The choice is not only whether or not to borrow – but how much, and for what

I’ve written this morning’s Thunderer column for The Times(£), arguing that Miliband and Balls need to make the case for more borrowing – explicitly for infrastructure – clearly and confidently.

The choice is not only whether or not to borrow – but how much, and for what.

After all, George Osborne is already planning to borrow £78 billion more in 2015 than he originally planned.

And whilst Ed Balls has committed to using the 2015/16 Tory spending plans as a starting point, he has yet to say that further borrowing post-2015 to stimulate a flatlining economy is being ruled out by a future Labour administration.

Both Balls and Miliband have begun to make tentative steps towards arguing in favour of borrowing for growth, jobs and investment, but not yet forcefully or convincingly enough. Such a thing as “good borrowing” – adopting Keynesian principles to stimulate demand – does exist. And it can have positive outcomes in terms of investing in bricks and mortar projects – most notably housing – that produce a tangible asset for the economy.

Of course, doing so would also bring down the housing benefit bill over the medium and long term.

Yet the word that dare not speak its name – borrowing – is the only realistic means of achieving that end point. Instead of speaking in hypotheticals like Balls did last week about “400,000 affordable homes across the country, and support over 600,000 new jobs in construction, including 10,000 apprenticeships”, Balls should commit, now, to such an investment, and begin winning the argument that this is a credible plan for growth. As I wrote in The Times this morning:

The British Chambers of Commerce (not known as a hotbed of either Keynesians or socialists) has noted that each pound invested can create £2.09 of extra economic output. The BCC has already called for the Government to “seize this opportunity and build the homes needed for a sustainable future, and a lasting economic recovery”.

Far from being an idea that is outside of the political mainstream, rapid expansion of house building is a plan backed by a mainstream body that speaks for British business interests.

Labour can’t wait until January 2015 to make the case for more borrowing, and expect to win an election a few months later. That’s not enough time to win the argument in the face of what would be an immense Tory-led media onslaught. And right now there’s clear public support for borrowing to build – as our polling last week showed.

The Labour leadership has the opportunity not only to do the right thing – for those who cannot afford a home of their own, as well as for the British economy as a whole – but to put the Tories on the wrong side of public opinion too.