Today was the second time that I have gone to Canary Wharf to hear Ed Balls speak. The first time was the evening before his celebrated Bloomberg speech in the summer of 2010 in which he warned George Osborne ‘against ripping out the foundations of the house just as the hurricane is about to hit’.

Surveying the wreckage wrought by Osborne’s failure to heed his advice, Balls today claimed that things need not be as bad as they are now or are likely to be in 2015. Our falling living standards, flatlining growth and stalled deficit reduction were attributed by Balls to Osborne’s failure to strike the right balance between deficit reduction and measures to support growth.

The immediate response to these challenges should be Labour’s five-point plan for jobs and growth. If this were immediately implemented then a Labour government in 2015 could look forward to a brighter fiscal inheritance than seems set to be the case.

This argument places a lot of weight on the capacity of Labour’s alternative. Would Labour’s slower pace of deficit reduction from May 2010 sufficiently have altered our growth rate to make fiscal choices now any less tough? Would Labour’s five-point plan make enough difference to growth between now and May 2015 to substantially alter the public finances bequeathed a Labour government?

The answer to both questions is somewhat, perhaps. But it was always inconceivable to imagine that Labour was not staring down the barrel of tough choices. Perhaps a perceived lack of candour on this helps explain the poor polling on Labour’s economic credibility flagged up again recently by LabourList.

Anticipating that Osborne will again not listen to his call for stimulus, Balls conceded that such tough choices will form the context of any Labour government in 2015. He gave a flavour of what this would mean by announcing that the winter fuel allowance would not be paid by such a government to the richest pensioners.

No other part of the welfare state, as Steve Van Riel has previously noted, has recipients setting up campaigns to give their benefits to charity. As tough choices go, it’s hardly up with the recent, incredibly brave and admirable example of Angelina Jolie, say. And, as Nick Robinson of the BBC pointed out in questions to Balls, it amounts to a saving equal to 0.1 per cent of the deficit. Such a small sum seems unlikely to shift the reputation for profligacy attaching to Labour. Yet Peter Hain was quick to oppose even this limited measure.

Balls is trapped between Robinson questioning his credibility and Hain doubting his compassion. Until the economy recovers a decent growth rate, he will remain so. Less growth and fewer tax receipts will come, however, from Canary Wharf than they did during the last Labour government.

The key to achieving the growth and taxes that will help resolve Balls’ dilemmas exists in building an economy less dependent upon Canary Wharf for them. In this sense, the balance that Balls must strike is less between austerity and stimulus and more between finance and the rest of the economy. Fully worked through answers to this challenge seem even further away than ones that will satisfy the likes of Robinson eager to test the extent of Labour’s fiscal credibility.

I’d like to go somewhere other than Canary Wharf the next time I hear Balls speak.

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Jonathan Todd is a contributing editor to Progress. He tweets @jonathan_todd

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Photo: Mark Mozaz Wallis