The Chancellor's medicine may be harsh. But Ed Balls would be economic poison
23:33 GMT, 5 December 2012
George Osborne has many enemies. Something about the Chancellor of the Exchequer exasperates people even when he tries to be nice, as he did during moments of his Autumn Statement yesterday.
After telling the nation that he is cutting corporation tax, increasing investment allowances for small business and scrapping the scheduled 3p increase in fuel duty, he said: ‘We’re all in this together.’ Voters could be heard jeering as far off as Colwyn Bay.
It’s not his fault, but most of his life has been financed not from his earnings like the vast majority of the population, but instead from the family fortune. George Osborne may occasionally catch a cold like the rest of us, but he is rash to pretend he knows from experience what it is like to struggle to pay a mortgage.
In the spotlight: Something about the Chancellor of the Exchequer exasperates people even when he tries to be nice, as he did during moments of his Autumn Statement yesterday
The Chancellor’s core message yesterday was brutally honest and inevitably bleak. He restated his conviction that Britain is on the right course back to economic health, but then had to acknowledge it is taking longer than he had hoped to get there.
He sped through a list of numbers — financial figures which are incomprehensible to most of us — before declaring that the national debt will only start falling in 2016 rather than 2015 as previously announced, and then only if a lot of other factors go to plan.
Most of his policy changes tinkered with small amounts of money which will provide marginal incentives for economic growth. They will have little or no effect on businesses or industrial behaviour, but are the only carrots the Chancellor can offer when he has so little money to spend.
He sat down looking like an apostle who has announced that the Second Coming is indefinitely postponed, and waited for the Pharisees to start throwing stones.
But then Shadow Chancellor Ed Balls rose to his feet — and almost immediately got his tongue tied up in them. Instead of telling the Commons that public debt has risen, he roused Tory derision by saying the opposite. Of course he then corrected himself, declaring that this one test that the Government had set itself was ‘now in tatters’, but the damage was done.
Bruiser: Shadow Chancellor Ed Balls lost his way during his response to Osborne's speech
Even Balls the bruiser, Balls the understudy for Tony Soprano, Balls the man who would be king, recognised that he had lost the plot, and failed to find it again for the rest of his speech.
At a stroke, attention shifted from the Chancellor of an unpopular government, struggling to retain its economic credibility, towards his Labour opposite number, the politician who will take over Britain’s purse strings if the Tories lose the 2015 election. And, for most of us, that is a very sobering possibility indeed.
A few weeks ago I happened to meet Balls’s boss, Ed Miliband, in a TV studio. He said: ‘You don’t seem very impressed with what the Government is doing. Shouldn’t you be joining us’
I responded that on the day he stands up and says: ‘I apologise humbly to the British people for the fact that the last Labour government, of which I was a member, wrecked the economy and squandered all our money,’ I might start to think about it.
Miliband lapsed into silence, and on that note we parted.
But what I said was neither original nor surprising, because it reflects what every sensible voter knows to be the case.
Many people are disappointed by the performance of the Coalition. They are sick of being told by Tory ministers that it is impossible to do sensible and important things — for instance, changing energy policy or making real cuts in welfare benefits — because the Lib Dems will not allow it.
I have heard wise people who traditionally vote Conservative say they will not vote Tory again, or even that they will vote for Ukip at the next election. But have they thought about what they are saying, or what awful fate they would thus help to bring upon Britain Every morning between now and 2015, we should remind ourselves that after the next election, only one of two people will be Prime Minister — David Cameron or Ed Miliband. Superman is not on offer.
Likewise, if George Osborne does not remain Chancellor, then Ed Balls (the very man who advised Gordon Brown through what has proved the most disastrous chancellorship in modern history) will take charge of the nation’s money.
A vote for Ukip, Labour or any minority party will contribute to the same outcome.
It is not just that Balls urged on Brown to the vast debt-fuelled binge which the Coalition inherited. If Labour regains power, he promises more of the same.
Challenge: Cameron and Osborne inherited from Blair, Brown and Balls a catastrophe, and they deserve sympathy in their struggle to rescue us from it
He has learned nothing from the past, proposing to borrow vastly more money that the country does not have to resurrect New Labour’s disastrous era of fantasy prosperity.
For years, Britain has been obsessed with spending money without much consideration as to whether what our manufacturers produce is what the rest of the world wants to buy.
As a result, in the decade after Tony Blair took power and Brown and Balls made themselves at home in the Treasury, manufacturing output shrank by 19 per cent, while the property industry grew by 37 per cent, finance by 41 per cent and retailing by 27 per cent. Public spending increased by 42 per cent in real terms.
As we now know, the 27 per cent supposed growth in the economy produced by this spending binge was merely a bubble which exploded with a bang in 2008.
All that was left — and still remains — is an 876 billion increase in personal and government debt built up over the same period, which the unfortunate George Osborne is now struggling to reduce.
If George Osborne does not remain Chancellor, then Ed Balls will take charge of the nation's money
Of course, he has not been a perfect Chancellor. But he is an intelligent and courageous politician pursuing the only sane course for Britain — to attack our unsupportable sense of entitlement that has spawned an unaffordable welfare bill and to reduce out-of-control public spending.
Unless Osborne can succeed, the great fear is the financial markets will judge that Britain is on a course to the knacker’s yard, and refuse to lend us more money to fund our pretensions.
Osborne had little choice than to say: ‘The British economy is healing.’
This may have been less than frank, but he had to offer some ray of hope for the future, if only to prevent his own party from despairing.
For his part, Ed Balls offers a far larger and more dangerous deceit: the scandalous pretence that we can sustain the lifestyle which he and Gordon Brown told the British people they could have, without earning the means to pay for it.
If Balls ever had to practise his political principles as a businessman, his deceitful prospectus would be exposed as a Ponzi-style scheme that would earn him a stiff prison sentence for fraud.
More seriously, if ever again he is allowed to get his hands on the Treasury tiller, any chance of restoring this country to solvency will vanish up the chimney.
Every time we voters get frustrated by David Cameron or George Osborne, we must remind ourselves of the lurking Balls menace.
The truth is that restoring Britain to any sort of financial health will require years of effort and wise policy-making across every area of government — in education, taxation, energy and welfare reform — together with sustained reductions in public spending such as have not yet taken place.
The Lib Dems remain hostile to many of these things. The Labour Party is committed to fighting them all tooth and nail.
We should never forget that Cameron and Osborne inherited from Blair, Brown and Balls a catastrophe, and they deserve sympathy in their struggle to rescue us from it.
We may never learn to love the Chancellor, but when we consider the alternative, it becomes tempting to kiss him under the mistletoe.