Peter Kenyon on a persistent Ed Balls problem that has straddled Labour and its leader, Ed Miliband.
Ed Miliband is stuck. He wants to lead One Nation. But Scotland got close to going alone. That independence referendum in mid-September showed Labour voters in its heartland authorities in Glasgow wanted out nearly as much as the Scottish National Party. The United Kingdom Independence Party while tearing the Conservative Party apart, gave Labour a fright in the Heywood and Middleton by-election coming within 600 votes of overturning a so-called solid Labour majority. Four years on from his election as party leader, Miliband is still shackled with Ed Balls as his shadow chancellor of the exchequer, a man he did not want in the job when first elected. A man whom Miliband was reported to have wanted to reshuffle after his 2014 Party Conference. However, as former Conservative prime minister (1957-63) Harold Macmillan replied when asked what was the most difficult part of his job: “Events, dear boy, events”. When the reshuffle didn’t happen it was reported by Labour Uncut, that Miliband’s own leadership was unsettled by the Heywood and Middleton by-election close-shave. His cunning plan to move Balls, and replace him as shadow chancellor with his wife, Yvette Cooper, was reportedly shelved.
The truth
Whatever the truth of that story, it is worth reviewing Labour’s current economic policy stance and asking whether Ed Balls’ dispositions are helping or hindering Labour’s electoral prospects. At the time of writing, the nation is agog by reports of a politically inept demand from Brussels for an extra £1.7 billion towards the European Union budget to be paid in December. Balls was not alone is expressing consternation. But there is a much more revealing policy announcement that illustrates more vividly the ‘dead hand’ at the heart of the Labour Party leadership. That is the issue of a mansion tax on properties worth over £2 million. Forget about the detail. A Mansion Tax is a property tax. Which taxes are most readily ported to local government to collect and spend? Property taxes. What is the Labour Party’s leader’s big offer? Devolving power away from Westminster. What is Balls proposing Mansion Tax receipts should be used for? Propping up the NHS.
That to your correspondent’s mind is treason. It is difficult to argue against the need to invest more money in the NHS. But the mansion tax yield as proposed by Balls is trivial (£1.25 billion) compared with the structural deficit in the NHS budget, now reported at £30 billion by 2020. The Mansion Tax yield was calculated before Balls was confronted with objections from Labour’s London mayoral hopefuls. Well, with the exception of fellow shadow cabinet member, Sadiq Khan, who loyally argued who could disagree with more money for the NHS? All very worthy, but hasn’t anyone on his campaign team pointed out that Londoners have yet to elect a Mayor who followed his/her party’s line. Ken…Boris…? Not exactly their party’s loyalist members. But I digress. Keeping track of every utterance of Tessa Jowell, Margaret Hodge, David Lammy, Christian Wolmar, Sadiq Khan and Diane Abbott – to name all the known hopefuls is a challenge. But the most coherent objection so far to Balls cunning plan to scupper Miliband’s localism agenda came from Abbott. In a carefully constructed lecture to the London School of Economics on 22th October 2014, she proposed that every penny raised in London should go to build affordable housing. Bang on – and is consistent with devolving revenue raising locally. She carefully avoided any criticism of Balls. Very loyal. Just a simple statement of the screamingly obvious to address one of London’s most pressing needs – use the proceeds to build.
The critical policy choice, and there is a choice, is more austerity, or pro-growth. But that’s not what Balls would have us believe. It is not too late for Miliband to free himself from the shackles
Inevitably, that leads on to the question: where is Balls plan to build more homes? One can only weep. Balls has been obfuscating about how Labour is going to fund a single new build for years. Can anyone cite a quote attributable to Balls that states unequivocally how Labour is going to enable the building of a single dwelling? Yeah, yeah, we have all heard the aspirational target – 200,000 dwellings a year by 2020. Wonderful, we all marvel at this audacious ambition. Though, your correspondent is old enough to remember seeing Pathe Newsreel in the cinema (pre-TV for the hoi poloi) reporting Macmillan, as Housing Minister (1951-54), a CONSERVATIVE, announcing a 300,000/year, yes, a 300,000/year COUNCIL house building programme. Balls has yet to reveal how Labour will pay for one dwelling. That policy stance is not credible, and therefore not sustainable.
