George Osborne and Ed Balls attend the State Opening of Parliament on May 8, 2013. Photograph: Getty Images.
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Why Balls is so confident about attacking Osborne's cuts

The shadow chancellor remembers that it was fear of "Tory cuts" that handed Labour victory in 2001 and 2005, and denied the Conservatives a majority in 2010. 

On the day of last year's Autumn Statement, as George Osborne's chief of staff Rupert Harrison briefed journalists on its contents, a nearby Labour strategist texted me highlighting a line in the new OBR document: "Check out para 1.8 (page 6) of the main document. On projections of the share of GDP consumed by govt. Alarming...". This apparently obscure reference went on to provide the basis for an entire new line of attack by Labour. The relevant section read: "Total public spending is now projected to fall to 35.2 per cent of GDP in 2019-20, taking it below the previous post-war lows reached in 1957-58 and 1999-00 to what would be probably be its lowest level in 80 years." It was this finding that allowed Labour to warn that George Osborne would cut spending to its lowest level since the 1930s - before the creation of the NHS and comprehensive education. 

To mark the start of this election year, Ed Balls takes up the charge in today's Guardian, declaring that "There are moments in politics when, amid the fog of accusation and rebuttal, things suddenly become crystal clear. And it’s now clear that last month’s autumn statement was another of those rare defining moments – the day Chancellor George Osborne ceded the political centre ground to Labour". 

He adds: "In the runup to the autumn statement we all knew the ongoing squeeze on living standards was leading to a huge shortfall in tax revenues, throwing deficit reduction plans badly off track. What took everyone by surprise was that, in the face of forecasts that this loss of tax revenues would continue, Chancellor Osborne would choose to make up the shortfall with massively deeper spending cuts in the next parliament."

The confidence with which Balls attacks Osborne on territory previously considered unfavourable for Labour is striking. But a clue is provided in the second line of his piece: "I remember well the speech in summer 2000 when the shadow chancellor, Michael Portillo, set out Conservative plans to cut public spending to fund tax cuts – the moment we knew they had lost the 2001 election." As Gordon Brown's former chief economic adviser, Balls recalls better than most that it was fear of Conservative cuts that handed Labour victory in 2001 and 2005. 

It was awareness of this failure that led David Cameron and George Osborne to pledge in 2007 to match Labour's spending plans in the next parliament (thus denying Brown "baseline" advantage). But the financial crisis and the resultant surge in the deficit led the Tories to abandon their commitment, instead promising an "age of austerity". Their subsequent failure to win a majority is partly blamed by Osborne on voters' fear of the cuts to come. Labour was able to warn (accurately, as it proved) that child benefit, tax credits, Sure Start and the Education Maintenance Allowance were all under threat. 

By vowing to continue cutting even after the deficit has been eliminated, the Chancellor has provided the opposition with a new opportunity to depict him as a dangerous ideologue. Balls's claim that Labour now owns the "centre ground" is supported by a recent ComRes/Independent survey showing that 66 per cent do not believe that cuts should continue until the deficit has been eradicated with just 30 per cent in favour. Polls have also long shown backing for the party's pledge to impose higher taxes on the rich, such as a 50p rate of income tax and a mansion tax. 

The challenge for Labour is combining its attack on Conservative cuts with the acknowledgment that it, too, would reduce spending. As Balls writes: "Let me be clear, including to those who would wish it were not so: Labour will need to cut public spending in the next parliament to balance the books." Labour is left with precisely the dividing line that Brown wanted to avoid in 2010: good cuts against bad cuts. The SNP and the Greens are seeking to capitalise by attacking the party's embrace of austerity. But Labour believes that a commitment to cut spending (albeit by far less than the Conservatives) is necessary to counter the fear that it would allow the deficit to rise and "crash the car" again. Just as only Nixon could go to China, so the party hopes that only it will be trusted to "balance the books" in a fair way. 

Should fear of "Tory cuts" cost the Conservatives victory for a fourth time, Osborne will truly have been snared by his own creation

George Eaton is political editor of the New Statesman.

