Ed Balls’ commitment problem

By Atul Hatwal

It’s been a tumultuous week. Quite rightly, the attention of the nation has been fixed on developments in Japan and Libya. Domestic politics has seemed less important.

But something big did also happen over here – and it wasn’t the launch of Labour’s opposing, yeah-but-no-but, AV campaigns.

On Monday, the two Eds gave a press conference on Labour’s tests for the budget. In the midst of what’s happening around the world, it didn’t get acres of coverage.

Setting aside the sight of head girl Justine Greening leading the Tory response, talking about “gi-noor-mous” holes in credibility on the BBC, presumably before returning to the treasury for lashings of ginger beer, the exchange seemed unremarkable.

But underneath the prosaic was something quite important. Labour developed its approach on the economy.

Before Monday, the position was straightforward. The government is cutting too far, too fast. Labour’s alternative is the Darling plan, halving the structural deficit over four years. In comparison, the Tory plan is to fully eliminate the deficit over a similar period.

So over the course of the parliament, Labour’s policy is for spending to be higher than the Tories to the tune of 50% of the structural deficit. This might not help reassure the 41% of voters who solely blame spending by the last Labour government for the cuts, but it is at least clear.

Based on this approach, Labour might have reasonably been expected to commit to reverse some cuts each year in the run-up to the next election, presenting an alternate view of how Labour would have managed the economy.

But on Monday, when questioned about turning back the cuts, Ed Balls was unequivocal,

“Ed Miliband and I are clear on this; no commitments to reverse these changes, they would be irresponsible”.

Red lines had been drawn: no reversing what’s already passed, no new open-ended spending commitments and no rabbit-out-of-the-hat plans where cuts are less fast and less deep.

In one sense it’s an understandable policy. As shadow chancellor, Ed Balls needs to prevent shadow cabinet spending commitments locking Labour into long term positions, four years off an election. The economic situation might be radically different and Labour needs to preserve its room for manoeuvre.

But this new hard-line stance, ruling out spending pledges, seemed to cut across the established economic position.

If the party isn’t going to reverse the cuts or publish any plans that explained how money would be spent differently, the implication is that Labour will be sticking to the same spending plans as the Tories.

Quite different to the higher spending in the Darling plan needed because the government was cutting too far and too fast.

So what is the truth of Labour’s position after Monday’s presser? Are cuts now in, or still out?

It was a question asked in various forms, several times at the press conference and in the interviews afterwards.

The answer was neither.

The confusion arises because of an unspoken part of the shadow Chancellor’s position.

Although there are no promises to reverse the cuts, that’s not the same as accepting them.

Ed Balls’ one hard target is halving the deficit, and any combination of lower spending, increased tax revenues or higher growth could deliver him this goal.

For example, come 2013, if growth is poor, he might want to accept the majority of the cuts to achieve the target. Equally, if there’s a rapid upturn in the next year, and government revenues rise, lots of services could be reinstated while still halving the deficit.

Balls wants to wait and see the lie of the land before making his choices.

Labour isn’t even going to have a shadow budget where detailed alternate plans on the deficit and spending would have to be published.

It’s an economically rational approach, certainly given that the opposition doesn’t have to implement any real economic policy.

But there’s a political problem.

“Hang on, I haven’t decided” is a hard pitch to make when the government is making decisions now and people are crying out for some leadership.

It means that Labour’s immediate alternative to the consequences of “too far, too fast” is a silent vacuum.

When faced with demands to protect sure start centres or police numbers, the answer in the coming months and years is going to be “no commitment”.

To the people asking the question, in many ways, this is even less satisfactory than just accepting the Tory spending plans. At least that gives certainty.

Labour has launched a raft of policy reviews, engaging party members, the public, businesses, academia and the voluntary sector. But if any of these reviews produces a consensus around ideas which require new spending, a shadow treasury red line is going to go through the proposals.

The challenge of holding to the wait and see line was evident in Balls’ own interviews this week.

Under pressure on the Tory charge that Alastair Darling’s spending plans this year would only have been £2bn more than the government’s, the shadow chancellor’s response was that budgets were set on a year by year basis and no level of cuts were pre-ordained in any particular year.

He hinted heavily that, given that borrowing was £20bn lower than forecast, the extra room for manoeuvre on spending could be used to reduce the impact of cuts.

But Balls couldn’t go any further than a nudge and a wink, because of the need to wait and see.

The result was that the Daily Mail had enough to write a story the next day about increased Labour spending while anyone wanting to know what Labour would actually do was left with more unanswered questions. Did that mean Labour was going to spend more, or not?

Monday’s press conference set a pattern of questioning that will be repeated over and over again in the coming months.

It is sound economics to wait before making definitive commitments, but politically there will be a cost to not having a final position on individual cuts and not saying which services the party would protect.

The uncertainty will breed hope and doubt in equal measure.

If Labour accepted Tory spending plans, then once a cut is made, that would be that, and no one would be in any doubt about reversing it. If Labour clearly set out spending plans where some cuts were accepted and others reversed, there would be similar clarity.

But because Labour’s position is to delay decisions on the extra spending till later in the parliament, the door has been left ajar for any cut to be turned around.

Hope dwells eternal, next to doubt because not everything can be funded. Like the stereotyped man of chick-lit rom-coms, Labour just can’t commit.

