Exclusive: Ed Balls interview: I could go into coalition with Clegg

The shadow chancellor says for the first time that he could work with the Lib Dem leader, supports airport expansion and says history will "paint a different picture" of Gordon Brown.

On Monday evening, I had the pleasure of interviewing Ed Balls in his House of Commons office. As ever with Balls, one of the genuine big beasts of British politics, it proved to be a fascinating encounter.

You can read the full piece, which appears in tomorrow's NS, here, and here are some of the highlights, along with some parts that didn't make the cut.

On Nick Clegg: "I've no reason to doubt his integrity"

Until now, the shadow chancellor has always suggested that Nick Clegg's removal as Liberal Democrat leader is a pre-condition of any coalition between the Deputy PM's party and Labour. He said in November 2011: "I don't think there's a single member of the shadow cabinet who'd find it easy to sit down with Nick Clegg ... What Clegg did last year was so shocking. But that's not true of Lib Dems generally." Then in December 2011: "I don't think it's possible for Nick Clegg to lead that move" and in September 2012: "Nick Clegg made his decisions and I think the way he’s gone about his politics makes things very difficult [to form a coalition with him]".

But when I spoke to Balls he revealed, for the first time, that he is now willing to work with Clegg if the electoral arithmetic in 2015 demands it. After revealing that he had had a "friendly chat" with the Deputy PM in the Commons a few hours before we met, he told me: 

I think what you always have to do is deal with politics as you find it. We’re fighting hard for a majority, who knows how things will turn out, I think, look, very many Labour Party members, voters, supporters, would find that very difficult and some Liberal Democrat voters would find that very difficult as well, but we’ll deal with the situation as we find it. I saw that subsequently he made a further statement to one of the newspapers that these things weren’t about personalities, and I think he’s right about that.

Even more strikingly, he said that he "understood" Clegg's decision to enter coalition with the Conservatives in 2010 and his need to support "a credible deficit reduction plan". 

I understand totally why Nick Clegg made the decision that he made to go into coalition with the Conservatives at the time, I may not have liked it at the time, but I understood it. I also understood totally his decision to support a credible deficit reduction plan, because it was necessary in 2010.

He added: "I think the decision to accelerate deficit reduction, compared to the plans they inherited, which was clearly not what Vince Cable wanted, I think that was a mistake. I don’t know whether that’s something that, in the end, the Liberal Democrats will acknowledge. I think the decision to support the top rate tax cut and the bedroom tax, that was a mistake, those were an unfair combination. I think that the decision to go along with the boundary changes in return for the AV referendum was a mistake, which I think Nick Clegg acknowledged by reneging on his half of the deal in retrospect."

But he maintained:

I can disagree with Nick Clegg on some of the things he did but I’ve no reason to doubt his integrity, we’ve never, I don’t think, ever had a cross word.

On Gordon Brown: history "will paint a different picture"

I asked Balls, who worked alongside Gordon Brown for 16 years (for 11 years as his chief adviser and for five as an MP and minister), whether he was saddened that Brown, for so long a titan of British politics, is now derided as the worst prime minister in recent history. 

He replied: 

When history is written for Gordon Brown, it will paint a different picture. There is no doubt that, even now, around the world, the contribution he made to solving the global financial crisis and avoiding a depression, that’s already, outside of Britain, very well understood. But I think the fact that the National Health Service is still so foundational a concept in British politics that David Cameron has to desperately try to persuade people that he supports it, even though we know he doesn’t really, is a positive tribute to Gordon Brown, the fact that we didn’t join the single currency is also extremely important...I think the credit for that will come too.

I also asked Balls whether he still spoke to his mentor and he revealed that, by chance, "he actually emailed me today about a by-election coming up in the next couple of weeks", adding that "from time to time we exchange emails and from time to time we meet up".

On airport expansion: Britain needs more capacity

The biggest infrastructure decision that the next government will take will be on whether, and where, to expand the UK’s airport capacity. When I asked Balls whether he favours expansion, he hesitated, seemingly afraid to reveal his true thoughts ("I think..."), before eventually conceding: 

Yes, I always have, yes I do [support aviation expansion]. I thought the Howard Davies report was a very informed first stage, which I think made the case for airport expansion...I think a modern, open British global economy needs effective aviation capacity.

While refusing to reaffirm his past support for a third runway at Heathrow, his position contrasts with that of Labour, which has yet to even explicitly commit to expansion.

