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Osborne thinks budget discipline is Labour's biggest weakness. He's not wrong

Both Miliband and Balls know they need to do more if people are going to be persuaded to put them in charge of public money.

Ed Miliband and Ed Balls at the Labour conference in Manchester in 2012. Photograph: Getty Images.

There isn’t much doubt which side enjoyed the Autumn Statement more in the Commons chamber. Tory MPs wore gleeful looks that showed they thought the Chancellor had planted his ball firmly in the back of Ed Balls’s net. They cheered with terrace gusto. Labour MPs looked solemn and attentive. Perhaps their expressions were meant to project scorn and disbelief at what George Osborne was saying. They could also be interpreted as masks of defeat.

The mood imbalance was, to an extent, inevitable. The focus of the Autumn Statement was things the Chancellor wants to talk about and things Labour says are missing the point. Osborne boasts that the economy is growing lustily. Labour asserts that people aren’t feeling it in the marginals. Osborne declares that his plan for fiscal prudence has delivered the stability from which future prosperity will flourish. Balls says Osborne’s plan has left voters feeling out of pocket.

The Tories think they have won the biggest argument of the parliament – the question of who was to blame for the economic mess and who is best qualified to clear it up. Labour think, or at least hope, that there is a bigger argument about who the economy serves, who can be trusted to look after ordinary people, and that the Tories are ill-equipped to meet that challenge.

The problem for Labour today was that Osborne got to set the terms of the debate, so Balls arguing vigorously in the debate he would rather be having sounded close to a capitulation. When he accused the Chancellor of being in denial, the charge ricocheted back in his face. The Tories guffawed merrily. The Labour leadership – both Eds – remain confident of having the last laugh, to the extent that the macroeconomic indicators fuelling Conservative levity conceal real pain that will cost the government votes. The economy that Tory MPs were cheering is on paper; the one Labour’s cost of living campaign focuses on is in winnable constituencies. That’s the theory, at least.

But what today also demonstrated is that Osborne believes Labour’s reputation for overspending is terminally toxic. One of the Chancellor’s favourite gambits is engineering parliamentary debates exclusively to force Labour MPs to vote against something that most voters think is sensible. This device has been deployed with some effect over welfare reform, challenging the opposition to advertise their squeamishness about benefit cuts, which they duly did.

Today, Osborne gave advance notice of the next trick he will pull from the same box. He intends to put a "Charter For Budget Responsibility" before parliament next autumn, reaffirming the coalition parties’ determination to press ahead with the current trajectory of deficit reduction. The tactical logic behind this move is clear. It means that, six months before a general election, Labour will have to choose between endorsing the government’s economic policy (which they won’t do) and voting against prudent budgeting (which they will insist is a principle they cherish).

The standard Labour line in response to these Osborne stunts is to denounce them as cynical game-playing, unworthy of indulgence by a serious opposition whose eyes are fixed on the higher prize of transforming Britain’s economy and society for the better. Etc.

For nervous Labour MPs that can sound rather like a declaration of intent to walk straight into the trap, although Ed Miliband probably has more leeway with his own side now than he did a year or two ago. Since the party’s successful conference – and the energy price freeze pledge that disoriented the Tories for weeks – there is more patience in the parliamentary Labour party for Miliband’s insistence on doing things "in his own time, on his own terms."

Still, after today, I suspect there will be increased pressure for one of those things to be a clearer line on long-term fiscal policy. Both Eds have said repeatedly in speeches and interviews that they recognise the spending constraints under which a future Labour government would operate. Osborne clearly thinks that message hasn’t reached the public and that he can continue pummelling Labour as the party that opposes every cut, while plotting to raise taxes, borrow and spend like Topsy.

Privately, senior Labour figures concede that this is a weakness. Both Eds know they need to do more if people are going to be persuaded to put them in charge of public money. There is, behind the scenes, a rolling discussion about the kind of measures and policies that will help Labour "cut through" with its determination to be prudent. The lesson that Miliband has learned from the energy price freeze is that voters don’t listen to vague declarations of intent. Many actively avoid anything the sounds like politics. So to get their attention, you need something big, bold, easy to understand and unignorable.

There are many on the Labour side who would like to get through a campaign without having to apply that logic to the delicate matter of budget discipline. Perhaps it can be avoided. The Eds may be right that a cost of living crisis will soon wipe the grins from Tory faces and that Osborne’s attempt to force the debate back to his preferred terms, while effective in the Commons today, will have diminishing returns over time. But the looks of unease on the Labour benches today suggest the party is still uncomfortable when the conversation turns to balancing the books. That is a weakness of which Balls will be well aware. I imagine the shadow Chancellor will be marching some sacred spending cow to the slaughter before polling day. 

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