Whatever happened to Jobs and Growth?

22nd September, 2014 3:54 pm

I wasn’t going to write about the Ed Balls speech today. The pre-briefed announcements had left me underwhelmed, and one in particular – freezing child benefit – had left me furious. Spending is clearly going to be constrained over the next Parliament, and difficult decisions will need to be made. But what sense is there in balancing the books off the backs of children, many of whom weren’t even born during the financial crisis that has caused such hardship. Are we, the “cost of living crisis” party, really daft enough to believe no-one will notice when we make real terms cuts to benefits for parents? Do we not think that this – like real-terms pay cuts for public sector workers – might blow a hole in the “cost of living” line of attack?

Balls Bingo Tax 2014-03-20 15-25-57

But angry as this made me, I decided to wait for the speech. Balls has always been a strong conference performer, peppering his speeches with gags and balancing the positive with the negative to make an otherwise uncomfortable Labour audience leave the hall if not happy, then at least sated.

But this speech, when it came, contained an even more damaging nasty than the pre-briefed announcements.

Remember “Jobs and Growth”? Ed Balls spent his first few years as Shadow Chancellor banging the drum for Jobs and Growth. No speech that he gave was missing that key phrase, no opportunity to attack Osborne for his failures on Jobs and Growth were missed. It was the centrepiece of his economic plans and his touchstone mantra.

And yet today he appears to have sacrificed “Jobs and Growth” in a capitulation to Tory attacks on Labour’s economic record. The man who once gave the Bloomberg speech has now signed up for Tory spending plans without the crucial wiggle-room of borrowing for capital spending.

There will be no manifesto commitments that borrow to fund capital spending.

For many in the party, the only reason for stomaching the adoption of Tory spending plans was the understanding – or at least, the hope – that Balls would use borrowing in capital investment projects to boost growth. Building schools, homes, road and railways costs money, but it also has a significant growth multiplier that means every pound borrowed and spent repays itself many times over – an economic dividend that a Labour government and the British people could reap at a time of hardship. And this kind of investment in the future of the country – investments that stand the test of time and deliver for the future – seemed to be precisely the direction of travel the party under Miliband had planned.

Borrowing for growth might not be an easy sell, but it’s sound economics. A Labour government that was able – for example – to offer housebuilding and the knock on of jobs and growth that entails – could offer a credible story of national renewal that activists could be enthusiastic about and take out into their communities and workplaces.

Without that, we risk the spectre of austerity with more austerity to come. A vision that is essentially without hope. Miliband will need to deliver a huge offer tomorrow to offset the disappointment of today’s announcements. But it’ll need to be more than just tinkering. Balls and Miliband are happy to tell us that we’re £1600 worse off thanks to the Tories, but we risk being left with a bunch of £20 solutions to £1000 problems.

If we are to leave here in a mood that is anything but flat this week, Miliband must deliver tomorrow. And deliver big.

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  • David Ward

    He only promised not to put it in the manifesto. Doesn’t mean the same thing as promising not to do it.

  • Danny

    This child benefit bol*ocks might finally give me the impetus to get on the phone and cancel my membership.

    • treborc1

      I would not worry wait until Darling returns then you can leave.

      • leslie48

        Darling’s got more guts and intelligence than to to go for child benefits.

        • treborc1

          I’ll take your word on that, it’s not what I remember him actually saying.

  • treborc1

    Progress at it’s best.

  • David Lewis

    It comes as no surprise that young people don’t default to the left any more.

    Listening to Balls, you could have been in 1962 and not noticed the difference.

    • BenM_Kent

      Hmm Lord Ashcroft poll relased just now – Lab 33% Con 27% btw – shows 18-24 year olds splitting 33% Lab 17% Con.

      • David Lewis

        Very interesting – thank you. I wonder how he selected the sample.

      • “….shows 18-24 year olds splitting 33% Lab 17% Con.”

        I think you’re just confirming David’s point. Young people don’t default to the left any more.

  • David Lewis

    ` that Balls would use borrowing in capital investment projects to boost growth. Building schools, homes, road and railways costs money, but it also has a significant growth multiplier that means every pound borrowed and spent repays itself many times over – an economic dividend that a Labour government and the British people could reap at a time of hardship. ‘

    Labour did that during their last government and what happened? The biggest election disaster for forty years.

  • wycombewanderer

    When the labour shadow chancellor, in his last speech on the economy before a general election, can’t get the lead headline in the Guardian and is ignored completly by the Telegraph, that shows how credible labour are at forming the next government.

