Time to grow some, Balls…

John Hewitt Jones

Name:John Hewitt Jones
Occupation: studying English Literature at Edinburgh University
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Arriving at the Institute of Education on Saturday 14th January, London, W1, it was clear that this was indeed the right place for the 2012 Fabian Society conference. Shoals of suit-clad, Guardian-clutching socialist young things schmoozed their way between reception points and media desks, surrounded by advertising for the New Statesman. There was a considerable media presence; TV cameras, sound recordists, baying journalists. And perhaps for good reason. The central feature of the day was to be a keynote speech from Shadow Chancellor Ed Balls, outlining Labour’s new critical approach to fiscal policy.

Shadow Chancellor of the Exchequer, Ed Balls. Photo by Harry Pots

For those with a vague notion of the organisation’s role, the Fabian Society is Britain’s oldest think tank. Affiliated to the Labour party, it’s a left-wing institution that has played a central role in defining the direction of the Labour party’s policy since 1884. An appropriate place then to launch the fight-back, with a day of events billed as ‘The Economic Alternative’.

I suspect that in many people’s minds Ed Balls doesn’t cut a particularly impressive figure, his performance at the dispatch box often accused of being underwhelming. But his credentials as an economist make impressive reading, winning a Kennedy Scholarship to Harvard after Oxford, before working as a staff writer for the Financial Times and a policy advisor to the treasury.

Surely this was home territory? Time to make a nice, left wing speech to a hall packed with nice friendly socialists. Not so. Right from the outset the conference had a feeling of urgency, a sense that the clock was ticking (heightened by some delightfully vociferous heckling from an old socialist madam). Because there’s no two ways about it; Labour, at the moment, is a party in crisis.

Much of Balls’ speech was rambling and unappealing; lacking the gleam of the Blairite sound byte. However, it was clear from the outset that, damn it, this man has a supreme grasp of fiscal policy. The central tenet of Balls’ argument is this: The current government’s response to the financial crisis – strict, swift austerity cuts alone – isn’t working. With last year’s GDP figures to be published today, forecasters are predicting that these will show the UK economy shrinking in the final quarter, and that the country will fall back into recession within the next few months. Even George Osbourne admitted the other day in a BBC interview that he’s feeling rattled. As it stands, the government will fail to hit its target of reducing the deficit by 2015.

Balls presents a persuasive case; whilst the cuts are necessary, he argues, austerity alone can’t stimulate growth in the economy. It really isn’t just a case of playing the opposition and challenging the government’s action. As a close admirer of John Maynard Keynes, he is convinced that now is the time that the government should be injecting short-term stimulus packages into the economy to create jobs. And he’s not the only one. Standard and Poor’s, the international credit agency who has just downgraded France’s credit rating, are saying that austerity measures on their own are not going to get Europe out of the economic downturn.

The key problem facing Labour at the moment is one of fiscal credibility. Even if Balls and his chums do turn out to be right, it’s nigh-on impossible for their voices to be heard above the drone of the Conservative coalition automaton. You only have to watch Prime Minister’s Questions to see the efficacy of the government’s relentless optimism and bleating austerity mantra. To the electorate, Labour doesn’t seem to have a definitive position. It looks as if they are playing a game of catch-up, finally admitting that they’ve been wrong all along, when the figures don’t necessarily provide evidence for this. Labour need to follow Balls’ lead and look to define their message on the economy, and they need to do it now. Whilst it’s the appropriate time to be having an internal debate, as the next general election looms closer, the party must pull together and prove it can be trusted to take the right action that will benefit the economy in the long-term.

What do you think?

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