The danger is that by the time the shadow chancellor wants to settle down, the electorate will have gone and found someone else.

Atul Hatwal is associate editor of Labour Uncut.

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7 Responses to “Ed Balls’ commitment problem”

  1. Tacitus says:

    Some good points here. If Labour sits on the sidelines, the hundreds of thousands who will attend rallies on March 26th will feel Labour has sold out. Understandably they will argue that if Balls cannot, or will not commit to reversing these unacceptable cuts, then they will have to seek an alternative. Where that alternative will coem from remains to be seen – but it certainly won’t swing to us.

    If Miliband is still commited to rebuilding the Labour Party, he will need to recognise the grass roots membership and those who were once loyal to the party are looking to him to reverse Tory measures. Nothing less will be acceptable.

  2. AnneJGP says:

    An interesting article, Atul, thank you.

    I agree that the wait & see approach is sensible; there’s just no way of telling how the economic and social picture will have changed by the time of the next election.

    Mr Balls’s position on this is grounded in the previous Labour government’s Deficit Reduction Plan. If that had provided even a sketchy outline of what would be cut to halve the deficit within a parliament, he’d be able to refer to it now. Still, that’s water under the bridge.

    It seems to me that it would be worth Mr Balls’ while to prepare a stance on the broad-brush outcomes of the present government’s aim to eliminate the deficit within the parliament. The outcome will be one of: overshoot; undershoot; just meet.

    So, in those 3 scenarios, what is Labour considering doing? If the deficit is more than eliminated, so that we can begin to pay off debt, would Labour want to return to deficit spending? If the deficit hasn’t been fully eliminated, would Labour choose to increase the deficit spending? And if the deficit has only just been eliminated, would Labour choose to return to deficit spending?

    All 3 scenarios end up posing the same question: what attitude will the next Labour government have to deficit spending? That is the real issue, and someone as intelligent as Mr Balls should be able to to find ways to explain it in terms that will satisfy his audiences.

  3. Rob Marchant says:

    Atul, on the same point: as Luke Akehurst pointed out, at the 26th demo the overall message will be “no cuts”, and our distinct message is “cuts but not as much”. This is further weakened by “but we woudn’t reverse them anyway”. Three separate messages – where does that leave us? I fear EM speaking at the demo will leave us very vulnerable.

  4. Keith says:

    Balls is damaged goods. This man spent too much time practicing the dark arts for his previous master to make a good future chancellor. He will always be remembered for this and that is why Milliband would do better to replace his shadow chancellor with someone else.

  5. Richard says:

    “Labour has launched a raft of policy reviews, engaging party members…”

    So we keep being told, but I know of no member in any CLP in the entire regional party who has been consulted. Even the Lib Dems have got a look-in before party members.

  6. Edward Carlsson Browne says:

    Rob: It leaves us vulnerable, but not appreciably more so than we would be already: Labour can’t control the TUC’s message and there’s no way we can stop the Tory press eliding Labour with the unions – even something as drastic and shortsighted as breaking the union link wouldn’t do that.

    There’s also the issue of how we’d have responded to the demo if Miliband wasn’t speaking. We wouldn’t be able to ignore it, after all, and condeming it wouldn’t be practicable – as well as being bad political strategy, given that the votes we’ll rely on for a good result in Scotland, Wales and the Mets this year (the big political prizes in terms of headlines) are going to be more leftwing than the votes we’ll need in 2015.

    I’m not sure how much we can engage with and try to change ‘no cuts’. The parts of the Labour Party which view that as a viable policy are those which will be least likely to respond to pressure from central office and much of the impetus for the idea comes from those who are actively hostile to us. But certainly there’s a problem with “cuts but not as much” and “which we won’t reverse”. Indeed, “cuts but not as much” does seem like a weak political line, for all that it’s the most feasible economic line.

    I think the problem is that there’s no way to resolve this dilemna without making too drastic a move. “No cuts” is an impossibilist gesture but if we accept too many cuts then we drive away those bits of our old core support that are only just starting to return – and we couldn’t compensate for that by gaining with swing voters, because admitting mistakes might detoxify us but it wouldn’t immediately lead people to consider us again – because whilst a message of “sorry we screwed up” might be well-received, implicit in that is a statement of lack of competence.

    Whilst I wasn’t keen on it at the time, I think the solution might have been to have been more explicit about our planned cuts before the election in an attempt to call Cameron’s bluff (and possibly to set a few bear traps for the incoming administration). But where we are now, there are no easy solutions or quick fixes. I think we just have to ride it out, and attempt to draw attention away from our weakness here by attacking the government hard. Cameron can throw it back, but he only has one line, and that doesn’t break new ground. We can try as many lines as it takes to detoxify him as much as us. Only once we’re there do we have a chance to remove the stench from ourselves without the risk of it backfiring on us.

  7. william says:

    Interested in winning the 2014 election?Prepared to stop talking to each other, rather than the electorate?Admit the past,fess up , more than half of today’s grief is down to one Gordon Brown.All the opinion polls . focus groups always come to the same position.Deck chairs and the Titanic come to mind.The government has no principled opposition on the economy.This is a disaster for the swing Labour voter.The world is bigger than north London scrabbling like children.

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