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Turbulent Times For UK Opposition

For many in the Labour Party, the promotion of Ed Balls to Shadow ­Chancellor was as inevitable as it was long overdue. I was among many party members who argued at the time of Ed Miliband’s election as ­Labour leader that Balls was the natural candidate for the Treasury brief.

He’s a pugilist with both the necessary aggressive ambition and the economics brain to take on George Osborne. And I’m convinced Osborne is nervous at the prospect.

Back in September when Ed Miliband originally appointed Alan Johnson to the brief, Osborne was in Washington at a meeting of the International Monetary Fund. He was clearly relieved. Balls, he’s said to have admitted, would have ‘been at him 24 hours a day’. 

 The sentiment was repeated yesterday after Balls became Shadow Chancellor, and one of the Prime Minister’s circle was quoted as saying: ‘Balls will be ­taking great chunks out of George.’

It’s true that, in contrast to Alan Johnson, Balls has never been popular with the public. Johnson was one of those increasingly rare creatures in politics: someone who had held a real job, in his case as a postman. A man, in the words of his Hull West constituency agent ­Stuart Spandler, who ‘knows how to relate to ordinary people’.

But for all Johnson’s folksy appeal he never quite managed to land a punch on Osborne, despite the faltering economy, despite rising unemployment and cuts in public expenditure — all surely open goals for a Labour politician in opposition.

Private-school-educated Balls, who attended Oxford and Harvard and moves in rarefied political and academic circles, may be far removed from the ordinary people. Yet he is likely to rain punches down on Osborne from the sky.

 The new Shadow Chancellor, like Osborne, is a professional politician to his fingertips. And having teamed up with Gordon Brown at the Treasury in the 1990s. Balls does actually know what he is talking about when it comes to economics.

He could not be more different from the self-deprecating Johnson, who admitted when appointed Shadow Chancellor that he would have ‘to go and read an economics primer’, and who was obliged to mug up by reading the Financial Times each morning in the Lords’ tea room before breakfast.

More than that, Ed Balls clearly likes nothing better than a scrap — as Cabinet minister Michael Gove, who shadowed him when he was Labour’s Education Secretary, will testify. But before we all get carried away in the Labour Party, there are one or two caveats about his appointment that should give us pause for thought.

The most obvious one is, of course, the question already being rung from the rooftops by the Tories: if Balls is such an economic maestro, if he really is so brilliant, how on Earth did we end up with the worst ­banking crisis in British history and the largest deficit since the War when he was at the helm with Gordon Brown?

 For all his bruising instincts, Balls had better have a well-honed answer to this. It is immaterial that for much of the 1990s, almost ­everyone of whatever party seemed to believe that it really might be possible — as Brown and Balls repeatedly proclaimed — to end ‘boom and bust’, somehow to turn the economic system on its head.

The point is that it was Brown and Balls in power who brought us what they bafflingly called the ‘neo-endogenous growth theory’. Essentially this was the idea that rising property prices and the dotcom revolution, along with a light touch on financial regulation, would usher in a glorious new era of ­perpetual economic growth.

Since the sun seemed to be ­shining on Britain in those heady days, since the economy was ­growing and unemployment was at an all-time low, few economists and politicians wanted to rain on their parade.

Yes, there were one or two old-timers who expressed their doubts. People such as Brian Sedgemore, the former Labour MP for Hackney South and Shoreditch and a ­member of the Treasury Select Committee, who expressed his ­reservation from the very beginning of the Brown/Balls reign in No 11 Downing Street.

For his pains, Brian Sedgemore was booted off the Treasury Select Committee. He once told me that Gordon Brown and Ed Balls had had their heads turned by the boom. ‘They had a love affair with the City,’ he added. ‘They lapped it all up with the dinners.’

So in thrall were they to the god Mammon, a shocked and incredulous Sedgemore once told me, that when Brown and Balls used to travel to America and listen to the Chairman of the Federal Reserve, Alan Greenspan: ‘They actually believed him when he talked about abolishing the economic cycle!”

The young Balls used to be a member of Sedgemore’s local Labour Party in Hackney, East London. ‘We used to have barbecues and Ed was quite good at it. I’d say, you do the burgers, I’ll do the economics!’

And as we all know, it is the ­economics that count. Or as Bill Clinton was wont to say to Democrat campaigners: ‘It’s the economy, stupid!’

However tough a fighter he is, the fact that Balls was a pivotal figure in the very economic policy that helped plunge Britain into a ­financial crisis will be a serious ­difficulty for him and for Labour. The Tories will mercilessly and relentlessly repeat the mantra that it was his fault, that Balls is not to be trusted.

Labour has made too little of the fact that it was Brown, with Balls at his side, who actually helped ­formulate the global response to a recession — a response that could well have saved us from falling into a depression.

So from the very start, Balls, the notorious attack dog that Labour has now unleashed on economic policy, will be on the defensive.

And if Osborne manages to persuade the public of his argument — a public who, as I have said, do not much like Balls anyway — then Labour is almost certainly doomed to lose the next election.

But there is another problem for Labour. It is that Ed Miliband clearly had reservations about Balls, his erstwhile colleague in Brown’s ­Treasury advisory team, and conceivably still has them. Why otherwise would he have passed him over as Shadow Chancellor in the first place? It was, after all, the brief Balls coveted and he was a natural for the job.

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Perhaps there is a clue in the long, tough battle for the leadership of the party, when on one occasion Balls’s mask slipped. It was back in the summer when Balls complained about the ‘daily soap opera of one Miliband brother or the other’.

The new Shadow Chancellor is nothing if not tribal and perhaps Miliband feared Balls would not be able to resist building his own ­fiefdom in the Treasury, as Brown did. Understandably, Miliband was desperate to avoid the remotest possibility of a re-run of the vastly debilitating wars between Blair and his Chancellor, Brown.

Yet now, Ed Miliband — who believes we should cut the deficit faster than does Balls — has given Labour’s most ruthless operator a position of supreme power.

And it is not just Balls that ­Miliband will have to contend with, but his equally sharp wife Yvette Cooper, who was promoted to shadow the Home Office after Johnson’s resignation.

A husband-and-wife team, shadowing the two most powerful departments in the land — the Treasury and the Home Office. Ed Miliband must surely be hoping that this high-flying couple really do play a collegiate game. Many employers are hesitant when confronted with married couples or partners working closely with each other — and often for good reason.

Although Ed Miliband seems far more relaxed than either Blair or Brown ever did about internal ­dissent, he will lose no time in reminding the next meeting of the Shadow Cabinet of the importance of ‘collective Shadow Cabinet responsibility’.

Ed Balls’s appointment presents huge risks for him. But at least we know that George Osborne and his economic policy will come under scrutiny as never before.

This article by Mark Seddon appeared in the Daily Mail

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