has been destroyed. They might not like Ed Miliband, but they reserve a special animus for the shadow chancellor. For them, the return of growth proves that Balls's critique of George Osborne's austerity programme was fundamentally wrong; Labour will not be taken seriously until he is thrown overboard. 

If Balls is such a liability to his party, one wonders why so many Conservatives exert so much energy calling for his departure (the answer, as some privately acknowledge, is that he is one of Labour's greatest assets). But put this Machiavellian gamesmanship to one side, the claim that it is Osborne, not Balls, who has been vindicated doesn't bear scrutiny. 

Contrary to the right, Balls never said that there would be no recovery, only that it would be painfully slow. On this point he was entirely right. The return of growth after three years of stagnation is nothing to celebrate. As Balls writes today, "we would need 1.4 per cent growth in each and every quarter between now and the election simply to catch up all the ground lost since 2010." Even if we learn tomorrow that the economy grew by 1% in the third quarter, output will still be 2.3% below its pre-recession peak. In the US, by contrast, where the Obama administration maintained fiscal stimulus, the economy is 3.2% larger than in 2007. Growth of 1% in Q3 would mean that the economy has expanded by just 2.8% since autumn 2010, compared to the 7.7% forecast by the OBR. 

Not all of this can be blamed on Osborne. The continued fragility of the banking sector, the rise in global commodity prices and the eurozone crisis have all constrained growth. But it is precisely for these reasons that wise minds counselled the Chancellor against austerity. As Balls warned in his celebrated Bloomberg speech in 2010, Osborne was "ripping out the foundations of the house just as the hurricane is about to hit". Hippocrates’s injunction to "first, do no harm" should have been his watchword. Instead, with the private sector already contracting, he chose to tighten the squeeze. We are still paying the price today. The double-dip may have been revised away (growth was 0% in Q1 2012 rather than -0.1%; only an economic illiterate would celebrate that) but the austerians didn't only  promise that Britain would avoid another recession, they promised, in the words of Osborne's first Budget, "a steady and sustained economic recovery". What we got was the slowest recovery for more than 100 years. 

Then there is the claim that Labour is only now talking about living standards in a desperate attempt to distract attention from the macroeconomy. As Tim Montgomerie writes in today's Times, "The Opposition won’t acknowledge the recovery but it’s interesting to note what Labour politicians have stopped saying. Ed Balls isn’t talking about a double dip any more. Ed Miliband isn’t calling for the abandonment of Plan A. Labour has moved the goalposts and now talking about the cost of living crisis — a genuine challenge but a different one."

Yet it was on the day after his election as Labour leader that Ed Miliband first used the phrase "the squeezed middle" and it was in February 2011, a few weeks after being appointed as shadow chancellor, that Balls first spoke of a "cost of living crisis". Three months later, in a speech at the LSE, he argued: 

[T]he test for the Treasury isn't just whether they can post better growth rates - we all know the economy will return to stronger growth eventually - it's whether they can make up all this lost ground in jobs and living standards

It is precisely because the recovery has been so weak that real wages have fallen for the longest peirod since 1870. As Osborne himself noted in his conference speech, the cost of living cannot be detached from "the performance of the economy". Rising GDP is no longer a guarantee of rising wages (the point Labour is rightly emphasising) but the near-absence of growth for three years explains why British workers have suffered more than most. Since mid-2010, average hourly wages have fallen by 5.5%, a faster rate of decline than every EU country except Portugal, the Netherlands and Greece. For Osborne to now lecture others on the importance of growth to living standards takes chutzpah to a new level. Wages have fallen for 39 of the 40 months that Osborne has sat in the Treasury (the exception being April 2013 when deferred bonuses were paid out following the abolition of the 50p tax rate).

The living standards crisis wasn't an unavoidable coincidence of the lack of growth, but an inevitable consequence. Before the Tory spin machine whirls into action tomorrow, it's worth remembering this. 

Ed Balls and George Osborne attend the State Opening of Parliament, in the House of Lords at the Palace of Westminster in London May 8, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Theresa May’s stage-managed election campaign keeps the public at bay

Jeremy Corbyn’s approach may be chaotic, but at least it’s more authentic.

The worst part about running an election campaign for a politician? Having to meet the general public. Those ordinary folk can be a tricky lot, with their lack of regard for being on-message, and their pesky real-life concerns.

But it looks like Theresa May has decided to avoid this inconvenience altogether during this snap general election campaign, as it turns out her visit to Leeds last night was so stage-managed that she barely had to face the public.

Accusations have been whizzing around online that at a campaign event at the Shine building in Leeds, the Prime Minister spoke to a room full of guests invited by the party, rather than local people or people who work in the building’s office space.

The Telegraph’s Chris Hope tweeted a picture of the room in which May was addressing her audience yesterday evening a little before 7pm. He pointed out that, being in Leeds, she was in “Labour territory”:

But a few locals who spied this picture online claimed that the audience did not look like who you’d expect to see congregated at Shine – a grade II-listed Victorian school that has been renovated into a community project housing office space and meeting rooms.

“Ask why she didn’t meet any of the people at the business who work in that beautiful building. Everyone there was an invite-only Tory,” tweeted Rik Kendell, a Leeds-based developer and designer who says he works in the Shine building. “She didn’t arrive until we’d all left for the day. Everyone in the building past 6pm was invite-only . . . They seemed to seek out the most clinical corner for their PR photos. Such a beautiful building to work in.”

Other tweeters also found the snapshot jarring:

Shine’s founders have pointed out that they didn’t host or invite Theresa May – rather the party hired out the space for a private event: “All visitors pay for meeting space in Shine and we do not seek out, bid for, or otherwise host any political parties,” wrote managing director Dawn O'Keefe. The guestlist was not down to Shine, but to the Tory party.

The audience consisted of journalists and around 150 Tory activists, according to the Guardian. This was instead of employees from the 16 offices housed in the building. I have asked the Conservative Party for clarification of who was in the audience and whether it was invite-only and am awaiting its response.

Jeremy Corbyn accused May of “hiding from the public”, and local Labour MP Richard Burgon commented that, “like a medieval monarch, she simply briefly relocated her travelling court of admirers to town and then moved on without so much as a nod to the people she considers to be her lowly subjects”.

But it doesn’t look like the Tories’ painstaking stage-management is a fool-proof plan. Having uniform audiences of the party faithful on the campaign trail seems to be confusing the Prime Minister somewhat. During a visit to a (rather sparsely populated) factory in Clay Cross, Derbyshire, yesterday, she appeared to forget where exactly on the campaign trail she was:

The management of Corbyn’s campaign has also resulted in gaffes – but for opposite reasons. A slightly more chaotic approach has led to him facing the wrong way, with his back to the cameras.

Corbyn’s blunder is born out of his instinct to address the crowd rather than the cameras – May’s problem is the other way round. Both, however, seem far more comfortable talking to the party faithful, even if they are venturing out of safe seat territory.

Anoosh Chakelian is senior writer at the New Statesman.

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