Ed Balls is not our economic saviour
The shadow chancellor’s conference speech was big on populism and small on practicalities.
Labour’s chief media cheerleader has been railing against those who say that Labour’s leader and shadow chancellor, Ed Miliband and Ed Balls, have no ideas for the economy. ‘The Eds do have plans’, said the Guardian‘s Polly Toynbee, ‘but a fixed-term parliament means they need not be bullied into revealing all’. As poker players know, keeping your hand close to your chest could be a way of disguising the fact that there’s not much in it. However, the speech by Balls to the Labour Party Conference on Monday offered a few clues as to what he thinks about the economy – and he’s not exactly holding a full house, folks.
Just to save you the bother, here’s a quick precis of Balls’ speech. Labour is really united, unlike the Lib-Con coalition; David Cameron doesn’t like women, pensioners or pasties – but he does like millionaires; the government raised taxes and cut spending too fast, which has ‘choked off’ recovery; the government needs to invest in infrastructure; we need to put ‘jobs and growth’ first; we have been too short-termist and risk-averse in relation to the economy, and now we need more long-term planning.
Now, much of the speech was positively emetic. The cheap party-political point-scoring at the beginning was hardly in line with the conclusion that Balls drew from the success of London 2012: ‘The lesson of the Olympics is that if we approach major long-term infrastructure projects by building a cross-party sense of national purpose, then we can deliver.’
In his speech on Monday, Balls also bemoaned the fact that the Channel Tunnel high-speed rail link was only completed 13 years after the Tunnel itself and that London’s east-to-west rail link, Crossrail, was delayed for decades. Is this the same Ed Balls who was a leading figure in the Labour government from 1997 until 2010? The same government that prevaricated over everything from nuclear power to a third runway at Heathrow? The odour of double standards and hypocrisy is overwhelming.
But, nonetheless, let us try to jemmy the good points out of Balls’ speech. He did admit that ‘the financial crisis exposed deep-rooted problems in our economy’. He did at least recognise that the current planning system is ‘cumbersome’ (though ‘sclerotic’ might be closer to the truth); that a ‘modern industrial policy’ and investment in infrastructure – in things like Britain’s ageing national electricity grid and fast broadband – is much needed; and that in ‘difficult times’, there will be no great Keynesian spending boost.
That said, those problems were there for years when he was in government. Why should we expect Labour to be able to deal with them now? Moreover, his more concrete proposals were small potatoes and came across more like petty pen-pushing than a grand vision. So his ‘clear and costed plan to kickstart the economy’ amounts to taking the money from selling 4G mobile-data licenses – about £4 billion – and building 100,000 new homes with it. Britain desperately needs new homes, it is true. But 100,000 is a drop in the ocean compared with what is required (and even less than the 200,000 extra homes New Labour promised in 2003 but couldn’t deliver). And a stimulus of £4 billion in an economy with an output of roughly £1,500 billion is simply not going to kickstart anything.
Balls was desperate to impress us with his claim that the days of ‘light touch’ regulation of financial institutions – something he championed when he was chief secretary to the Treasury – were over. Now he proposes a ‘full, open and independent public inquiry into the culture and practices of our banking system’ and lambasts the ‘gross irresponsibility and greed of a few millionaire bankers at the top’. Given that the City of London remains the UK’s leading cash cow, this was just intemperate language deployed for populist effect.
Balls’ speech also epitomised some corrosive and anti-democratic modern trends. It seems the way that politicians prove they really will ‘do’ something these days is by promising to have the power and responsibility taken out of their own hands. New Labour led the way on this front by giving the Bank of England independence over setting interest rates. The current Lib-Con government set up an Office of Budget Responsibility (OBR) as an independent (that is, unelected) check on government spending. Balls wants to take this process further by creating new fiscal rules to be monitored by the OBR, and he wants a ‘commission or process, independent of government, that can assess and make proposals on the long-term infrastructure needs of our country’.
In other words, Balls is inviting us to trust him on the basis that he doesn’t trust himself and would outsource responsibility for huge chunks of Britain’s economic life.
It would be nice to believe that Labour could offer a genuine alternative to the current deficit-obsessed government. spiked has argued for some time that the only way out of the crisis is through restructuring the economy to create the conditions for new wealth creation – something the authorities could help along by improving infrastructure and reducing barriers to investment. Rhetorically, Balls seems to be moving in that direction. But in truth, the strongest impulse in modern politics is to restrain, regulate and micromanage while actually achieving very little – something Balls and his colleagues in the New Labour government excelled at.
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