John McTernan: We always knew Ed Balls was bright

Ed Balls: Even the Tories have had to surreptitiously follow his advice. Picture: Getty

Swagger is what distinguishes the great politicians from the good ones. That sense when they enter the room that they are important, and they are entering on to a stage where they will catch every eye. And in the very best, a sense of the absurdity too – with a self-deprecating humour. Think of Peter Mandelson, who even in his pomp was never pompous.

The current crop of senior politicians are mainly cut from the same cloth. Oxbridge. Special advisers. Corporate flacks and lobbyists. Their sameness of background is matched by a centrist, technocratic style with little difference and no flash.

I said mainly, because there are a few honourable exceptions. Chief Whip Michael Gove is one – any voter could spot him in a line-up. Labour’s Ed Balls is another. On the BBC’s Daily Politics programme, I was once asked what I thought of Ed B (as insiders call him to distinguish him from Ed M). “He’s one of the big beasts of modern politics,” I said, “but he’s a polariser. You like him or you loathe him. He’s a Marmite politician.”

Tory Central Office tried to flam this up into a big Labour split story – “Blairite insults Balls”. But it didn’t take off, because what I said was true – and it wasn’t an insult, it was actually a compliment. There are far too few true individuals in politics – and the voters know it. Labour is lucky to have Ed Balls: he may just be the secret weapon that wins them the election.

One of the most quoted of all election-winning slogans is: “It’s the economy, stupid.” That was the line James Carville, Bill Clinton’s chief strategist, forced on the Democrats’ campaign team in 1992. It still expresses a core truth. Voters trust right-wing parties to manage the economy, but they fear that they will be heartless. The opposite is true, in their view, of left-of-centre parties – they are all heart and will spend, spend, spend, but will they grow the economy? Has the Left – in effect – the head to make the hard decisions? This is where Ed Balls comes in.

No-one who has met Balls could doubt his intelligence and intellectual integrity. Treasury officials still mourn his departure for the House of Commons. When he was senior special adviser to Gordon Brown he was superlative. He not only knew what Mr Brown thought on any issue, but he also knew – without checking – what the Chancellor would say on any given issue. As a result, he was able to defuse potential bomb after bomb. The Treasury is full of clever people – so clever they can be stupid. Think of the “bedroom tax” and the “pasty tax”. Both would have been impossible on Mr Balls’ watch, but all too possible on George Osborne’s.

Mr Balls was a good Cabinet minister, and had a creditable leadership campaign in what was – in the end – a two-horse, one-family, race. But it is in opposition that his talent has matured into real leadership. He has fought the battles a shadow chancellor has to – and he has won them. Earlier this month the Labour Party’s National Policy Forum signed up to a massive consolidation of public spending – £20 billion of cuts. This was a sign of political intent – unions and party united behind Ed Miliband because they firmly believe he could be Prime Minister next year and they know that on this key issue Labour needs credibility. But it was equally a sign of political and intellectual strength on Ed Balls’s part. There is only one economic analysis in the party – his. There is no alternative.

This dominance derives, in the end, from Mr Balls’s unchallenged mastery of economics. It is a fact of modern politics that he who owns the economic narrative owns their party. Mr Osborne and Mr Cameron are unchallenged in their party – a far cry from the Thatcher government in which leading members, the “Wets”, had a completely different economic analysis from her. Or look at the Liberal Democrats. Messrs Clegg and Laws could take them into government with a Tory party committed to stalling the economy because the only coherent economic programme the Lib Dems had came from the neo-Thatcherite “Orange Book” Liberals. Vince Cable has been hamstrung in government with no alternative economic plan – his discomfort in office has been clear, but he is unable to break the frame imposed by Mr Osborne.

Not so Mr Balls. He correctly stated that the Chancellor’s Plan A would kill economic growth. It did. Mr Balls also correctly argued that a Plan B was needed. Lo, and behold, that come forth too. The plan to eliminate the deficit within one parliament was abandoned. Capital spending was increased substantially. And the economy coughed into life. It was always going to be impossible to keep the fifth-largest economy in the world in the deep freeze – the price, as Mr Balls insists, has been a wasted decade of falling living standards.

There is a view that Labour signing up to deficit elimination was a profound admission of defeat – a concession, not to say confession, that the Tories have won the economic argument. Actually, it’s not. On the one hand, being Keynesian on the way into a recession – spending to maintain demand – requires being Keynesian on the way out and cutting spending as growth returns. A 2010 Labour government would have taken £20bn out of NHS spending, but without cutting services – it had a well-designed system of choice and competition which would have delivered higher quality at lower cost. On the other hand, it is an acceptance of reality. Labour wouldn’t have started from here – but the Tories have brought us to here. So Labour has to build on what is good – rising employment and growth, and mend what isn’t – low wages and low productivity.

Economic credibility is, in the end, a matter of perception. From his days on the Financial Times, through his time as Mr Brown’s adviser when he coined the phrase “post-neoclassical endogenous growth theory”, to today, no-one has ever doubted Ed Balls’s brilliance. What no-one could anticipate was quite how brilliantly he would grow into his role.