Wednesday, 2 February 2011

Deficit denial leaves Ed Balls on the ropes

It’s disappointing to find that new shadow Chancellor Ed Balls has hardly warmed the seat left vacant by Alan Johnson and he is already trying to re-write New Labour history – or, more plainly, telling porkies.
Speaking on the BBC’s Andrew Marr Show last weekend he boldly denied that as Gordon Brown’s man at the Treasury he oversaw a structural deficit before the recession struck.
He told Marr: “I don't think we had a structural deficit at all in that period (before the recession).” To support his claim, Balls argued that “We had a deficit, but we were covering that with investment.” This was smoke and mirrors intended to confuse – either there was a deficit or there wasn’t.
A quick look at Table 2.3 in New Labour’s 2008 Pre-Budget Report shows general government net borrowing on a Maastricht basis recorded a 3.1 per cent deficit for 2007-8.
Balls contention was tested by Full Fact – an independent fact checking organisation – and found to be just that. After weighing the shadow Chancellor’s arguments, it came to the conclusion: “What is clear however is that by the Treasury's own judgement, and that of international bodies, there was a structural deficit between 2002 and 2008.”
The reason this matters is that the deeper we get into the Coalition government’s cuts, the greater will be the public’s demand for honest economic assessment of whether David Cameron and George Osborne’s remedies are working or killing the patient.
It needs to believe the man charged with challenging the government on its economic policies isn’t going to twist the facts for party advantage. One of the reason’s Labour leader Ed Miliband chose Johnson first time round is that he worried Balls was too closely associated with the worst aspects of the spin and economic bungling of the Gordon Brown years.
Balls is a heavy hitter but he leaves himself open to Tory sucker punches by continuing to insist Labour is entirely blameless for the economic mess the nation faces.

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