John Rentoul: This is new all right. It just isn't enough

Labour's acceptance yesterday of the Tory case for cuts is welcome, but Miliband and Balls still look like a losing team

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Ed Balls caught up yesterday with where the Labour Party should have been 16 months ago. It was an important moment. First, because saying, "We are going to have keep all these cuts" changes the balance of the debate. As with many important shifts in a party's position, Balls pretends that he has said nothing new, and that if we had been paying attention we would know that he said all this – not in so many words, obviously – in his party conference speech last year. But it is new all right, and necessary.

Second, it is also significant that Balls said it. At the end of a week in which the party leader gave what was billed as an important speech in which he said nothing at all that I can remember, it is clear where the intellectual force is coming from. Naturally, Balls and Ed Miliband agreed the new position. For all we know, it may have been Miliband's idea, but it doesn't look like it.

At first sight, it looks as if the Shadow Chancellor's acceptance of coalition spending cuts is setting the tempo – pushing the opposition argument ahead, taking the party and journalists by surprise. That is certainly something that a good opposition has to do, but this is so late, and so much an acceptance of the obvious, that it is not going to achieve much "cut through" – a phrase that Balls himself used recently of his leader's attack on Rupert Murdoch. (Balls said, witheringly, that he did not think his constituents in Morley and Outwood noticed it – although, he could have gone on to say, The Sun certainly did: it ran "Block Ed" as its front-page headline after Miliband paid tribute to the presenter of "Blackbusters" on Twitter.)

Keeping the coalition's cuts is a statement of the obvious because, by the time of the election, public spending will have been cut. It may be wise to keep half an eye on the possibility that the coalition will collapse and that Labour may need to fight an election earlier, but it was even wiser for Rachel Reeves, Balls's deputy, to say in an interview yesterday that "there is still a lot of work for Labour to do" before it is ready to fight an election. In 2015, Labour will have to set out its plans for what happens next – it may promise to reverse one or two cuts, but mostly it will be starting again from a new square one. So the effect of Balls's change is that it should help to shift the party's default setting. Does Labour go on saying, as it has done for the past 16 months: "Oh, no, we wouldn't do that"? Or does it look ahead and focus on what Labour would do with the finances that it would inherit?

There are problems, however, both with accepting the cuts so late and with putting Balls forward to do it. Because Labour has spent the past 16 months appearing to oppose each and every cut, it is harder to convince floating voters that it has converted to the cause of fiscal responsibility. I know some members of the Shadow Cabinet have tried, and Jim Murphy, the Defence spokesman, may have helped force yesterday's shift with his plans for £5bn of cuts in defence spending earlier this month.

However, the leader or Shadow Chancellor has to say something like this, and often, for it to have any impact. And it makes it harder if the person trying to persuade the floating voter is Balls, the Shadow Cabinet member who is most closely identified with Gordon Brown's denialism. Brown wouldn't use the cuts word and denied that it was a mistake to go on borrowing money before the financial crash.

It will not matter much at the next election that Labour was right to argue for cutting spending less far and less fast. Depending on what happens to the eurozone over the next three years, there may be a case then for more borrowing to provide a Keynesian stimulus in Britain, but we cannot know that yet. In the meantime, what Labour needs to do is to show that it can be trusted with the public finances, and to make some tough choices that show that its values are different from and better than the Government's.

Yet when Balls was asked yesterday what cuts Labour would make that the Government would not – which is the implication of accepting the cuts overall – the examples he came up with were not paying to reorganise the NHS and cutting police budgets. The first is irrelevant, on his own terms: the NHS will have been reorganised by the next election; it may look like a management awayday gone horribly wrong, but it will be the mess that Labour will inherit. As for police spending, I am prepared to put "failed to reform the police" on my long and eagerly awaited list of things that Tony Blair did wrong, but a promise to cut spending on law and order, even if police numbers were unaffected, is unlikely to persuade the voters that Labour values are theirs.

Labour should have said from the moment the coalition was formed that it did not agree with its plans to cut spending, but that it couldn't promise to reverse any cuts, that it accepted cuts were needed, and that it would even make some cuts that the Government would not.

It should have proposed deeper cuts in welfare spending. The winter fuel allowance, a benefit paid to pensioners regardless of how rich they are, is an obvious target. Labour could also have exploited the disagreement between coalition partners in the run-up to the Autumn Statement over the uprating of out-of-work benefits at a time when in-work tax credits are being frozen. George Osborne, the Chancellor, was worried about lessening the incentives for people on benefits to take work, but he was forced to uprate benefits by the Liberal Democrats.

Playing catch-up is better than staying off the pitch altogether and hoping that the pitch will move, but the two Eds are so far behind where they need to be that yesterday's welcome advance will have done nothing to deter those who argue that Labour needs to field a different team.

twitter.com/JohnRentoul; independent.co.uk/jrentoul

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