Ed Miliband and Ed Balls at the Labour conference in Brighton last year. Photograph: Getty Images.
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Could flood prevention help Labour make the case for "good borrowing"?

Ed Balls's emphasis on the long-term benefits of investment in flood defences is an example of how the party could challenge the Tory narrative on public spending.

With the flood waters finally receding, the debate about how Britain copes with extreme weather in the long-term (the Met Office has just confirmed that this winter was the wettest since 1910) is beginning. Ed Balls has a notable piece in the Telegraph today committing the next Labour government to increased investment in flood defences (it "must and will be a priority," he writes). Having warned in his 2012 conference speech that "we must decide how we are going to protect our country from rising sea levels and exceptional rainfall", Balls, more than most, can claim to have seen this crisis coming.

In the piece, he makes the case for higher spending on flood protection (which, contrary to David Cameron's claims, was cut by 17 per cent in real-terms in 2010) as part of a wider shift towards long-term preventative spending (which can result in significant savings). He writes:

[T]he damage from the flooding of recent weeks is not only to people's lives and livelihoods, but the financial costs are expected to be over a billion pounds. Furthermore, the Committee on Climate Change warned last month that investment in flood defences is now £500 million below what's needed and that this risks £3 billion in avoidable flood damage.

How can this make economic sense? Rather than the short-termist salami-slicing of budgets we have seen, we need instead to make long-term decisions now that can save money in the future.

Next month's Budget must begin to set out that action, and I am also clear that investment in flood defences - preventative spending that can save money in the long-run - must and will be a priority for the next Labour government.

Balls is certainly right to argue for the long-term economic benefits of investment (alongside flood prevention, one could cite housing, childcare, transport and skills), which is why he has, crucially, left open the option of borrowing for this purpose, while achieving a current budget surplus.

In a recent Staggers piece, Julian Morgan, the chief economist of Green Alliance, made the case for running a capital deficit to pay for improved flood defences: "As flood defences provide protection for many years to come, it seems wholly appropriate to pay for them gradually with long-term borrowing by issuing 30 or even 50 year gilts, especially when the cost of financing is so low. This would mean that the burden would not only fall on the current generation of taxpayers, but would be spread across the current and future beneficiaries of the flood defences."

The shadow chancellor and his aides state both publicly and privately that no decision will be taken on whether to do so until closer to the election, when the state of the economy is clearer. But few in the party believe it will be possible for Labour to achieve its priorities – a mass housebuilding programme, universal childcare, the integration of health and social care – without doing so. As one shadow cabinet minister recently told me: "We all know that a Labour government would invest more." The question, rather is a tactical one: when and how does Labour make the case for "good borrowing"?

Owing to the Tories' framing of the crash as the result of overspending by the last government, the party starts from a position of weakness. In private, Ed Miliband’s advisers argue that the voters are able to distinguish between borrowing to fund day-to-day spending and borrowing for investment, just as they distinguish between “borrowing to fund the weekly shop” and “borrowing for an asset like a house”. But the Labour leader is not yet prepared to make this case in public. Since an ill-fated interview last year on Radio 4’s The World at One, in which he refused eight times to admit that Labour would borrow more than the Conservatives, Miliband has focused deliberately on market reforms that would not cost government money: freezing energy prices, expanding use of the living wage and restructuring the banking system. When he has made promises that would require new funding, such as the construction of 200,000 homes a year by 2020, the question of borrowing has been deferred.

But sooner rather than later, the party will need to return to it. After the deluge of this winter, flood prevention would be a good place to start.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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What do Labour's lost voters make of the Labour leadership candidates?

What does Newsnight's focus group make of the Labour leadership candidates?

Tonight on Newsnight, an IpsosMori focus group of former Labour voters talks about the four Labour leadership candidates. What did they make of the four candidates?

On Andy Burnham:

“He’s the old guard, with Yvette Cooper”

“It’s the same message they were trying to portray right up to the election”​

“I thought that he acknowledged the fact that they didn’t say sorry during the time of the election, and how can you expect people to vote for you when you’re not actually acknowledging that you were part of the problem”​

“Strongish leader, and at least he’s acknowledging and saying let’s move on from here as opposed to wishy washy”

“I was surprised how long he’d been in politics if he was talking about Tony Blair years – he doesn’t look old enough”

On Jeremy Corbyn:

"“He’s the older guy with the grey hair who’s got all the policies straight out of the sixties and is a bit of a hippy as well is what he comes across as” 

“I agree with most of what he said, I must admit, but I don’t think as a country we can afford his principles”

“He was just going to be the opposite of Conservatives, but there might be policies on the Conservative side that, y’know, might be good policies”

“I’ve heard in the paper he’s the favourite to win the Labour leadership. Well, if that was him, then I won’t be voting for Labour, put it that way”

“I think he’s a very good politician but he’s unelectable as a Prime Minister”

On Yvette Cooper

“She sounds quite positive doesn’t she – for families and their everyday issues”

“Bedroom tax, working tax credits, mainly mum things as well”

“We had Margaret Thatcher obviously years ago, and then I’ve always thought about it being a man, I wanted a man, thinking they were stronger…  she was very strong and decisive as well”

“She was very clear – more so than the other guy [Burnham]”

“I think she’s trying to play down her economics background to sort of distance herself from her husband… I think she’s dumbing herself down”

On Liz Kendall

“None of it came from the heart”

“She just sounds like someone’s told her to say something, it’s not coming from the heart, she needs passion”

“Rather than saying what she’s going to do, she’s attacking”

“She reminded me of a headteacher when she was standing there, and she was quite boring. She just didn’t seem to have any sort of personality, and you can’t imagine her being a leader of a party”

“With Liz Kendall and Andy Burnham there’s a lot of rhetoric but there doesn’t seem to be a lot of direction behind what they’re saying. There seems to be a lot of words but no action.”

And, finally, a piece of advice for all four candidates, should they win the leadership election:

“Get down on your hands and knees and start praying”

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.