    Alongside Rachel Reeves being skewered by Brillo!

  • Ed Balls is a smart guy. He can’t possibly believe all this crap about “reducing the deficit” . The way it works is that government creates money when it spends. When it taxes it destroys it. A surplus means it destroys more than it creates which is logically impossible except over a short time-scale.

    All money created by government must eventually come back to be destroyed after it is trapped in the government’s very efficient tax net. Where else can it go? It can be temporarily reprieved from its eventual fate if it is saved, either by ‘prudent’ individuals or companies, or in the central banks of the big exporting countries.

    So if he wants to “balance the books” he needs to stop people saving or buying imports. To do that he needs to make us all very poor. If that’s his plan he should tell us before the election , not afterwards.

    • Steve Stubbs

      Of course he doesn’t believe it. But you aren’t going to get him to admit what he would really do given the chance, as then he won’t be given the chance. Its what is generally called politics, or the art of lying through your teeth.

  • wycombewanderer

    Remember “Jobs and Growth”? Ed Balls spent his first few years as Shadow
    Chancellor banging the drum for Jobs and Growth. No speech that he gave
    was missing that key phrase, no opportunity to attack Osborne for his
    failures on Jobs and Growth were missed. It was the centrepiece of his
    economic plans and his touchstone mantra.”

    How can he attack the government on jobs and growth when there are jobs and growth?

    • If zero hours contracts are classed as jobs, then I suppose we do have to conceded the point that there are indeed more jobs available now than there were a few years ago. If the hourly pay of those ‘jobs’ at minimum wage level (£6.28 p.h.) can be termed ‘growth’ over minimum wage levels which were previously even lower, then we’ll have to concede that point too.

      So Tory economic strategy has been a success after all?

  • Gary Pepworth

    All I am hearing on the news headlines is Balls apologising for “past mistakes”. Something the Tories have been calling on Labour to do and Ed Balls has delivered for them.

    If there was a time to apologise for past deeds (and I don’t believe there is anything to apologise for) it’s not in the run up to the general election. Labour activists are going to have today’s words shoved down their throats from now til the election.

    Whatever his merits as an economist, he is appalling at the politics bit. I have maintained for a while now that this election is going to be a rerun of 92 election campaign. I blamed John Smith then for his shadow budget stunt, it looks like once again all the hard work is going to be undermined by the shadow chancellor.

    • David Lewis

      `Whatever his merits as an economist,’ Any ideas?

    • Gary, I think you’ve got it the wrong way around. As an economist, then what he’s saying at the moment is crap.

      He’s like someone who does know that the Earth is round, but to gain the votes of those who think its flat, he does have to pretend to agree with them. That’s not the way to do it, in my opinion, and I could never do that myself. But that’s probably why he’s a successful politician and I’m not.

  • Duncan Hall

    It’s just so depressing. How do we sell this on the doorstep? All we’ve got to sell is “it’s not the Tories”. You’ll still have cuts; still have austerity; you won’t get a pay rise… but you’ll wipe smug smiles of Cameron and Osborne. It might even be enough but, bloody hell, what a missed opportunity.

    • David Lewis

      The problem is that for Balls the penny has dropped. He really does want to make up for last time or at least convince enough people he is capable of doing so.

      • treborc1

        As a Tory you would say that I doubt to many on here would be agreeing with you unless like you they vote Concervative

        • David Lewis

          People make great errors in acting on assumption and from conjecture.

          I am not a Tory and I do not vote Conservative but I am a realist and I try to think for myself and come to my own conclusions.

          Dogmatists and tribalists, from my personal perspective, are just dupes and useful idiots but very often simply dullards.

          • treborc1

            So whom do you vote for, it cannot be labour it I doubt it’s the liberals do not tell me somebody in the realms of Yankee land sorry Canada

          • David Lewis

            I’m not a tribalist and think carefully before I vote. I doubt if you have ever vote other than Labour?

    • Paul Adams

      I loathe Cameron and Osborne so much it would do it for me – but I agree it is depressing in the long run.

      • treborc1

        I loathed Blair but in the end what labour are casing are the swing voters the middle class, they do not loath anyone they vote for the party they see is beneficial to them..

    • Jamie

      Balls is trying to win over people who would never vote Labour anyway.

      And this kind of Tory-lite nonsense is going to turn off left-leaning Lib Dem converts, who are key to 2015 electoral success. It’s self-defeating and depressing. We should be making the case for capital investment, not giving up in the face of an increasingly irrelevant Tory press.

