Ed Balls’s speech today is significant for two reasons. First, it implied that a Labour government in 2015 would not spend more on current spending. But, rather, it would borrow more to fund higher capital spending—what Gordon Brown used to calling ‘borrowing to invest’. This, I take it, means that a 2015 Labour government wouldn’t introduce the five point plan for the economy that Balls has previously outlined.
The second was the announcement that Labour would stop winter fuel payments to higher and top rate taxpayers. This will save about a £100 million a year, which is hardly enough to give Labour a reputation for fiscal rectitude.
But it does concede crucial ground on universality. It accepts that in these times, benefits should be targeted on those who need them most. There is no intellectual difference between Balls’s position on winter fuel payments and the coalition’s on child benefit.
The Labour leadership is hotly denying they’ve abandoned universality. But it is hard to see on what grounds they’re arguing this. This provides an opening for the Tories to offer a scaled back version of the welfare state that is more of a safety net than a universal system.
Finally, I suspect that this speech has provided some political space for Ukip. I’d be surprised if it didn’t go into the next election as the party committed to protecting pensioner and middle class benefits.