Autumn Statement: Has Ed Balls been outmanoeuvred?

George Osborne, the Chancellor of the Exchequer, walked into the House of Commons today, to be greeted by a wall of noise from all sides of the chamber—approval from his own benches, opprobrium from those opposite. In his hand, a large sheaf of paper on which was written the text of the speech. He sat next to the Prime Minister, whose legs were crossed, slip-ons buffed.

Opposite them, the two Eds, Miliband and Balls, the latter turning through the pages of his own speech, occasionally pointing out to Miliband a line of interest, as around them the session of Business Questions was drawing to a close. And then it ended. Osborne rose to his feet.

“Mr Speaker,” said the Chancellor, in a slow, assured tone, “Britain’s economic plan is working.” With this, the House emitted a deafening cacophony of shouting, hooting and raucous agreement.

“The forecasts show that growth is up,” said the Chancellor and, at this, proceedings were called to a halt by the Speaker. “Calm yourself man,” he bellowed at a Labour backbencher, adding: “your bellicose barracking is audible several miles off.”

Osborne’s point about forecasts was a substantial one that was backed by data from the Office for Budget Responsibility. He set out the OBR’s re-assessment of the fall in economic growth in the aftermath of the crisis. Initially thought to have been 6.3 per cent, the OBR’s new figure for the total economic downturn was a “staggering” 7.2 per cent. The crisis was even worse than was thought. At the Budget in March, the estimate for growth in 2013 was 0.6 per cent, said Osborne. But the OBR has now upgraded that forecast to 1.4 per cent and next year’s growth has been revised upwards from 1.8 to 2.4 per cent.

The OBR has been forced to own up to a certain pessimism, noting in its Economic and Fiscal Outlook that “the UK economy has picked up more strongly in 2013 than we expected.” This gave Osborne one of the greatest presentational advantages that it is possible to have: he was able to show that he had under-promised and over-delivered.

Opposite the Chancellor, Ed Balls was not enjoying any of this. He smiled wanly, heckled, shook his head and at times blew out his cheeks, as if shocked by what he was hearing. “Employment is at an all time high,” the Chancellor shouted across at him. The deficit is coming down, he said, from 6.8 per cent this year, reaching as low as 2.7 per cent in 2017-18. And then, said Osborne, relishing the moment, “by 2018-19 on this measure, the OBR do not expect a deficit at all. Instead,” he said, “they expect Britain to run a small surplus,” and at this point to say that the House erupted would be a gross understatement—a net understatement, even. Surplus. Has the word been spoken in the Commons this decade?

The Labour benches were beginning to stiffen. The deluge of positive data was beginning to become wearing, even for some on the Government’s own benches, one of whom yawned. There were announcements about tax avoidance, business rates, married couples’ tax allowances, cuts to government levies on energy bills and the cutting of National Insurance for employees under the age of 21. In an aside the Chancellor even announced that he would be removing stamp duty for shares purchased in Exchange Traded Funds, a move that will generate a good deal of interest in financial circles. Osborne roared to a close, concluding with the words: “Britain’s moving again; let’s keep going.”

The roar was very loud as the Chancellor sat—it became even more so when Ed Balls stood up. He began speaking, but the noise in the chamber was so intense that he was barely audible. The words “breathtaking complacency,” just about cut through the crazed mess of noise, and when Balls was heard to say that the “Chancellor is in complete denial,” the Government benches made a sound like an abattoir.

Working families were now £1,600 worse off than when the government came to power, said the Shadow Chancellor. Prices were rising faster than wages and what’s more the country was in the throes of the slowest recovery for 100 years. It became clear at this point that Balls was losing his voice, making the exchanges feel uneven and rather unfair. However, Balls persevered admirably, shouting hoarsely that business lending was unacceptably low, that the triple-A credit rating on British government debt had been lost and that the “smoke and mirrors,” of the government’s economic policy had led to “three years of economic failure.”

The removal of government levies from energy bills was, said Balls, a “panicked and half-baked attempt to steal Labour’s clothes.” The house once more struck up at this comment with a torrent of mooing. Balls accused Osborne of “tinkering at the edges,” before saying Osborne’s position amounted to, “surprise surprise, letting the energy companies completely off the hook.” It became apparent at this point that a large section of the government’s back benches was shouting the shadow chancellor’s name—his second name—as he spoke.

Balls managed to silence the house when he turned to the introduction of the Universal Credit, which is being overseen by Iain Duncan Smith, the Work and Pensions Secretary. “IDS?” shouted Balls, “In Deep Shambles,” and the place fell about. He lambasted the “unfair and perverse” bedroom tax, and barrelled along to the closing line that “Hard working people are worse off under the coalition.”

Osborne has been lucky with the data and Balls did not perform well. But this should not detract from the potency of Balls’s underlying point, which is that wages have stagnated even though GDP is rising so that many people are not getting anything out of the recovery. The Chancellor has made it clear that he is going for growth and that’s it. Business taxes are coming down, and in a large structural fiscal move, he is bringing forward legislation next year to put in place a “Charter for Budget Responsibility” which would set borrowing limits that could only be breached following a vote in Parliament. Fiscal reticence is to become embedded in the statute book.

But what does any of this matter if people’s lives are not improved? In a matter of weeks, we will be able to start talking about “next year’s election.” The Chancellor must hope that, very soon, the effects of growth start to be felt more widely. If they are not, then to the electorate, Osborne’s “recovery,” will feel like nothing of the sort.