How Labour's Miliband and Balls are looking to the past, to plan for the future

They are unusual in having experience of shaping policy while working in opposition

So toxic is the recent past in British politics that neither Ed Miliband nor Ed Balls dare to talk about theirs.

Yet in different ways their varied experiences in opposition and government inform each move they make. In two highly significant speeches this week, they have looked back for guidance. I hear very loud echoes.

The speech on Monday from Balls and the one today from Ed Miliband are the equivalent of a bridge between the relatively easy task for an opposition of stating “what we would do now” to the much more demanding one of “what we would do if we were to win the election”. Not surprisingly, both speeches have been the subject of much agonising, from the timing to the substance. The stakes could not be higher and although they choose not to talk about their recent pasts, they are fortunate to have such a background. It acts as a highly effective guide to the strange rhythms of politics and gives them depth.

The significance of Balls’ speech on Monday has not been fully appreciated. In the space of an hour or so, Balls dropped the commitment to cut VAT, one of those policies he would introduce now, but not after the election; more or less committed a future Labour government to stick with George Osborne’s spending plans; and ended his support for the principle of universal benefits by removing the winter fuel payments to wealthy pensioners. The response from much of the media seemed to be that this was nowhere near enough, a sign that the current Labour leadership will not satisfy some of its critics until it announces it will not spend any money at all. But the broad outlines are in place and they are very tough.

Miliband and Balls are highly unusual in having considerable experience shaping policy in opposition en route to an election victory in 1997, and then serving in subsequent governments. Tony Blair and Gordon Brown, and David Cameron and George Osborne navigated the almost impossible demands of opposition on the basis of experiencing only election defeats at relatively close hand, not a victory. Neither duo had any direct ministerial experience to sense what policy-making would be like in power. Miliband and Balls were close to the decision-making in the build up to Labour’s 1997 election. Both witnessed how it all turned out in power.

This matters because, although the economic context is unrecognisably different, the test for Labour now is almost precisely the same as it was in the build up to 1997. Can it be trusted to run the economy? Have they started to answer the question at the right time in the parliamentary cycle? Can they answer this question in a way that reassures critics while still giving them the space to act radically if they win?

In relation to the first two questions, Balls’ speech on Monday and Miliband’s today are astutely judged. In the case of Balls, there is no one else in Labour who could meet the demands of economic expertise and political artistry that the job of being shadow Chancellor requires. In a five-year parliament, Balls was right to resist demands for more policy detail before this week, and right also to leave some leeway between now and the next election, which is still almost two years away.

One of the errors the less experienced George Osborne made when he was shadow Chancellor was to announce seemingly definitive approaches early in the parliamentary term that he leapt away from several times before the election, a significant factor as to why the Conservatives failed to secure an overall majority.

In relation to the substance, Balls had no choice but to accept Osborne’s current spending plans, while clinging to his Keynesian arguments by pledging a big capital investment programme. As in 1997, Miliband and Balls have discovered that they cannot win an argument about current public spending in opposition, but will hope to do more in power. Balls has been known to look at the meagre five early pledges that Labour highlighted in the 1997 election and compared them with what the government did subsequently in relation to investing in public services.

For now, the talk will be of iron discipline. Balls should cite more often his own contribution to the iron discipline before and after 1997: the early, tough public spending rounds; the decision to use the billions raised from a telecom sell-off to repay debt; and the later comprehensive spending reviews described at the time by other ministers and by Cameron and Osborne as too tough. Balls recognises the benefits of public investment but the idea that he is recklessly profligate is wholly wrong.

So much so that the big unanswered question is whether he has left enough leeway if Labour were to win. Balls has been a departmental minister and knows how tough his proposals are. Indeed, when he gave details of this week’s speech to the shadow Cabinet, he was almost surprised rather than reassured at the enthusiastic agreement around the table. He knows some of the inexperienced team will not be nodding so enthusiastically if they become Cabinet ministers.

The same sequence applies to Miliband’s big speech on welfare today. Again, there are echoes with the arguments applied in the build up to the 1997 election. Then the Labour leadership argued that they would focus on “productive spending” rather than “spending on failure”. In other words, they would develop policies that encouraged work rather than pay the bills for high unemployment.

The challenges are greater today and so the ambitions of Miliband extend further to house-building programmes to replace high housing benefit. But the principle is the same as in 1997 and so is the politics, the need to show that Labour will be tough on welfare spending. Once more the politics is well judged. Again the bigger test will come if Labour were to win and found it had to deliver a cap on welfare spending before the new homes are built, when unemployment might still be high and when fragile companies do not have the cash to pay the living wage.

The two speeches in Labour’s most important week since the last election navigate a credible route towards the next, but show what a nightmarish challenge governing would be.

Twitter: @steverichards14