We already knew Ed Balls was behind Gordon Brown’s economic policy. He devised the
policy on spending that left Britain with the worst deficit heading into the crisis, and wrote the bank regulations that his colleague Douglas Alexander attacked earlier today.
What we have discovered today, from Balls’ first foray into economic policy as Shadow Chancellor, is that he was also behind the old Brown ploy of twisted facts and absurd assertions.
First, he claimed the public finances are better than the Treasury forecast. Yet the independent Office for Budget Responsibility found that the structural deficit – the hole we have to fix -
was worse than Labour admitted.
Second, he described Labour’s economic plan as “credible”, when everyone, from the OECD to the IMF, Britain’s major business leaders, the European Commission, and even the
Governor of the Bank of England appointed by Gordon Brown, said Labour’s plans lacked credibility.
Third, he claims the coalition is going “too far” in putting Britain’s finances back on track. Does that mean he’s not in favour of dealing with the deficit? We all wish the
deficit were smaller, but thanks to his policies, it is not.
Fourth, he claims cuts under Labour would be smaller. Not true. Postponing the inevitable, as Balls would, creates much more pain. The longer we leave the cuts, the more debt and interest payments
we rack up. So the combination of cuts and tax rises under Labour would be bigger, not smaller, and dragged out for years.
Last autumn, Ed Balls gave a speech saying that Ed Miliband’s proposal to halve the deficit over four years would lead to a “double dip”. He is yet to tell us whether his economic
judgement was wrong again then, or whether he still thinks Ed Miliband’s policy would lead us to “double dip”.
After all this, the bit I find most extraordinary is this: the claim that the coalition is doing this because they want to, not because they have to. No serious politician would undertake the
course the coalition has set because they want to. On the contrary, two parties are clearing up the mess made by another. The course is unavoidable.
Balls did get one thing right: good economics is good politics. But when Shadow Chancellors put political ideology or expediency before economic logic, they pay with their credibility. The real
test of credibility for an opposition’s economic policy is what would happen if it were implemented tomorrow. Ed Balls’ policy would put Britain back in the economic firing line with
Ireland, Greece, and Portugal. No wonder Douglas Alexander said the opposition needs a credible alternative.
Matthew Hancock is Conservative MP for West Suffolk.Tags: Coalition, Conservatives, Cuts battle, Debt, Ed Balls, Ed Miliband, Labour, Labour leadership, Spending cuts, UK politics