      • leslie48

        As if this would win back the Scots Labour vote too…

    • IAS2011

      I agree, Duncan.
      Leadership is most certainly NOT at the helm when it comes to the Labour party.

      How frustrating this is to many who desperately seek the VOICE that is willing to harness theirs, the aspirations for growth in social mobility that reflects the voice of those they claim to be supporting… and the knowledge – even understanding – of the policy failings that have done so much to FAIL and hinder so many people – those who have seemingly been forgotten by ALL political parties.

      Labour leadership is WEAK until it shows a BOLDNESS to confront what is REAL, Challenged and Progressive – the ‘ordinary’ people who remain ambitious, determined and resilient amid the failings and the objectives.

      Who is fighting for such people? I thought the Labour party was supposed to be!

  • Dan

    The writing has been on the wall for more than a year now, ever since summer 2013. They just completely lost their nerve and capitulated to Tory economic thinking completely, even more so than Blair ever did (he atleast always defended the principle of government spending even if not redistribution or workers’ rights or high taxes for the rich). And the saddest part is, the whole exercise was intended to boost “economic credibility”, but instead it’s only boosted the Tories’ credibility because it allows them to point and say “see, even Labour admits there’s no alternative, so we must be right”.

    The one saving grace at the moment is that some of Labour’s candidates for next year are actually surprisingly good — there’s quite a lot of people who’ve worked for charities and who (I hope/think) might actually see politics as a matter of principle and something that affects people, rather than a game to “outfox the Tories”. Certainly, the secret poll of new candidates for the Sunday Politics yesterday shows they have views that would give the Progressites seizures.

    • David Lewis

      Well that is reassuring.

    • wycombewanderer

      Most of whom have worked for labour before, and were just avoiding being unemployed after labour were kicked out in 2010.

      That’s why I give nothing to any national charity any more.

  • Charlie_Mansell

    Just read the speech http://press.labour.org.uk/post/98137818419/speech-by-ed-balls-mp-to-labour-party-annual and whilst there was an acknowledgement that central government needs to devolve “Yes, we do need to change our constitution and reform and strengthen our union in a fair way” he did not set out the Treasury’s devolution plan to cities and counties for Tax and charges, delegations and wider prudential borrowing rules as well as employment spend. This is disappointing as the Fabians publish a helpful guide to the issues just a few months ago http://www.fabians.org.uk/wp-content/uploads/2014/08/FabianReview-Summer2014.pdf Sadly Ed Balls and Ed Milliband are missing a trick in reframing the issue to include not just the long-term ‘Constitutional Convention’ offer to England but also a shorter term pre-election 4 nations ‘Reform the Treasury Offer’ to go with the current ‘Scottish promise’

  • Sunny Jim

    We’re frightened of our own shadows (no pun) at the moment.

    If we can’t confidently articulate a higher investment narrative underpinned
    with a responsible approach to generating revenue in terms of tax reforms then what exactly are we looking to do?

    ‘Red Tories – we’ll hit you just as hard but smile while we do it’

    • David Lewis

      Does that translate as tax, borrow and spend? That sort of reminds me of something.

      • treborc1

        Yep socialism not Tory-ism

        • David Lewis

          And a wildly successful approach as we all know!

          • treborc1

            Well as a yank I will accept your view on this hahahahah

          • David Lewis

            A yank, you dullard? I was born and grew up in the worst part of Brixton.

  • David Lindsay

    His father was a very brave man, going to teach at Eton with a name like that.

    Little Balls is today attracting considerable anger for his commitment to continue the freeze on Child Benefit. That anger is correct.

    He also talked about “devolution to the cities and counties of England”. On that point, he is correct, as he also is to identify the English grievance, where there is one, as fundamentally economic, and as directed at least as much against Westminster as against Scotland.

    Moreover, Labour now has a far tougher policy on immigration than the Conservatives have. Remember, if your answer to that one is the four-letter non-word, then you have no interest in politics.