On whether Miliband has guaranteed his position

I asked Balls whether Miliband had personally promised him that he would remain shadow chancellor until 2015. He replied: "I’ve never had that conversation with him ever", revealing that the only time the pair had discussed his position was on the day he got the job.

In that conversation Ed said to me ‘I want you to be shadow chancellor’ and I said ‘are you sure?’ and he said ‘yep’, so I said ‘then fine, of course’, and that’s the only conversation that we’ve had. These are totally his decisions.

I’m just going to get on and do my job because it’s really difficult and really important and we’ve got to win, and anything I can do to help Ed to win, I’ll do.

On his "friendly chat" with Clegg

After I noted that Clegg had declared before Christmas that he sought to avoid making political argument personal but made an "exception" for "a man named Ed Balls", Balls replied by revealing that he had had a "friendly chat" with Clegg in the Commons that day.

"I had a friendly chat with him a couple of hours ago in the House of Commons, as you sometimes do, I’m not saying where, but the kind of place people pass in the House of Commons, we had a nice chat about how things were going. I think it was the first time I’d had a conversation with him for a really long time...I can say, with my hand on heart, the only conversation I’ve had with Nick Clegg in the last 18 months was very friendly and warm."

On NHS spending: "I would be staggered" if Labour doesn't ring-fence it

Labour's Treasury team has recently begun a "zero-based" spending review, one that will scrutinise every area of public spending for potential cuts.

But when I asked Balls whether Labour will pledge to ring-fence NHS spending, he offered the clearest signal yet that it will. In an echo of Nye Bevan’s declaration that "the language of priorities is the religion of socialism", he told me:

I always think in politics revealed preferences are a very powerful indicator of future actions and, at every stage, Labour has ring-fenced and supported ring-fences for the National Health Service. I would be staggered if we are anywhere other than wanting to ring-fence the NHS going forward in 2015-16 and in the future.

On interest rates: the Bank of England should not rush to raise rates

The most notable feature of the delayed recovery has been the sharp drop in unemployment, which now stands at 7.4 per cent, within touching distance of the 7 per cent threshold at which the Bank of England will consider an interest rate rise.

How does he think Mark Carney should respond when joblessness falls to this level? "I think he’ll be very cautious about wanting to use unemployment and the labour market as an indicator of underlying strength," Balls told me. "I know that they’ll [the Bank] be very worried and concerned and focused on what’s happening to London house prices and wider house prices, but I hope that the monetary policy committee will look across the piece, rather than at one indicator, before they decide to move on interest rates."

His message is clear: based on current conditions, there should be no rate rise this year.

On whether Labour will borrow for investment: "we're going to continue [looking at it]"

Throughout our conversation, Balls referred to the need for Osborne to do more to increase "underlying growth" through greater public investment. Having pledged not to borrow to meet day-to-day spending in 2015-2016, would he consider borrowing to fund new infrastructure projects?

"That’s something that we’re going to continue to look at," he says. "I’m not going to rule it out, but I’m also not going to say now that it’s definitely the right thing to do. But I’d make a broader point, which is that if you want to have a stronger, sustained recovery, and if you want to get the housing benefit bill down, and if you’re trying to help people on to the housing ladder by supporting housing on the demand side, this is absolutely the time when you ought to be doing more to support investment in housing supply – in particular, but not entirely, affordable housing."

On why the Tories can't win a "values-driven" election

Balls ended the interview by perceptively noting of Osborne's Today programme interview: "the word he kept using throughout was ‘values’ . . . He knows when it comes to values – whose side you’re on, fairness – he knows he’s got a huge problem . . . They will have to be totally negative because they know, [and] they’re going to try and neutralise it, but they can’t win on that basis".

He went on to explain why Labour is best placed to win an election based on values and why his job is to make sure "that the sums add up":

The thing for Labour is, the place where we are really strong at the moment, is who will be on your side, who’ll do things in a fairer way, who’ll put growth and jobs first, who’ll stand up for me and my family, in a values fight, we’re on the right side, we’re on the winning side. My job, and that is an important part of the reason why Ed Miliband had such a good conference, because he set out that values message, it was policy linked to a view of what’s right and what’s fair, I don’t think that will change in the next year and a half. Labour can win a cost of living election around values, but people have got to know that the sums add up, that in the end they can trust us. My job is to make sure that we are tough in fiscally underpinning of that values choice.