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Everyone's forgotten the one issue that united the Labour party

There was a time when Ed Miliband spoke at Momentum rallies.

To label the row over the EU at Thursday’s Labour leadership hustings "fireworks" would be to endow it with more beauty than it deserves. Owen Smith’s dogged condemnation of John McDonnell’s absence from a Remain rally – only for Corbyn to point out that his absence was for medical reasons – ought to go down as a cringing new low point in the campaign. 

Not so long ago, we were all friends. In the course of the EU referendum, almost all of the protagonists in the current debacle spoke alongside each other and praised one another’s efforts. At a local level, party activists of all stripes joined forces. Two days before polling day, Momentum activists helped organise an impromptu rally. Ed Miliband was the headline speaker, and was cheered on. 

If you take the simple version of the debate, Labour’s schism on the EU appears as an aberration of the usual dynamics of left and right in the party. Labour's left is supposedly cheering a position which avoids advocating what it believes in (Remain), because it would lose votes. Meanwhile, the right claims to be dying in a ditch for its principles - no matter what the consequences for Labour’s support in Leave-voting heartlands.

Smith wants to oppose Brexit, even after the vote, on the basis of using every available procedural mechanism. He would whip MPs against the invocation of Article 50, refuse to implement it in government, and run on a manifesto of staying in the EU. For the die-hard Europhiles on the left – and I count myself among these, having run the Another Europe is Possible campaign during the referendum – there ought to be no contest as to who to support. On a result that is so damaging to people’s lives and so rooted in prejudice, how could we ever accept that there is such a thing as a "final word"? 

And yet, on the basic principles that lie behind a progressive version of EU membership, such as freedom of movement, Smith seems to contradict himself. Right at the outset of the Labour leadership, Smith took to Newsnight to express his view – typical of many politicians moulded in the era of New Labour – that Labour needed to “listen” to the views Leave voters by simply adopting them, regardless of whether or not they were right. There were, he said, “too many” immigrants in some parts of the country. 

Unlike Smith, Corbyn has not made his post-Brexit policy a headline feature of the campaign, and it is less widely understood. But it is clear, via the five "red lines" outlined by John McDonnell at the end of June:

  1. full access to the single market
  2. membership of the European investment bank
  3. access to trading rights for financial services sector
  4. full residency rights for all EU nationals in the UK and all UK nationals in the EU, and
  5. the enshrinement of EU protections for workers. 

Without these five conditions being met, Labour would presumably not support the invocation of Article 50. So if, as seems likely, a Conservative government would never meet these five conditions, would there be any real difference in how a Corbyn leadership would handle the situation? 

The fight over the legacy of the referendum is theatrical at times. The mutual mistrust last week played out on the stage in front of a mass televised audience. Some Corbyn supporters jeered Smith as he made the case for another referendum. Smith accused Corbyn of not even voting for Remain, and wouldn’t let it go. But, deep down, the division is really about a difference of emphasis. 

It speaks to a deeper truth about the future of Britain in Europe. During the referendum, the establishment case for Remain floundered because it refused to make the case that unemployment and declining public services were the result of austerity, not immigrants. Being spearheaded by Conservatives, it couldn’t. It fell to the left to offer the ideological counter attack that was needed – and we failed to reach enough people. 

As a result, what we got was a popular mandate for petty racism and a potentially long-term shift to the right in British politics, endangering a whole raft of workplace and legal protections along the way. Now that it has happened, anyone who really hopes to overcome either Brexit, or the meaning of Brexit, has to address the core attitudes and debates at their root. Then as now, it is only clear left-wing ideas – free from any attempt to triangulate towards anti-migrant sentiment– that can have any hope of success. 

The real dividing lines in Labour are not about the EU. If they were, the Eurosceptic Frank Field would not be backing Smith. For all that it may be convenient to deny it, Europe was once, briefly, the issue that united the Labour Party. One day, the issues at stake in the referendum may do so again – but only if Labour consolidates itself around a strategy for convincing people of ideas, rather than simply reaching for procedural levers.