Balls commits to Labour spending restraint

In 1997 Labour sought to neuter Tory attacks on their economic credibility by announcing that they would be sticking to Conservative spending plans after 1997. It was a strategy that worked. Fast forward to 2013 and Labour again face a Tory party campaigning heavily on their economic credibility, and it seems clear that in response Labour have gone back to that 1997 playbook.

Stating plainly that “we stand to inherit a very difficult situation”, Shadow Chancellor Ed Balls said he needed “to be straight with this Conference and the country about what that means”.

In amidst the anti-Tory and anti-Clegg rhetoric, he stated explicitly that Labour would not throw away the austerity playbook: “we won’t be able to reverse all the spending cuts and tax rises the Tories have pushed through. And we will have to govern with less money around. The next Labour government will have to make cuts too.”

And the clincher: “The government’s day to day spending totals for 2015/16 will have to be our starting point. Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto. There will be no more borrowing for day to day spending. And we will set out tough fiscal rules – to balance the current budget and get the national debt on a downward path.”

The result was a series of announcements on what Labour would have to do in the next Parliament:

  • They would not be able to pay the winter fuel to all pensioners;
  • Labour would need to keep the benefits cap;
  • They’d have a cap on structural social security spending;
  • And the party would have no choice but to increase the retirement age.

These won’t all go down well in the conference hall, but the bigger question is if this strategy, that worked in 1997, can have the same effect come 2015.

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