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It’s hard to see how Balls and Osborne can both survive the next Budget. Who will fall?

If the Chancellor wriggles free again, Balls’s detractors inside Labour will be howling for blood.

There is no fixed degree of contempt that the public feels towards politicians. If one day a candidate is despised a little more, it doesn’t follow that his rival is hated any less. Proof of this principle is found in the mutually debasing grudge match between George Osborne and Ed Balls.

The Chancellor’s credentials as a reliable steward of the economy are shot. He has missed the deadlines he set himself to fix the deficit and failed the tests he said would measure his credibility. The loss of Britain’s AAA credit rating with Moody’s is mom­entous chiefly because Osborne flaunted its preservation as evidence that his way works. It doesn’t.

The economy has behaved much more as Balls predicted it would than as Osborne insists it should. The shadow chancellor’s warnings of double-dip recession were vindicated. He said an aggressive lurch into austerity would suffocate growth and sabotage deficit reduction. It did.

If one man’s reputation were boosted by the other’s mistakes, Balls would be a tower of popular acclaim. Opinion polls show Labour inching ahead of the Tories on the question of which party can be more trusted on the economy, but not by much. When the question is made personal, Balls and Ed Miliband invariably lag behind Osborne and David Cameron.

People remember who was in charge when the bubble burst. The Tories have managed to portray indebtedness as both a moral outrage and the lodestar of Labour policy. When Nobel laureates and Financial Times columnists point out that low interest rates invite short-term borrowing to stimulate growth, it is called macroeconomics. Yet somehow, when shadow ministers say the same thing, it is seen as the deathly spectre of Brownism.

It is no secret that a Conservative election campaign will urge voters not to hand the keys back to the party that drove the car into a ditch and other such menacing metaphors. Tory strategists think they need only a modest recovery to make that message resonate. The light at the end of the tunnel doesn’t need to be all that bright if Labour’s offer can be depicted as a U-turn into the darkness.

Despite knowing two years in advance what the attack lines against the opposition will be, Labour has made little progress in rebutting them. Even MPs who swear fealty to the shadow chancellor worry that he isn’t getting his message across. "He couldn’t be proved more right and he still keeps losing the argument," says a despairing ally. Balls’s friends were dismayed by his failure to wound Osborne in the parliamentary debate after the Autumn Statement last December, when the Chancellor abandoned his debt consolidation target.

That flop encouraged those on the Labour side who hate Balls’s style of politics, resent his lofty independence from Miliband’s office and think he is generally a liability to turn up the volume of their complaints from casual murmur to noisy chatter. It is a sound that never quite goes away. In the run-up to the Budget on 20 March the dial is set on low whispers. If Osborne wriggles free again, Balls’s detractors inside Labour will be howling for blood.

There is still time for the tide of public opinion to rise in Labour’s favour. In April, a clutch of cuts and tax changes will take effect, transforming austerity from an abstract noun to a household emergency. Tax credits will shrink, benefits will be stopped, changes to council tax will punish low-income families. Meanwhile, the highest earners will get a juicy tax cut – a favour from last year’s Budget that smears plutocratic contaminant all over the Tory brand.

Fear of repeating the errors of the 2012 "omnishambles" package has made Osborne ultra-cautious ahead of his next Budget. He will deploy no extravagant gestures that might signal capitulation to the calls for a change of direction: no easing of austerity to gratify Labour; no drastic tax cuts as urged by Tory backbenchers.

There is more than stubborn pride to Osborne’s craving for consistency. His team has not stopped believing that the measures taken since 2010 are the right ones. Team members insist a normal recovery has been delayed by foreign turbulence and will arrive later this year. That optimism looks eccentric, verging on the delusional, and the Conservative Party is losing patience with it. The background hum of Tory frustration with Osborne is on the same wavelength and has the same frequency as Labour’s drone of dislike for Balls.

The most plausible economic prognosis is more stagnation and falling living standards. Balls’s calculation is that Britain will find that intolerable, finally pin the blame on Osborne and turn to Labour for salvation. The Chancellor’s calculation is that Balls has no comfort to give when there is no money to spend and Labour has no notion of how to save. They are both right. Osborne will look increasingly ridiculous blaming the failure of his budgets on Labour, while no amount of finger-jabbing outrage will turn Balls into a prophet of national renaissance.

