John Rentoul: Labour wakes up, fuzzy and too late

As Osborne fiddles, Miliband, rather belatedly, is beginning to think about balancing the books

A few more schemes, complications and subsidies and pretty soon I shall have to go away and rethink my life. I had thought that Gordon Brown was a bad Chancellor because he fiddled with the tax system, finding another few hundred million down the back of a refurbished Treasury armoire for footling schemes designed to secure a day's headlines; complicated things so no one could work out why what he had just said was rubbish even though it obviously was; and invented subsidies, tax reliefs and distortions that turned out to be counter-productive.

At this rate, though, we may have to conclude that the fault lay not with Brown's personality but with the Treasury or, worse, with contemporary politics. Because George Osborne is up to the same silly, self-defeating tricks.

Even the most worthy scheme so far, which the Chancellor allowed Nick Clegg to unveil last week, to subsidise the wages of young people newly hired in the next three years, is not as good as it looks. It is £1bn to employers to do what most of them would be doing anyway, and if it influences their behaviour at all it will encourage them to hire young people who qualify, rather than those who are just over 24 or who have been unemployed for just less than six months.

At least it is better than the infuriating plan to offer a state guarantee for mortgages offered to first-time buyers who are bad risks, also announced last week. If it works, the scheme would increase demand for homes, and therefore increase prices, at a time when everyone seems to agree that cheaper homes, and more of them, would be a good idea.

There will be more of this nonsense on Tuesday, when Osborne rises to deliver the Autumn Statement. All he needs to say is that the forecasts made by the independent Office for Budget Responsibility in March have been revised downwards. He could explain why, which is mainly because the eurozone is in more of a mess than anyone expected. He could have an entertaining argument with Ed Balls about the pace of deficit reduction. Balls could quote Keynesian economists saying that a bit more government borrowing now might save a lot of borrowing later, and Osborne could say that, if the bond markets take fright it doesn't matter how many Keynesians you can cut and paste, it is all over. Then he could sit down and we could get on with the ceaseless struggle to make exports that foreigners want at prices they can afford.

Instead, because of his temperament, or because Treasury officials have got at him, or because modern politics is like that, the Chancellor will want to surprise us with some shiny policy gizmo. He will therefore announce, to much cheering, some superficially clever tax cut for business or subsidy for investors that will be called a "plan for growth" and commend it to the House.

It is enough to make one nostalgic for Nigel Lawson, a Chancellor serious about tax simplification and impatient with the disreputable side of political showbiz.

The one thing we can be sure of, however, is that Osborne's performance this week, however bad, and regardless of the unanimity among commentators saying his make-piece public-relations doo-dahs are worse than useless, will not make the voters nostalgic for a Labour government.

So the big story of this week will be: Osborne makes hyped statement full of trivial schemes designed to promote growth, which at worst are counter-productive, at best, in Keynes's immortal phrase, pushing on a string, at a time when the entire eurozone is breaking apart. But the Opposition isn't trusted and has no better line of attack than, "You're in a mess, aren't you?"

Which is why it is interesting that there are signs of life in the Labour Party after all. By which I mean that there are still people in the party who realise that winning elections means winning over people who thought that the Tories were right last time.

There was an intriguing passage in Ed Miliband's speech last week in which he said that "the next Labour government is likely to inherit borrowing levels that still need to be reduced". He said that "resources will have to be focused significantly on paying down that deficit" and that the party would have to find "different way of delivering ... social justice in straitened times".

Fuzzy and 18 months late, these phrases hinted at a Labour policy capable of winning the fiscally conservative centre ground. Just on cue, two publications this week will set out in more detail what such a policy might mean. A Policy Network pamphlet by four authors, including Anthony Painter and Hopi Sen, is called In the Black Labour, playing on the fashion for symbolic colours (Red Tories, Blue Labour, The Purple Book). It advocates, clearly and admirably briefly, the case for Labour fiscal conservatism, saying that the party should try to outdo the Tories in promising to balance the books. It even quotes Ed Balls from 1998: "Left-of-centre governments need to favour tough fiscal policy because from time to time, if economic crises occur, you may have to relax that."

Also this week, Luke Bozier and Alex Smith publish a book called Labour's Business, which devotes serious thought to what ought to be one of the most important questions the party asks itself: "Why did Labour not have the support of a single business leader at the last election?" Smith is significant because he was a central member of Ed Miliband's leadership campaign team but left in disillusionment.

Osborne will carry the day on Tuesday, however bad his policies, therefore. Yet, though it may already be too late, at least some people in the Labour Party are trying to stop him.

John Rentoul has been voted No 3 in the Top 100 Political Journalists by readers of 'Total Politics' magazine. He blogs at independent.co.uk/jrentoul or follow him on Twitter