On PMQs: "the government figure really sets the tone"

Balls's exchanges with Cameron at PMQs (normally prompted by one of his famous hand gestures) are increasingly celebrated, so I couldn't resist asking him whether he ever feels like going up against the PM for a full session. He replied: "No, no, it’s the hardest thing, Prime Minister’s Questions, and I’m there to support Ed Miliband. I think he’s doing really well; it’s incredibly frustrating for us. For Ed, he only gets six questions, when I’m there with George Osborne we only get two, whereas the government side, David Cameron or George Osborne will answer 20, 30 questions, so it’s so imbalanced. Many of the times that David Cameron will lash out, or attack, happen after the exchanges with Ed Miliband, rather than in those exchanges. Often Ed Miliband will elbow me to say 'keep him under pressure, keep him under pressure'."

He addded: "The thing that's really important to understand about the chamber in the House of Commons is that the government figure really sets the tone. David Cameron can choose the tone he sets at Prime Minister's Questions. And I think the Prime Minister's Questions of this parliament have been very much a reflection of him. I think very many people find that frustrating, that at Prime Minister's Questions there's often very little attempt made to answer the questions at all, things are very partisan, hugely political, but as I said the tone is set by the Prime Minister, the event reflects his or her personality, and our job as opposition politicians, we can't set that tone. But we have to deal politically with the situation as it's set."

Intriguingly, Labour are suggesting that today's more subdued PMQs was a trial of Ed Miliband's new approach. The Labour leader is seeking to disagree "without being disagreeable".


Ed Balls speaks at the Labour conference in Brighton last year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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John McDonnell's seminars are restoring Labour's economic credibility

The Shadow Chancellor's embrace of new economics backed by clear plans will see Labour profit at the polls, argues Liam Young.

It’s the economy, stupid. Perhaps ‘it’s the economy that lost Labour the last two elections, stupid’ is more accurate. But I don’t see Bill Clinton winning an election on that one.

Campaign slogan theft aside it is a phrase Labour supporters are all too familiar with. Whatever part of the ‘broad church’ you belong to it is something we are faced with on a regular basis. How can Labour be trusted with the economy after they crashed it into the ground? It is still unpopular to try and reason with people. ‘It was a global crisis’ you say as eyes roll. ‘Gordon Brown actually made things better’ you say as they laugh. It’s not an easy life.

On Saturday, the Labour party took serious steps towards regaining its economic credibility. In January a member of John McDonnell’s economic advisory committee argued that “opposing austerity is not enough”. Writing for the New Statesman, David Blanchflower stated that he would assist the leadership alongside others in putting together “credible economic policies.” We have started to see this plan emerge. Those who accuse the Labour leadership of simply shouting anti-austerity rhetoric have been forced to listen to the economic alternative.

It seems like a good time to have done so. Recent polls suggest that the economy has emerged as the most important issue for the EU referendum with a double-digit lead. Public confidence in the government’s handling of the economy continues to fall. Faith in Cameron and Osborne is heading in the same direction. As public confidence continues to plummet many have questioned whether another crash is close. It is wise of the Labour leadership to offer an alternative vision of the economy at a time in which people are eager to listen to a way by which things may be done better.

Far from rhetoric we were offered clear plans. McDonnell announced on Saturday that he wants councils to offer cheap, local-authority backed mortgages so that first-time buyers may actually have a chance of stepping on the housing ladder. We also heard of a real plan to introduce rent regulations in major cities to ease excessive charges and to offer support to those putting the rent on the overdraft. The plans go much further than the Tory right-to-buy scheme and rather than forcing local authorities to sell off their council housing stock, it will be protected and increased.

It is of course important that the new economics rhetoric is matched with actual policy. But let’s not forget how important the rhetoric actually is. The Tory handling of the economy over the last six years has been dismal. But at the last election they were seen as the safer bet. Ed Miliband failed to convince the British public that his economic plan could lead to growth. The branding of the new economics is simple but effective. It does the job of distancing from the past while also putting a positive spin on what is to come. As long as actual policy continues to flow from this initiative the Labour leadership can be confident of people paying attention. And as economic concerns continue to grow ever more pessimistic the British public will be more likely to hear the Labour party’s alternative plan.

Liam Young is a commentator for the IndependentNew Statesman, Mirror and others.