Ed Balls is right, VAT increase has cost Britain dearly.

by liamssoft | May 26, 2012 at 05:13 am

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David Cameron and George Gideon Oliver Osborne were wrong, Ed Balls was right.

Nearly every leading economist and 70% of the British public are aware that the raising of VAT from 17.5% to 20% on 4 January 2011 was the start of the contraction in public spending in the UK.

After one year four months of the pointless increase, tax revenues have plummeted, retail sales have collapsed and thousands of businesses have either gone to the wall or are struggling to survive.

In any normal business sense the VAT should have been cut and spending would then have been kept alive and the economy would have sailed clear of the storms.....

The shadow chancellor Ed Balls has called it correctly on the two most important judgments of recent times.

Only in politics could the phrase "muttering idiot" be considered a compliment. To be sure, David Cameron meant to insult Ed Balls when he hurled that term across the floor of the House of Commons on Wednesday. But those watching knew it was the highest possible praise. The prime minister was confessing that Balls had burrowed under his skin. From a man who breezily laughs off the arrows aimed at him by so many others, this was an indirect admission that he sees Balls as a threat.

Why does Balls, described less than two months ago by the PM as the "most annoying person in modern politics", so wind up Cameron? It's worth paying attention to the nature of the shadow chancellor's serial provocations, for Balls is a master sledger, a match for Australia's cricketers in their heyday. He has studied the acoustics of prime minister's questions, realising that there is a moment, just as a roar or cheer subsides, when, if he speaks directly to Cameron at normal, conversational volume, the PM will hear him even if the microphones do not. His taunts follow a consistent theme: that Cameron is not up to the job. "You're supposed to be the prime minister," Balls will say – or, with equal, quiet menace, "You don't know the detail, do you?"

In the summer of 2010, when the coalition was young and Labour was gazing inwards to choose a new leader, Ed Balls broke with what was then a near-uniform consensus to declare that a rushed austerity programme made no sense when the economy was so fragile. In his Bloomberg lecture, he warned that rapid contraction was likely to strangle the recovery before it was fully born, even plunging Britain into a double-dip recession. Doling out money to the unemployed, who would no longer be paying taxes, would only see Britain's debts get bigger, not smaller.

Things look rather different now. This was the week when official figures confirmed that Balls's direst warnings had come true: Britain is indeed in a double-dip recession, the economy that was making a modest recovery when Labour left office having contracted in the past quarter by 0.3%. Balls's once maverick demands for a growth-oriented plan B look less eccentric now that they are echoed by Barack Obama and François Hollande (with Cameron hastily, and laughably, claiming to be in the same camp). Even George Osborne's favoured choice as head of the IMF, Christine Lagarde, wants action to kickstart the British economy. Suddenly the terms of trade have shifted. Where once the conventional wisdom spoke of a debt crisis, it now warns of a growth crisis. But Balls got there first.

In time, this should give the shadow chancellor a perch in British politics last occupied by Vince Cable – that of a seer, admired for his prescience. Cable's prophetic reputation rests on his claim to have foreseen the great financial crisis of 2008, a claim that rests, perhaps flimsily, on a 2003 warning that personal debt levels were too high. Cable issued no warning about the banks, and in 1999 was insisting that financial regulation be merely "light-touch". Still, it was enough to give the Lib Dem a moral authority rare in British politics, one that endures even now. This week the Telegraph's Peter Oborne described the good doctor as "the moral centre" not only of the government, but of "British public life".

People, starting with his own colleagues, will be very reluctant to give Balls that status any time soon: his years as a ruthless henchman to Gordon Brown have seen to that. But the facts are the facts. He was right to denounce the deficit fetishism that gripped the coalition and almost all the commentariat, just as he was right to oppose bien-pensant support for British membership of the euro more than a decade ago. (Though, embarrassingly. he, like Cable and nearly everyone else, failed to see the dangers of banks run riot: press him on this and he acknowledges forgetting that his hero Keynes foresaw the perils of financial instability as well as everything else.) Put simply, Balls called right two of the most important political and economic judgments of recent times.

Some will hear such talk as building up one Ed at the expense of the other. It's true that Labour's two Eds are not best buddies, the starring duo in a wonk bromance. But Harry Truman was right: if you want a friend in politics, get a dog. More important than chumminess is that the interests of Balls and Miliband converge right now, and that they see the current political landscape in broadly the same way. Both understand that a collapse in the coalition's popularity is not the same as a public rush to Labour. Both see that the cutting of the 50p tax rate has fundamentally altered the political narrative – away from collective austerity in the national interest towards the more contentious terrain of who feels the pain – but that Labour still suffers from what Balls calls the "overhang" of blame for the economic plight of the country.

The Tories are losing public trust with each passing week. Labour is a long way from regaining it. But every new woeful economic number proves that Labour's shadow chancellor is no idiot – and Cameron knows it.

Ed Balls is right, and should ignore the whinging tory trolls. They're unable to cope with the fact that this complete farce of a government with the real muttering idiot, clueless cameron as the head, cannot understand that they are truly useless and once again the tories with the libdem lapdogs are shown for the greedy, lying, inept money grabbers they've always been.
Bring back the good old days of Labour, the only party that cares for a more equal Britain!

Source; guardian.co.uk