Editorial: Ed Balls offers first hints of a Labour manifesto

Labour’s image problem is proving tricky to shift. As the Conservatives reverted to strife-riven type, recent months have offered any number of opportunities for the Opposition to make hay. Yet it has failed to do so. Worse, some polls suggest Labour is even losing ground, as the disingenuously anti-politics Ukip powers ahead.

Part of the trouble is the economy, where David Cameron and George Osborne remain streets ahead in the electorate’s estimations, despite both the absence of meaningful growth and the fulminations of the shadow Chancellor. The lack of policy detail is also a problem. For all the rhetoric about One Nation and “producers versus predators”, voters have little grasp of what Ed Miliband would actually do.

Time, then, to show some political leg. True, Ed Balls’s speech yesterday performed the familiar hatchet job on what he calls George Osborne’s “catastrophically failing” economic policy. Having recognised, though, that Labour will not succeed as merely “the party opposing Tory cuts”– as Tony Blair contentiously puts it – the shadow Chancellor went further than ever before in setting out an alternative. Not in a hypothetical Labour-governed present; in the real world that will follow the 2015 election.

And what Mr Balls made clear, for the first time, is that as Chancellor he would borrow more to fund growth-boosting infrastructure investment. The message was not spelled out, but it was unmistakeable, nonetheless, and it heralds a real shift in the political debate.

At one level, the move is a clever one. With the economy all but stagnant, few argue against extra capital spending. Indeed, no economic set-piece is now complete without the Chancellor talking up investment plans (albeit with little tangible result). Taken in isolation, therefore, a Labour promise to go further – particularly as regards Britain’s desperate need for more housing – cannot fail to catch the electorate’s eye.

Such promises are not made in isolation, however, and Mr Balls’s challenge yesterday was to prove that he has a more effective plan for growth without confirming sceptics’ worst suspicions of dyed-in-the-wool Labour profligacy. Hence, the speech was larded with talk of “iron discipline” and governing in “a different way”. Hence, the pledge to spend more on infrastructure was accompanied by a commitment to stick to the Coalition plans to cut day-to-day spending. And hence the plan to scrap fuel subsidies for rich pensioners.

Taken in isolation – once again – the proposal is a welcome one. This newspaper has long argued that universal benefits for pensioners are as unaffordable as they are wrong-headed. Yet, in context, the £100m saving from restrictions on the fuel allowance is not enough to make much difference to the public purse. Nor is it, as Mr Balls hopes, a compelling guarantee of that promised iron discipline, even though it comes with the totemic value of taking on a party shibboleth.

Mr Balls is half right, then. Capital spending must be the priority, whatever the colour of the government. The Coalition’s over-hasty down-sizing of investment budgets was perhaps its greatest error; Britain is crying out for more houses; the failure to settle the issue of airport capacity in the South-east is indefensible political cowardice. But adding to the country’s already towering debts is no solution.

Labour has a formidable task. It must find itself room for fiscal manoeuvre while proving it can be trusted with the purse strings. Yesterday’s speech from the shadow Chancellor made a start and that from Mr Miliband on Thursday will go further. Faced with a justifiably wary electorate, there is some way to go.