That poses an obvious challenge to Cam­eron and Miliband. Their Treasury generals have fought each other to a bloody standstill, unloved by their parties and scorned by voters. Yet there are two more years of combat to come with the economy as the main battleground. This year’s Budget won’t resolve that argument, but for the sake of a better debate it should still be the endgame for Balls and Osborne.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

This article first appeared in the 04 March 2013 issue of the New Statesman, The fall of Pistorius

Photo: Getty Images
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It's time for the government to think again about Hinkley Point

The government's new nuclear power station is a white elephant that we simply don't need.

Today I will welcome Denis Baupin, Vice President of the French Assembly, to Hinkley.

His own choice to come and visit the site of the proposed new nuclear power station reflects his strong desire to prevent the UK disappearing up a dangerous dark alley in terms of energy policy. It also takes place as France takes a totally different path, with the French government recently adopting a law which will reduce nuclear energy in the country.

Greens have opposed Hinkley ever since the government announced its nuclear strategy. Hinkley, with its state aid and an agreed strike price of £92.50 per megawatt, has always been financially and legally suspect but it is now reaching the level of farce. So much so that George Osborne is required to be economical with the truth in front of a House of Lords committee because he cannot find anything honest to say about why this is a good deal for the British people.

Mr Baupin and I will join hundreds of protestors – and a white elephant – to stand in solidarity against this terrible project. The demonstration is taking place under a banner of the triple risks of Hinkley. 

First, there are the safety and technological risks. It is clear that the Pressurised Water nuclear reactor (EPR) – the design proposed for Hinkley C – simply does not work. France’s nuclear safety watchdog has found multiple malfunctioning valves that could cause meltdown, in a similar scenario to the 1979 Three Mile Island nuclear accident in the US.  The steel reactor vessel, which houses the plant’s nuclear fuel and confines its radioactivity, was also found to have serious anomalies that increase the risk of it cracking. Apart from the obvious safety risks, the problems experienced by the EPR reactors being built at Flammanvile in France and Olkiluoto in Finland have pushed the projects years behind schedule.

Secondly, Hinkley poses risks to our energy security. Hinkley is supposed to produce 7% of the UK's energy. But we now know there will be no electricity from the new nuclear plant until at least 2023. This makes power blackouts over the next decade increasingly likely and the only way to avoid them is to rapidly invest in renewable energy, particularly onshore wind. Earlier this week Bloomberg produced a report showing that onshore wind is now the cheapest way to generate electricity in both the UK and Germany. But instead of supporting onshore wind this government is undermining it by attacking subsidies to renewables and destroying jobs in the sector. 

Thirdly, there is the risk of Chinese finance. In a globalised world we are expected to consider the option of allowing foreign companies and governments to control our essential infrastructure. But it is clear that in bequeathing our infrastructure we lose the political control that strengthens our security. The Chinese companies who will be part of the deal are part owned by the Chinese government and therefore controlled by the Chinese Communist Party. What a toppy-turvy world globalisation has created, where our Conservative British government is inviting the Chinese Communist party to control our energy infrastructure. It also seems that China National Nuclear Company is responsible for the manufacture of Chinese nuclear weapons.

Of course it is the Chinese people who suffer most, being at the hands of an oppressive government and uncontrolled companies which show little respect for employment rights or environmental standards. By offering money to such companies from British consumers through their energy bills our government is forcing us to collude in the low human rights and environmental standards seen in China.  

Research I commissioned earlier this year concluded we can transform the South West, not with nuclear, but with renewables. We can generate 100 per cent of our energy needs from renewables within the next 20-30 years and create 122,000 new quality jobs and boost the regional economy by over £4bn a year.

The white elephant of Hinkley looks increasingly shaky on its feet. Only the government’s deeply risky ideological crusade against renewables and in favour of nuclear keeps it standing. It’s time for it to fall and for communities in the South West to create in its place a renewable energy revolution, which will lead to our own Western Powerhouse. 

Molly Scott Cato is Green MEP for the southwest of England, elected in May 2014. She has published widely, particularly on issues related to green economics. Molly was formerly Professor of Strategy and Sustainability at the University of Roehampton.