I was intrigued by the prospect of reading a book by a fellow politician (now, like me, an ex-politician) with a shared background in economics and a shared hinterland including Strictly and football. My curiosity grew as I read the introductory section about a political funeral I also attended where the emotions that he describes matched mine in excruciating detail. And then I discovered that, although we hardly know each other, after parliamentary and ministerial careers spent in our tribal enclosures, our views on economic policy and political philosophy are more similar than our respective tribes would approve of.
Ed Balls’s Speaking Out is an enjoyable read. He forsakes the easy path of chronological narrative for a succession of essays on specific themes (there are 27 in all). It is initially disconcerting to move backwards and forwards through time, but the device works and some of the essays stand alone as little gems of insight and reflection.
Not knowing Balls well, I had lazily assumed that the popular stereotype of the intellectual and political bully was probably right. That is how he came across in parliament and in the media. The book illuminates quite a different person: someone who makes generous and nuanced judgements of foes as well as friends and tries hard to understand the motives of people who have crossed him.
He is especially kind in his assessment of George Osborne as a sympathetic albeit professionally ruthless human being, whom he contrasts favourably with the altogether colder and less empathetic David Cameron. Having seen both at close quarters, I would agree. He is also far more understanding of and well disposed towards Tony Blair than the common view of his role as Gordon’s hatchet man in the Brownite v Blairite conflict suggests. He reminds readers that Blair and Brown were very close politically, that they were an effective partnership in delivering Labour’s main reforms and aligned with each other against the forces of darkness in the Labour Party (now firmly in the ascendant, to Balls’s evident disgust). The shadows that fell on the relationship after Blair announced his intention to seek a third term have obscured the positives.
Balls tries but struggles to be equally kind to Ed Miliband. He judges him politically rather than personally and explores two huge errors that caused Labour lasting damage: the “brain fade” in his 2014 pre-election conference speech, which omitted agreed lines on Budget discipline and immigration; and the change in leadership election rules that opened the door to Jeremy Corbyn’s takeover. Nick Clegg also gets a bad report, not for joining the coalition but for being too close to the Tories when in office.
For policy wonks and those, including myself, who were directly involved in the debates, there is particular interest in Balls’s account of the Labour government’s economic performance in the run-up to the financial crisis. As the City minister in the Treasury, Balls had an active role and earned a reputation as an apologist for the financial services sector at a time of excess. Though he is self-critical, he falls back on the explanation that the 2007-2008 crash was located in sub-prime mortgage lending in the US.
Indeed, it was. Yet there is little acknowledgement that his government was blind to the dangers incubating in global banks based in the UK and in the build-up of household leverage in the British economy, which fuelled consumer demand at the expense of investment and exports. To his credit, however, he acknowledges the grave error in not following up the Cruickshank report in 2000, which pinpointed the dysfunctional nature of UK banking, especially its disconnect from productive business activity.
Balls is on much firmer ground when he defends the Labour government’s record in fiscal policy, which was shamefully but successfully misrepresented by Osborne and, I regret, by some of my party’s spokesmen. (He may not remember that in Queen’s Speech debates I went to some trouble to defend that record, causing considerable annoyance on my side.)
During the coalition years he was torn between the political imperative to throw red meat to his supporters and the economics, which was more complex. His warning of a “triple-dip recession” was an embarrassing hostage to fortune (the recession failed to appear). Yet I agree with his assessment that we relied too heavily on monetary policy and could have used fiscal policy more, especially public investment financed by very cheap government borrowing. He places too much emphasis, however, on the negative effect of an early round of fiscal tightening, when the damage caused by addiction to monetary stimulus has been more apparent over time.
Balls argues that his biggest achievement in economic policy was helping to keep Britain out of the euro. Notably, he credits Blair with initial scepticism and Brown with having a more positive position (though the roles subsequently reversed). I rather share Brown’s pragmatic view that the project was not inherently good or bad for Britain but depended on the conditions. We can only speculate about the counterfactual case in which Britain joined, insisting on a non-deflationary monetary and fiscal framework and at a competitive exchange rate that would have averted the long period of UK currency overvaluation, which knocked the stuffing out of British manufacturing (a subject to which Balls does not give even a passing mention here).
The most passionate and telling sections of the book – and the most relevant to the future of Labour – are his vigorous defence of a mixed economy and the necessary compromises involved in a social-democratic government operating in a capitalist system. He has a barely concealed contempt for the type of politics now on offer from the Labour leadership, which regards government as a den of iniquity and power as a miasma of sin. For him, politics is all about getting into power and trying to make the world a better place within the inevitable constraints – a philosophy I share.
Ed Balls is very clear that his defeat in his constituency in 2015 was a prelude to a funeral and life outside politics. I don’t believe a word of it. I suspect that the funeral was a prelude to a resurrection. This book will help him rise from the dead.
Vince Cable was the Liberal Democrat MP for Twickenham (1997-2015) and the secretary of state for business, innovation and skills from 2010 to 2015
This article appears in the 28 Sep 2016 issue of the New Statesman, May’s new Tories