Is John McDonnell's new economic policy just continuity Ed Balls?

At first glance, John McDonnell's line on austerity looks a lot like Ed Balls's. But important differences lie beneath the surface.

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Continuity Balls? That's the first impression given by Labour's new shadow chancellor, John McDonnell, who has kicked off Labour party conference with an interview in the Guardian in which he commits the party to voting for George Osborne's fiscal charter.

McDonnell has committed Labour to balancing the books, but with a commitment to do it in a "fairer way". And, as with the era of Ed Miliband, borrowing to invest - on big transport, energy and infrastructure projects - remains on the table. 

So what's the difference between the Miliband era - or, indeed, the approach favoured by Andy Burnham, Yvette Cooper and Liz Kendall during the leadership campaign? The answer seems to be that while Miliband, Burnham, Cooper and Kendall all envisaged a degree of spending cuts to departmental spending, accompanied with transport and infrastructure projects designed to create high-paying jobs and close the deficit that way, Labour will now seek to close the deficit through tax rises. 

Jeremy Corbyn himself floated the idea of tax increases during the leadership campaign. Writing in the Telegraph, he pointed out that the basic rate of tax, at 20p in the pound, is considerably lower than it was in the 1980s, when it was 25p to the pound, while the top rate was at 60p, as opposed to the 45p rate. That's a far cry from the days of Miliband-Balls, when Labour went into the election ruling out rises to both the basic and higher rate of tax.

Stephen Bush is political editor of the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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