Labour have spent the last week fretting about economic credibility, the cause is the realisation that the economy has probably bottomed and growth is returning. In fact yesterday saw an upwards revision of previous GDP figures which effectively halved the supposed depth of recession. The unemployment figures are going in the right direction, private sector growth is still anaemic though getting healthier, the re-balancing of the public sector is proceeding. The much awaited expansionary fiscal contraction is, whisper it quietly, almost upon us. This will fatally undermine the Balls mantra of “too far, too fast”. When Shadow Minister Ian Murray endorsed the idea of reviewing every single piece of public spending, he sent Balls into a spasm. Nobody came out to defend the policy or Murray, especially not Chuka Umunna, who despite numerous opportunities, ran to the hills. Now Ed Balls has stolen the policy in an interview with the Guardian.
In what looks like a a pre-conference policy side-step, Ed Balls has jumped on the “Zero Base Policy” bandwagon this morning. This state-slashing policy was outlined by Labour’s Miss Goody-Two-Shoes Stella Creasy earlier this summer. First advanced by the Adam Smith Institute this sensible policy is one that every government should embrace. Incoming governments should assess every single line item and every penny of taxpayers’ money spent. That should not be controversial.
Guido is glad that Balls has come round to this idea, though he does find it odd that just 48 hours ago Labour were trying to distance themselves from the very same policy when we asked. The problem Guido has with this Damascene conversion from Labour is that they have had years to review their spending. Instead of tackling waste they borrowed to spend and spend and spend – like a drunken sailor in a knocking shop. Balls has consistently denied debt fuelled overspending was ever a problem, repeatedly claiming (as recently as last month) that it was all going tickety-boo until the 2008 bank crisis hit. The metamorphosis of Balls into a supposedly frugal fiscal hawk willing to cut spending is something to behold.
Guido will only believe Balls if he announces – before the election - plans for line item spending cuts, in detail, in every government department and agency to balance the budget. Ed Balls won’t because he is only shifting his position because he knows an expanding economy with healthy growth will leave him looking foolish come election day. The only thing that is “zero based” is Ed’s fiscal credibility.