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: GettyTagged in: ed balls, obr
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