Rather cheekily, this morning I blogged the speech I though Ed Balls ought to make to the Labour Party conference today. It contained a six-point economic recovery plan and some reflections on what One Nation Labour might mean. I was fairly sure that the actual speech would be very different; in the end, though, the similarities were greater than I had expected. I never expected the reference to 1945.
I was impressed by Balls’ analysis. Balls flayed the Tories for their economic failures, and talked about the issues that the coalition ignores – housing and employment above all. The determination to reconsider the finances of that whitest of white elephants, HS2, was a bonus. You do not have to be a transport economist to understand that a rigorous re-examination of the business case is only heading in one direction, and perhaps at last we are hearing the death-knell for this ludicrous, overpriced, over-hyped and environmentally damaging grand projet – the transport policy equivalent of a very small beach towel indeed.
The issues in the speech were the right ones: investment and housing in particular. And on public expenditure, it looked to me as if the line on sticking to the spending totals in George Osborne’s 2013 spending review for the first year of a Labour Government has changed. Balls said:
The government’s day to day spending totals for 2015/16 will have to be our starting point.
Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto. There will be no more borrowing for day to day spending. And we will set out tough fiscal rules – to balance the current budget and get the national debt on a downward path.
Now that’s not the same thing as sticking to Osborne’s spending plans at all. It is a statement that Balls is willing to go beyond SR2013 if the extra expenditure is costed and announced in advance. Exactly what that means is unclear – is it compatible with extra borrowing? I remain convinced that a Government that is serious about economic recovery after 2015 must borrow more to invest and to stimulate the economy; quietly, almost stealthily, Balls seems to have moved to a position where that is for the first time an explicit possibility. And that is really important.
On employment, I remain concerned Balls’ commitment still looks like the discredited workfare programme; but his explicit ruling out of a race to the bottom, and his emphasis on skills and training is encouraging.
In summary this was a deeply impressive, powerfully-argued speech that presented a realistic analysis of the economic problems facing the UK and offered hope that Labour is beginning to move towards a more distinct economic agenda. In my view there is a lot further to go – but Labour is at least talking about the right issues and taking back the agenda from Tories blue and yellow. It’s beginning to look as if there could be a real choice in 2015.