Steve Richards: The truth about Osborne and Balls

Osborne will insist there is no Plan B until he has to implement one. He changed policy so often in opposition he will do so again

Share
Related Topics

In judging politicians, look at the policies and not the caricatures presented by media orthodoxy. The caricatures change from time to time and are nearly always inaccurate. The policies are there for all to see. Nowhere is this scrutiny more necessary than in relation to the battle over the economy, one that has become more vividly urgent with the appointment of Ed Balls as shadow Chancellor, and this week's growth figures that suggest the economy is flat-lining at best.

The elevation of Balls was greeted with a frenzy that is both flattering and potentially dangerous for the new shadow Chancellor. Most of the assessments that accompanied his return to an economics brief were patronising and set him up for a fall.

I must have read a thousand times that Balls is an "attack dog", well suited for opposition, a brilliant parliamentarian who will score some short- term hits against George Osborne, and in doing so will fire off some indiscriminate bullets against his own colleagues. The implication of this assessment is that in the end Osborne is a more considered strategist, pursuing a more thought through economic policy, and is suited for governing.

The reality is much more complicated. Osborne is a witty and quick-thinking parliamentary performer who will sometimes get the better of Balls in Commons exchanges. Balls is quick at the Dispatch Box and will be alert to any flaw in his opponent's argument, but he will not always win these encounters. Unquestionably he will pursue Osborne around the clock, which will be a novelty as the Chancellor has been largely free of scrutiny through his time in opposition and since he moved into the Treasury.

But Balls is most formidable as an economist who applies policy-making to the daunting demands of political context. My book Whatever It Takes highlights the degree to which Balls worked on the policy detail that restored Labour's busted credibility on the economy after its fourth election defeat in 1992. After acquiring a stable macro-economic framework, Labour acquired space to invest more in public services and retain the support of enough voters to win elections, a rare combination and one that currently eludes left-of-centre parties around the western world.

In order to achieve such a sequence, Balls was willing to challenge Bank of England and Treasury orthodoxy, an experience that gives him the confidence now to question the occasionally evangelical and seemingly partisan assumptions of the current Governor, Mervyn King.

Balls's reputation during this earlier phase in his career is a reminder of how caricatures of wilfully misunderstood politicians can change. I recall the normally perceptive David Blunkett telling me despairingly when he was Education Secretary that Balls was a monetarist. He could not have been more wrong. Balls is a Keynesian and had his first row with Peter Mandelson when the latter briefed the The Sunday Times in 1995 that Keynesian economics were dead under New Labour.

More recently, the stereotype of Balls suggests he is at least as bothered about destroying internal opponents as policy-making. This suggests to me that Balls is not yet the complete politician. He would not have allowed such a reputation to form if he were more alert to deadly perceptions. As ever, the reality is more multi-layered. Towards the end of the last government other ministers and advisers were more briefing than briefed against. In one conversation an adviser to a minister spent half an hour telling me that she did not trust Balls and his briefings. I gently pointed out she had spent the last 30 minutes briefing against Balls.

The policy-making of Osborne also presents a more confused picture than his current, partly self-proclaimed, stereotype as an unyielding figure of Thatcherite conviction, striding determinedly through the current storm. Although firmly on the right in terms of his economic beliefs, he has strode back and forth on several occasions already. He began his tenure as shadow Chancellor in 2005 by floating the merits of flat taxes, a policy that even The Economist regarded as too right wing and iniquitous. Next there was an apparently profound shift in Tory economic policy as Osborne told his party conference in 2006 that tax cuts must not be their focus, but economic stability. A year later he made a tax cut his main focus, the near abolition of inheritance tax.

In between he announced sensationally that he would support Labour's spending plans and not change them. When the financial collapse happened he uniquely proposed immediate spending cuts and opposed a fiscal stimulus. As the next election moved into view, further tax cuts were promised. Once the election was safely out of the way he announced that the deficit would be wiped out in a single term, leading to spending cuts on an unprecedented scale.

The challenge in terms of his latest economic policy is still to come. The evidence so far offers him little comfort. Forecasts for growth were revised downwards after his so-called emergency Budget last summer. The Coalition has been exaggerating the dangers of the UK sinking like Greece for so long it is not surprising that consumers have stopped spending before most of the cuts come into effect. The big test for Osborne will not be the next quarter's growth figures, but the third and fourth quarters. They will reflect more fully the consequences of cuts and the VAT increase.

On the basis of actual past records, rather than misleading stereotypes, how will Balls and Osborne respond to the continuing drama? Balls has recognised the dangers of sweeping cuts when a recovery is precarious, but that does not mean he will frame an economic policy at the next election that proposes only tax rises to pay for increases in spending. On the basis of his time in the Treasury and in opposition in the 1990s, tax cuts will be in the mix.

So too will an attempt to expose the Coalition on grounds of competence as much as ideology, although values will play a bigger part after Blair and Brown tested to the limits the language of apolitical managers. Balls will not spend his time plotting against Miliband. He knows the reputation as a schemer set him back from Day One of the last leadership contest and is aware that in politics things happen, such as his sudden appointment as shadow Chancellor.

Osborne will insist there is no Plan B until there is a need to implement one. He changed his policies often enough in opposition to suggest he could do so again. Cameron and Osborne are brilliantly calm when under political fire, such as when Brown almost called an early election, but tend to panic over reaction to policies.

One influential minister said to me when I asked him this week why he was so sure that their economic policy would work: "I am absolutely sure we were right to announce the deficit plan last summer". Perhaps he was suggesting inadvertently that the announcement was necessarily stabilising, but the actual cuts might not have to be so severe if they clearly are jeopardising recovery. Thatcher relaxed her policies in 1981 when they were obviously making matters worse, so there is a precedent from the decade on which their policies are based.

Judged on past policy records Osborne will not stride through the storm with no alternative if the tempest gets worse. Balls will form an economic policy that will be subtler than an echo of Labour's vote-losing past.



'Whatever it Takes' is published by Fourth Estate

s.richards@independent.co.uk; twitter.com/steverichards14

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

English Teacher Norwich

£24000 - £32000 per annum: Randstad Education Cambridge: Randstad are looking ...

Maths Teacher, Chatham School

Competitive Rates of Pay: Randstad Education Group: Our client school in Chath...

Humanities Teacher (History)

Main Teacher Pay Scale : Randstad Education Leeds: Teacher of Humanities (Hist...

Qualified Teachers requiered - Isle of Sheppey

Competitive Salary: Randstad Education Group: Randstad Education are currently...

Day In a Page

Read Next
 

Daily catch-up: EU news, and other reasons to be cheerful

John Rentoul
The influx of hundreds of thousands of eastern European workers has significantly altered the composition of some parts of Britain  

Immigration is the issue many in Labour fear most

Nigel Morris
Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker