Greg Clark: Balls's "iron discipline" is fit only for the scrapheap

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells.  Follow Greg on Twitter.

Many things have been said about Ed Balls’ big speech on the economy – most of them including words like “hypocrisy” and “chutzpah”. Certainly, it takes some brass neck to complain about the deficit that a supposed Labour government would inherit in 2015 without first apologising for the fiscal mess that the last Labour government left behind in 2010. Indeed so far from apologising, Balls even denied there was ever a problem to apologise for: “Do I think that the last Labour government was profligate, spent too much, had too much national debt? No, I don’t think there’s any evidence for that”, he said.

Brass wasn’t the only metal to feature in the Shadow Chancellor’s speech, which revolved around a promise of “iron discipline” over government spending, to deal with “a difficult inheritance”. Sound  familiar? In May 1996 Gordon Brown as Shadow Chancellor promised that Labour would display “iron discipline” to deal with “a difficult legacy”. The very language of this week’s speech shows that, as the pressure mounts on Labour’s economic policy, it is revealed to be not Balls’, but Brown’s.

The policy content of the speech was also back to Brown. Even at the height of his profligacy, he was given to mock displays of thrift – parading some supposed example of economy while ramping up spending everywhere else.

The main announcement in this week’s speech – the pledge to end Winter Fuel Payments for richer pensioners – was straight out of the Gordon Brown playbook: a modest saving that in no way answers the big budgetary questions. £100 million is, of course, a great deal of money. However, £12 billion – the cost of Labour’s proposal for a temporary cut in VAT – is a lot more money than that.

Then there’s the matter of the savings proposed and made by this Government and opposed by Labour – in particular vital welfare reforms, like the benefits cap, which Balls and Miliband have sought to obstruct at every stage.

Thus the idea that the Shadow Chancellor has seized the nettle of fiscal responsibility is as reliable a guide to Labour’s real position as Gordon Brown’s endless devotions to ‘prudence’. Far from providing a signpost to a comprehensive budgetary policy, the ‘big’ announcement was a distraction – designed to obscure the fact that Labour will do everything they can to avoid coming clean on their spending plans.

That is why Balls began his speech with an attack on the Government’s decision to hold a Spending Review this year. This “is a sign not of strength but weakness” he said. In reality, the Review’s timing is a sign that it’s been three years since the last one – the usual interval. Putting it off would hardly be showing strength – let alone ‘iron discipline’. Rather, a delay would reveal political cowardice. And guess who took that course? It was, needless to say, Gordon Brown, who put off his last Spending Review so it would fall after the 2010 general election.

Instead of saying how he would balance the books, Balls talks of striking the “right balance between economic growth and deficit reduction” – which is the classic Gordon Brown code for the same old Labour policy of massive spending funded by ever increasing debt. Or, as Brown put it in 2006, as spending spiralled out of control, "the right balance between keeping tax low and meeting the needs of public investment and stability."

There are those who say that Labour’s reputation on the economy is tarnished. But they’re wrong – under Gordon Brown and his acolytes it rusted right through and cannot be repaired. Brown’s so-called ‘iron discipline’, which a cornered Balls is now grasping for, is fit only for the scrapheap.