Housing is only one aspect of the need to borrow to invest. Why shouldn’t the government take advantage of historically low interest rates to start the process of enabling the younger generation to acquire an affordable home whether to rent or to buy? There is no economic reason why the government should not borrow to invest. Miliband’s problem is that astonishingly after four years of ConDem mismanagement of the economy, voters when polled say they trust the government more than the opposition with the economy. In the light of the government’s failure to meet its budget deficit reduction targets, with inevitable higher government borrowing, that represents a major failing on the part of Labour’s main economic spokesman, Ed Balls, the shadow chancellor of the exchequer.
Miliband has set the pace on tacking the cost of living crisis facing millions of Britons. He has lead on promoting Britain’s place in the European Union. At each turn of events he is less than enthusiastically supported by his shadow chancellor. Who is holding back on pressing a living wage strategy? Who is opposing a growth for all strategy? Who wants to continue with Tory spending cuts after the 2015 General Election?
There is no doubt about what the state of the public finances will be in just over six months time – parlous. The critical policy choice, and there is a choice, is more austerity, or pro-growth. But that’s not what Balls would have us believe. It is not too late for Miliband to free himself from the shackles.
Still embedded in Labour’s current policy disposition is an uncritical attitude towards the private sector. Being pro-business is denying the party the means of expressing its own values clearly to the electorate. That toxic combination of market forces and the free movement of labour has driven down real wages to their lowest level for over a century. Labour’s current offer of £8/hour national minimum wage by 2020 is barely adequate to keep up with forecast inflation. There is on overwhelming case for a living wage for everyone by the end of the next parliament. People in work should be able to make ends meet without government handouts. Responsible businesses, large and small, for profit, social enterprises and charities are already paying a living wage. Miliband has proposed tax relief to firms that offer a living wage in Labour’s first budget. But Labour has been silent on setting a good example as an employer when in government. Balls should be ordered to undertake budgetary modelling to establish a rolling programme for a universal living wage by 2020 at all levels of government.
Living wage
Only by demonstrating affordability can the government credibly tackle private and third sector employers that somehow can’t find the means to pay a living wage. A two-pronged approach is required. Working tax credits are a subsidy to businesses. They should be clearly labelled as such. If we have to descend to gutter journalism to change public opinion, who is the ‘scrounger’ – the employee or the firm? Where’s Balls on that issue? In the interests of openness and accountability, the public has a right to know how much every firm in the country is having its wage bill subsidised as result of its failure to pay a living wage. Why isn’t the Public Accounts Committee demanding disclosure? Why isn’t Balls insisting? He appears entrenched by the idea that despite growth in the UK economy (for the haves) there’s no feel good factor for the rest of us. Repeating that mantra is right for today. But what about tomorrow? All that is on offer is more of the same, but managed by Labour. Wow. That’s really something to go out and vote for (not). No wonder Miliband is trying to go over the top as depicted by Martin Rowson in our cover cartoon.
But there is a broader issue awaiting a response from Labour. Miliband proclaims One Nation politics. One troublesome issue rarely heard about (except on my blog) is that underlying many of the tensions in the United Kingdom, is the national cake and how it is divided up. Labour’s answer to the West Lothian question ought to be twin-tracked: a constitutional convention, yes, but in addition a radically different approach to setting the UK national budget.
Each region and devolved nation should be invited to set out its revenue and capital requirements. The current practice is to accept handouts from Her Majesty’s Treasury, except in the case of the devolved nations and London that have adopted a more strident approach. If Miliband wants to govern One Nation, and involve everyone in decision-making, why not break the mould and offer an inclusive approach to making the UK 2015/16 budget, and undertaking a spending review through the next parliament to 2020 and beyond? It would be a challenge to Labour’s elected representatives both nationally, locally and regionally. But it would also enable a direct appeal to voters wherever they live to be involved, spreading a better understanding of pressures on the national purse, and what is possible when.
OK, it is all Balls.