  • David Merrill

    There is not credit crunch facing Britain, The deficit in itself will never be a problem for Britain. Why? Because Britain has a sovereign currency. It can never run out of GB pounds. And there is plenty of slack in the economy. Britain should initiate a public Job Guarantee, offer a job at a fixed, uniform, living but minimal wage to all those willing to work. This policy is great for tackling social injustice. It is also great for establishing macro stability. Such a policy also frees the British state from its dependence on the great social powers behind neoliberalism. Have a look into the nature of money, state finance, the interaction between the central bank and national government. Search out Modern Money Theory (MMT). You will discover it is as I have described. Time to throw off austerity which in Britain’s case is completely self-imposed. We do not have the excuse of being forced to use someone else’s currency which would be case if we were in the Eurozone. The threat that UKIP and Le Pen pose should motivate everyone to cast aside their financial and monetary orthodoxy. Full employment is the best answer to the right, a lesson somewhat learned after WWII but now largely forgotten.

    • Steve Stubbs

      Good theory, tried extensively in the Eastern block and Russia, and failed miserably. We may be able to print pounds sterling till the cows come home, as Peter has pointed out on many occasions, but we can’t print the foreign currency we also need as as the pound sinks through the floor through inflation caused by excessive printing. Remember we oly produce internally about one third of our current food requirements, and import gas, oil and electricity as well. All paid for in someone else’s money.

      • PaulHalsall

        We produced around 70% of our food, and that has been the case for decades. I am no advocate of autarky, but the UK now could almost certainly supply all its own food *needs*.

        In the period 1918-1939, the UK did only produce about 30% of its own food, largely because food imported from the Empire, economic empire (esp. Argentina) and the USA was much cheaper to produce and important than food in the UK and agriculture stagnated.

        • Steve Stubbs

          “but the UK now could almost certainly supply all its own food *needs*.”

          Thank you for that information, is that by volume or value? Can you point me to the stats for that?

          Of course we could, but it would be a lot less varied and much more seasonal diet. Bit like we used to have in my youth, (I am 67) before we started air-freighting food all round the world. Not sure how the consumers would like that! We could use a slogan like “Dig for Victory”.

      • David Merrill

        We pay for imports in our own currency, Steve. We can import because other people want GB pounds. This is so because GBPs are somewhat of a reserve currency and this may continue for a while. When the world does not want any more pounds, then the UK can shift over to producing for export. Of course, I am not advocating excessive printing and of course we do not print but simply credit electronically bank accounts. The policy I recommend is about employing those who want to work at a fixed uniform living but minimal wage. I imagine you would like these sort of people who would want these sort of jobs to be in employment. And I imagine as well that you would not want the stability of the pound to be secured at the expense of those at the bottom of society. There are plenty of other ways to protect the pound than by maintaining large numbers of unemployed. I encourage you to see the Job Guarantee is a great emancipatory programme.

        • Steve Stubbs

          Yes to an extent, but they only want to hold pounds while they are worth something. If we over-print, whether paper or electronic, the value will fall and holdings will be sharply reduced. We will always have to pay for a lot of stuff in foreign currency.

          Governments have been trying to get manufacturing shifted to exporting for donkeys years, to no great effect, as we tend to produce stuff that is either too costly against products from the far east, or less technologically advanced that our neighbours. Yes there are honourable exceptions, but not that many. Anything that is manpower extensive, forget it, we can’t compete.

          I want everyone in employment who wants it. However if the pound gets even less stable (have you seen a graph of its value trend over say the last 30 years?) it is those at the bottom who will suffer, as always. To that extent, they have to be real jobs that add value, not simply makeey-work to keep people employed at the expense of the others. There is no such thing as a free lunch.

          I recently visited the DDR museum in Berlin, which was a fascinating insight into how the East Germans lived before the fall of the wall etc. Everyone had a job of some sort, even if it was spying for the state against their neighbours, or guarding the fences, walls and minefields that were there to keep the population from leaving. Everyone got reasonable or even good wages, but mostly they could not spend it as there was nothing to buy, or worth buying. Their currency was worthless outside of the DDR. Subsidised staples meant that some farmers were even buying baked bread and other products to feed to their animals, it was cheaper than buying grain.

          If there were easy answers they would have been tried by now. Those that were tried, failed.

          • David Merrill

            If you are interested in manufacturing for export, I recommend Mariana Mazzucato’s newish book on The Entrepreneurial State. She suggests that success has always involved a large state presence and so success going forward will require the same. You are right, UK’s recent record on this front is not good. On employment, the private sector only brings about full employment if ever only very briefly. Therefore, as I believe that employment is a right, the state has to make up the difference. There are also a lot of unmet needs even in the UK. The problem is that these needs have no solutions that are commercial. So again there is a place for the state. Somehow the state has to find a path between the East German option on the one side and extensive immiseration on the other. Again, I suggest action effecting the higher reaches of society if action is necessary to maintain the value both domestically and internationally of the pound. The status quo is no good, as too much of it is geared to crony capitalism and bedevilled by stagnation.

