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by GK Strategy 1st July, 2014

Labour, Anti-Business? Balls to That

Ed Balls arguably enjoys the dubious honour of being one of the few politicians less popular than Ed Miliband. Even within his own party he is viewed with suspicion, and as for the typical voter, they are most likely to think of him as a bully who was also Gordon Brown’s protégé. Say his name to some investors, and their features will darken as quickly as the thunderclouds over Centre Court.

But the Shadow Chancellor has remained. This is partly because Ed Miliband has few viable candidates who could replace him, and partly because, whatever his faults, Balls remains a big beast and a credible candidate to take over HM Treasury in 2015. Balls has of course been ensconced in the Treasury before; he was once the City Minister, and he still chooses to describe himself in those terms more frequently than you might think. He also spent many years as a key political adviser to Gordon Brown in the run up to, and following, Labour’s landslide 1997 victory when the City was widely, and successfully, courted. Some of them, perversely, alongside Ed Miliband.

The tenor of his speech at the London Business School yesterday was emollient, with the Shadow Chancellor seemingly aiming to reposition Labour as “pro-business” despite a stream of attacks on the UK’s “predatory” version of capitalism by Miliband since his leadership began. Balls set out new policies designed to reassure the City – including a pledge to keep the UK’s corporation tax rate competitive. Also proposed was a consultation on a new Allowance for Corporate Equity, which would cut taxes for companies that raise money by selling shares and then use it to fund acquisitions and growth.

This is yet another indication that there are clear differences in thinking between the Labour leader and his right-hand man. Miliband has been a staunch proponent of regional banking; Balls is sceptical. Miliband plans to order the Competition and Markets Authority to investigate the establishment of new challenger banks; Balls wants to respect the body’s independence. Ultimately, Miliband is an idealist who wants to transform the British economy; Balls is a pragmatist who wants to deal with it as it is. It was also Balls who was behind the Labour Party’s ambivalence on High Speed 2, arguing publicly that the project was too costly and could be “irresponsible”.

There’s every possibility this tension could escalate. Miliband is due to give a speech this week setting out new policies on localism – potentially devolving £30 billion to local authorities, based on a review by the ever-creative Lord Adonis. Tie in the reported comments from Jon Cruddas over the weekend, suggesting that Miliband only listens to a very small inner circle of acolytes, and you start to see serious potential for conflict.

The lesson is to be careful what you wish for. Many might wish to see Balls gone from the Shadow Cabinet. The question is whether that would strengthen or weaken Labour’s ability to understand the business community and its needs. The latter looks more likely.

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