Monday 1 October 2012

Balls' conference freebies

As the Labour Party conference in Manchester draws closer to the highlight of the party leader’s speech, the Shadow Chancellor Ed Balls has tried to steal the limelight from his namesake by proposing a stamp duty holiday for first time buyers. 

Balls undoubtedly will want to repeat the trick of his Conservative colleague George Osborne four years ago, who, with the Conservatives enjoying mainly ‘soft’ support in the polls, proposed a raise in the inheritance tax allowance for families to £250,000. Post-conference polling showed that the support for the Conservatives firmed up and Cameron was on his way to 10 Downing Street.

Yet, Balls may struggle to repeat this feat under current circumstances. In fact, his proposal may turn out to be a grave mistake for two reasons, one strategic, one tactical. 

The first reason why Balls may have miscalculated is that the country is in a different position now then it was in 2008. For the last two years, the public debate has been about how to pay down the debt in the best possible way, rather than about how to spend more. Although the writing was already on the wall in 2008, Osborne still operated under the impression of generous spending limits and the British public was equally thinking that there was still something to give away. Now, this has changed and the polls indicate clearly that voters expect the main battle ground to be over what and where to cut, rather than to make uncosted promises of additional spending. 

Yet, the second (tactical) mistake Balls may have made is one that resonates in particular with Labour voters. As spending is being squeezed, the Labour Party leadership is pushed hard to come up with suggestions about what they would do differently to the coalition. So far, there is a big yawning black hole (or a plethora of policy committees which may or may not report some time in the future) where there should be policies. This arguably leaves Balls and Miliband with little choice but to offer some little nuggets instead a coherent programme of reform. 

The stamp duty holiday fits into this tactic. It looks like short termism when Labour should instead strive to formulate a coherent programme to re-focus public services. Commentators have already noted how much Balls’ proposal smacks of Gordon Brown’s attitude to policy, echoing the lack of grand narrative and purpose of the last two years of Labour in power. 

So, there we are. As Balls reverts back to his old paymaster’s tactics, he may just come to regret his proposal as the country has moved on, for better or worse, to a time of spending reductions. The argument about what to cut and what not, is the harder one to have, but running away from it wont help Labour. 

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