      • “All paid for in someone else’s money.”

        That shows your misunderstanding, Steve. When China exports to the USA or the UK they are paid in US$ or UK £. Both Britain and the USA have very similar economies in that they import more than they export.

        The Chinese have the option of spending them or saving them. If they spent them all there wouldn’t be any trade deficit with China. They’d simply buy Scotch whisky or Rolls Royce jet engines or Boeing Airliners or whatever it is that Britain and the USA still makes these days.

        But they don’t seem to want to spend them all. They prefer to save their excess dollars and pounds. So, really, it’s China’s decision, more than our own, that we run the trade deficit we do

  • Paul Adams

    I can put up with being “tough” on spending – not that it is really “tough” to impose pain on poor/sick/disabled people while leaving the wealthy unaffected – provided Labour make up for it in other, non-spending ways, such as ending the abuse of zero-hours contracts, renationalising the railways and increasing trade union powers to redress the iniquity in the labour market.

    • David Lewis

      Is it 1960 still? Good I’m much younger.

    • leslie48

      Of course we could remove CB entirely from all above 50K to 60K arguably if you wanted to target but again controversial

  • David Lewis

    The SNP has increased its membership by 17k in the last three days. Not from the Tories I suspect.

    • treborc1

      Well that should please you… yes being a Tory stooge.

      • David Lewis

        I’m not a Tory or a stooge. You are making a value judgement based upon what you see as evidence but as usual getting it completely wrong.

        But you are of course in excellent company.

  • PaulHalsall

    This speech means that we already know that the next Labour government has failed.

    “Better than the Tories” is, at the moment, the only thing I could think of to defend what we must still call, I suppose, New Labour.

    • treborc1

      I do not think it’s so much New labour, as much as it’s cowardly labour.

  • This is what happens when you allow policies to be vetoed by Parliamentarians who are not accountable to the party nor the movement which helped get them elected in the first place. By allowing a parliamentary veto, a stage managed conference, and a heavy fixing culture to continue, the Movement has gained nothing and lost so much.

    The time has now come for the trade unions to finally come to terms with the fact that simply replacing one parliamentarian with another is not enough, what is required is a complete transformation and democractisation of the party apparatus if Labour Members of Parliament are to implement the policies the Movement believes in.

    As Tony Benn once wrote in his diary, “You can’t go on forever and ever saying you’re a socialist party when you’re not, saying you’re going to do something when you won’t, confining yourselves to attacks on the Tories when it’s simply not enough; people want to know what the Labour Party will do” And I think it’s about time we told them, don’t you?

    • treborc1

      You need to have a labour party which is interested in accepting this, sadly labour today has way to many right wingers in it.

  • leslie48

    What a way to get votes – go after kids, mums and those on lower to middle incomes. Balls should have gone long ago as he was economically damaged goods and many said here he was a liability. Yes- the UK has to deal with its large deficit but to use this as a headliner is just dumb politics. The man’s mad and shows the party has little political hunger to grab power. He should take his penance elsewhere not destroy Labour’s chances. Penance = “An act of self-mortification or devotion performed voluntarily to show sorrow for a sin or other wrongdoing.”

  • Geoff Dennis

    Balls will make “Tough Choices”. One of those choices he won’t make is to scrap Trident replacement even though that will save us £100 billion and 65% of people want it. What a wanker.

  • David Littlewood

    Sickening, but not unexpected. Ed Balls just hasn’t a clue. Why does the other Ed stick with him? This not policy-making, it’s either complete idleness or total submission to the same old neoliberal consensus that has failed us for over 30 years now. Do the Labour front bench want the Tories to win?

  • Redshift1

    Couldn’t agree more Mark. Underwhelmed by the minimum wage announcement. Furious with the child benefit freeze. Ed M better have something good up his sleeve for his speech this afternoon.

  • IAS2011

    What also happened to reinventing the ‘Aspiration Nation’ agenda – something that identifies leadership, acknowledging the challenges and works with the determination for many to achieve social mobility goals?

    Labour has come across extremely WEAK in a time that many desperately need their voices harnessed by GREAT leadership!!

    Why have Labour failed to harness the voices of those they claim to be supporting?

  • RWP

    Sensible economics…you can hardly lay claim to wanting to reduce the national debt and eliminate the deficit if at the same time you talk about borrowing more.


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