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By Peter Hoskin
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The
hull of HMS Ed Balls has taken a real pounding in recent months – the Guardian
published an editorial calling for him to be replaced; prominent lefties have
written letters to the same effect; and David Miliband has been touted as a
likely substitute. And yet, this week, Mr Balls appears to be bobbing happily across
Westminster’s waters.

First,
a poll suggested that voters are keener on policies when his name is attached
to them. And now the shadow chancellor uses an interview
with the Daily Telegraph
to make a bold demand of George Osborne: to cut
the basic rate of income tax in next week’s Budget. “If George Osborne, in this
Budget, were to cut the basic rate of income tax, he says, “we would applaud
him.”

The
last
time
a Labour government cut the basic rate they funded it by scrapping the
10p rate. So how would Balls, if here were Chancellor, fund it this time
around? The tax on bankers’ bonuses that would totally, definitely raise about
£50 squillion? The mansion tax? No, here’s the kicker: according to the Telegraph
report
that accompanies the interview, Balls reckons Mr Osborne should fund
it by borrowing more, at least temporarily.


There’s
something significant about this. Of course, we already know – thanks to the
Institute for Fiscal Studies, as well as Everything We Know About Politics – that
a Labour Government would be borrowing more right now. But this is something
that, on the whole, they’ve been reluctant to highlight themselves. That’s why
they’ve tended to suggest a tax rise for every tax cut or spending hike (even if
it’s the same tax rise each time). It’s why they have shied away from the words
“deficit-financed stimulus”. And yet Mr Balls now seems to be recommending something
along those very lines.

And
it comes at a time when others are mooting the idea of extra borrowing to fund
more spending or less taxation. Exhibit A is with Vince Cable’s “balance of risks” article for the New Statesman,
earlier this month. But there are other exhibits, too, including the final
paragraph of this recent
Economist editorial
. Neither may support Ed Balls’ calls for an income tax
cut, but there’s a unifying theme between them all: borrow for growth.    

But
there’s a problem for Mr Balls. As much as the mood music is changing, the
public still broadly support the Coalition’s plans for deficit reduction – and
it will be difficult to make them shift. Back in January, Ed Miliband argued
that the government, with its rising deficit forecasts, is “borrowing
for failure”
. Can he and Mr Balls really convince people that there’s an
alternative called “borrowing for success”?

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