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Coffee House

Ed Balls: Labour’s public spending was not a problem before the crisis

26 January 2014

12:47 PM

26 January 2014

12:47 PM

Ed Balls and Ed Miliband have a funny old approach to convincing voters that they should be handed back the keys to the car. They pen pieces about how tough Labour is on welfare spending and make careful (and carefully-worded) references at every opportunity to their promise not to borrow more for day-to-day spending. The Shadow Chancellor prevaricates over HS2 to give the impression that he’s fiscally responsible. He did that again today when he appeared on the Andrew Marr Show, but he also said this:

‘But do I think the level of public spending going into the crisis was a problem for Britain? No, I don’t, nor our deficit, nor our national debt – what happened was a global financial crisis which pushed up the deficit. The question then was ‘who can get the deficit down?’ – George Osborne choked off the recovery, a recovery Labour had delivered but it wasn’t caused by public spending in Britain and that’s just the truth.’

Cue party poppers and celebratory chocolate cake for whoever’s on duty in CCHQ today. It’s an interesting approach, this: being so bullish on something when the polls suggest that the public still blames Labour for the current spending cuts.

It’s also worth reading Ed Miliband’s Sun on Sunday piece to see what his proposition for filling the gap is:

‘If we are to tackle the deficit, we also have to do more to control social security spending. That means making tough choices this Government has ducked, such as scrapping the winter fuel allowance for the richest five per cent of pensioners.

‘But to deal with welfare spending properly, we will need to make big reforms to cut the costs of failure in the system. We will build more homes to get the costs of housing benefit down. We will give employers an incentive to pay workers a living wage to get the cost of tax credits down.’

[Alt-Text]


Now, it’s difficult to disagree with the sentiment in the second paragraph: that the welfare system shoulders the cost of political failure on housebuilding and other matters. But the problem is that these prescriptions will take years to work out (our housing crisis is now, unfortunately too big), or won’t make a big enough dent in welfare spending (as is the case for the tax incentives for employers who pay a living wage). As David Wooding points out in his analysis on the same page, the cash he’ll raise from the reintroduction of the 50p rate and from these measures won’t be enough. And it is Labour’s reluctance to spell out in detail its proposals for cuts and tax rises that makes the Ed Balls line about Labour’s public spending so potent.

P.S. Of course, it would be even more potent and CCHQ would be letting off even more party poppers today had the Conservatives not vowed to match Labour spending plans when in Opposition…

P.S. from Fraser What’s interesting about Ed Balls’ denial is that even the IMF now admits that the problem came before the crash – the below graph shows that the UK economy, under Labour, suffered its worst-ever overheating. It’s IMF data, but the IMF missed this at the time (the graph in pink is what it said then: i.e., no overheating, everything perfect). The IMF has changed its view, in the light of new economic data. Balls has not.

BROWN BUBBLE

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