The overnight briefing of Ed Balls’ speech to the Fabian Society’s annual conference was that the Shadow Chancellor would make a binding fiscal commitment to balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament. Which sounded like a mighty eleventh-hour repentance until you looked at the detail. Ed Miliband has spent the past few months trying to sound like a dry old bean counter by saying Labour wouldn’t borrow more for day-to-day spending, which really means Labour won’t borrow any more for revenue spending but can splurge all it likes on capital expenditure. And so Ed Balls has done the same today: the ‘surplus on the current budget’ is the same as ‘day-to-day spending': it’s the revenue, not the capital budget. Labour has finally worked out how to have its debate about good and bad borrowing, which is by telling anyone half-listening that they won’t borrow more, and then hope that they won’t ask whether that applies to both revenue and capital spending.
These elisions and very-carefully-worded statements are all because the Coalition has got Labour in a hole on the economy and both Balls and Miliband know it. But though Treasury ministers love nothing more than a bit of sport at the expense of Labour’s economic credibility, the one issue that the Conservatives still grow very sullen whenever it is mentioned is the scrapping of the 50p rate. It was a politically disastrous decision that even those who strongly support lower taxes thought foolish, and though it happened in 2012, it still has currency as an insult today, especially when used in juxtaposition with something like the bedroom tax or food banks. Voters who do not care much about Laffer Curves saw a government of well-off ministers helping their own.
So it makes political sense for Balls to pledge to restore it, as he has just done. But it’s also quite amusing that we’ve reached this situation. Labour had the 50p rate in place for just a few weeks before leaving office: it was introduced in Alistair Darling’s ‘nakedly political’ last Budget in 2010. And it does fit in with the direction of Labour under Miliband: a much more left-wing, big state party than we’ve seen for a long time.