Why Ed Balls is wrong

Just to continue the point I was making yesterday in a post headed, “Why Ed Balls is right“, I should make clear not so much where I disagree with him but where I think his record is a problem for Labour now.

He may be right to have preferred Plan B (Alistair Darling’s plan to halve the deficit in four years) over Plan A (George Osborne’s to eliminate the structural deficit in four, now five, years) 18 months ago.

As Robert Chote, head of the Office for Budget Responsibility, interviewed in The Times yesterday (pay wall), said:

The debate between Plan A and Plan B is down to a Budget call as to whether there is an additional fiscal loosening that would be large enough to help boost the economy but small enough not to spook the financial markets. Reasonable people can quite evidently disagree.

But Chote also said something else important:

There’s an unknowable question as to what difference it would have made if this organisation had been set up ten years ago. I think we would probably have gone into the financial crisis with the public finances in rather better shape than they were.

In other words, had Gordon Brown, advised by Ed Balls, kept to the prudent fiscal rules that it is now the OBR’s job to oversee, then we would be in a better position now.

This view was endorsed by Gus O’Donnell, the outgoing Cabinet Secretary, in an interview in today’s Observer, talking about the Gordon Brown years:

The important thing about fiscal rules is living with obeying them. They were perfectly reasonable.

The Shadow Chancellor’s complicity in breaking those rules (and never mind that Tony Blair, the Conservative Party and the media happily went along with it) from about 2003 to 2008 means that it is hard for Labour to regain the voters’ trust as the fiscally responsible party.

Photograph: Getty

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• http://www.facebook.com/profile.php?id=564920445 Douglas Samwise Lee

  Because no other party would have done it better. Osbourne would would have thrown fiscal rules out the window to favor banks and our country would be ruined. Blaming Balls is just pathetic.

• JohnJustice

  I trot out this line because it’s true. I see that you continue to trot out the line that the UK ’s borrowing was excessive when the historical and international comparisons I have referred you to show it was nothing of the sort. You have also ignored my point about the irresponsibility of curbing vital public expenditure because of the remote possibility of some sort of financial disaster occurring in the future. That would have been like not putting a roof on your house to save money against the possibility of losing your job. I suggest you take a closer look at our schools, hospitals, and public places before trotting out the Tory line that there hasn’t been much improvement.

• bishbashbong

  Ed Balls is a complete moron who couldn’t tell an economic policy from a Lewis Carol story.

  How anyone can give this consumate liar and fraud any credence what so ever must have the hair drier set too high.

  He is just another hindsight flunky who had no idea what was happening in the economy… just like all the other ‘experts’ given credit by the mainstream media.

• dave244

  The problem is not who’s right or wrong, Ed Balls v George Osborne or Plan A v Plan B what were are all losing sight of is the fact that the banks were out of control aided by the politicians who deregulated as fast as they could
  And now it’s gone so spectacularly wrong the banks are saying “who me” and the politicians are are saying ” yes we know the banks have been a little bit naughty but we need them to lend to us so we can have economic growth again”
  In the meantime the rest of us have to pay for their mistakes
  and then the very people that caused the problems to start with say “trust us to sort it out” as if it was nothing to do them to begin with