Fiscal dissonance

Hopi at Home

By Hopi Sen

First, the good news. It’s much, much easier to follow Labour party conference as a weekday office drone than if you’re relaxing over the weekend. today I was at work, but judicious application of twitter feeds, rolling news channels and regular scans of the various live blogs and Labour websites meant I was pretty much up to date with what was going on.

Plus, the extra good news – Conference sessions act as a pretty good background hum for trying to do real work. You can pretty much tune out the ebb and flow of most speeches and perorations, switching on only when someone says something brilliant, utterly crazed, or turns out to be Thirteen. (There’s one every year, though this year’s seemed to be more acute, more at ease and more fluent than most. If he had been an attractive sixteen year old girl, he’d be quite likely be on several front pages tomorrow.).

So after a rather frustrating start to my PC based conference journey, I felt considerably more plugged in today. Of course, this was helped by the fact that only really one story mattered all day. What was Ed Balls going to say, and would it work?

I think our Shadow chancellor effectively made two speeches today. In the first, he talked about what was happening now, and what the government should do about it. Right now, we face a crisis of demand, of international action. the government isn’t doing enugh. A Labour government would act. We’d tax the bankers a little more, find some money left over from unsuccessful Tory schemes, and use that money to pay for more houses, more training, a temporary VAT cut on DIY and suchlike, lower national insurance on small businesses and so on. Sensible, small, demand drivers, which wouldn’t prevent total economic collapse, but would make a difference to peoples lives, if implemented.

Which is where the rub comes. All of those plans are irrelevant. We’re not in government and won’t be for three or four years. When we are in government the fiscal situation will be very different, for better, or worse.

The only thing that’s certain is that we won’t face the crisis we have now, but a different crisis altogether. (Even if it’s a Japan style lost decade, the very fact we’ll have been in it for half a decade would constrain any future Labour governent). The great certainty of Ed Ball’s five point plan is that it will only come to fruition in an alternate universe.

So much for the first speech. Yet Ed Balls didn’t just talk about what he’d be doing if he was sat in the big chair. He talked about what Labour would after the next election when he very well could be in the big chair. Here the tone was markedly different. Instead of pledges and promises, we had restraint. A Labour government would impose tough fiscal rules. the OBR would monitor them. We’d pay down debt with any share windfalls from Banks (that’s mutualisation gone, then.)

The key quote was: “we will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to – to get our country’s current budget back to balance and national debt on a downward path” So not only would the next Labour government eliminate the structural deficit, we’ll eliminate the whole deficit over time, go into the black and start paying down debt.

This is a huge strategic shift for the Labour party. As a believer in Fiscal Stability (Which is, I stress, not the same as being a Tory, or a friedmanite, or an Austrian Economist) I’m delighted about this. It means that when I write my “Progressive Fiscal Stability” article I will be loyally coforming to party policy, which always makes me happy. It’s a really big deal, that commitment. It totally defines the nature of any prospective Labour government, and unlike the five point plan, there’s a non-zero chance it might actually happen.

But again, there’s a rub. We’ve made a big strategic decision and commitment. We’re not just going to do Darling, we’re going to go beyond him and into the Black. But would you notice that from the tone of Conference over-all? As I was watching Ed Balls declare for Fiscal moderation, I got a text message from Ken Livingstone promising to cut bus fares. Plus all the things we’re talking about at this conference mean more spending right now, which is counter-cyclically right, but sounds a bit odd. “Spend much more money now, and you’ll do a lot of saving later on, honest” is the sort of thing that gets Financial advisers in trouble. And then, what rules will we be bound by? Tough ones, I understand, Independently monitored. But I can hear Canary Wharf Business journalists snorting about Golden rules from my house in Greenwich. Surely explaining the bounds we set ourselves should come ahead of the reasons for bursting out of them?

There’s also a general dissonance too. We’re talking about building a long term economy in our briefings, denigrating the short term and the fast buck, but we’re focusing people’s attention on the short term in the hope of a fast vote. If we’re serious about the post 2015 fiscal framework, shouldn’t have been where the story was and where the attention went today?

Now, Ed Balls is a far smarter politician than I, so I expect he has a reason for all this. One could be that he feels he needs time to bring the party with him on Fiscal Stability. He joined Gordon Brown when the then Shadow Chancellor was rigidly limiting the ambitions of his colleagues, which made him less than popular. Alternatively, he could simply believe that voters want to hear that Labour would make things a bit better right away, before talking about the distant future. Or perhaps he thinks there’s no point making a big structral promise now, because no-one is listening.

But is there anyone in the country who doesn’t already know that the Labour solution to the current crisis would involve spending more money? Who are we trying to persuade with our case on that? On the other side of the coin, how passionately committed do we think the party sounds right now about long term debt reduction?

Today, the Labour party made a huge political shift, with enormous fiscal, policy and political style consequences. It’s just we larded it about with announcements which, while not contradictory in fact, we’re strikingly different in appearance.

Still despite all that, I’m much happier today than I was yesterday. Ed Balls may have a different media strategy for dealing with the cuts, but he has defined he ground for the next election very precisely, and in the right place. Perhaps the challenge isn’t with him, but with those of us who want to see the focus shift there to make it an attractive place for the Shadow Chancellor to focus on.

Oh and one last thing, as ever: compare Ed Balls in interviews with Ed Balls in a set piece speech. Huge difference. If there’s one politician in Britain who’d benefit from announcing his policies in a Q&A or an interview, not amid the bombast of the Conference hall address, it’s Ed Balls. In his interviews, Balls is funny, comabative, witty, and knowlegable. In speeches he gets distracted because he can hear the trundle and thud of the points as his argument goes by on rails.

Stop the speech format and switch Ed something else. Either that, or hire a speechwriter who can get the argument and data out of the way early in order to create easy fluidity or rhetorical punch in the text as needed. At the moment it sounds like Ed is mostly writig his own speeches, and I suspect he could do with an interlocutor. Actually, Ed Balls could do with Ed Balls.