Ed Balls, anti-austerity chancellor in waiting

By Andrew Osborn

LONDON (Reuters) - Critic-in-chief of the government's strategy to revive the weak British economy, on the face of it Ed Balls looks like he may be winning the argument ahead of elections due in 2015.

His opposition Labour party leads the ruling Conservatives by up to 10 percentage points in the polls, the economy is struggling to grow in the face of the government's radical budget cuts, and the International Monetary Fund has backed his long-held view that more capital spending is needed sooner.

But Labour's would-be chancellor, an influential member of the previous left-leaning government, is aware that many believe Labour should be much further ahead in the polls given the economic pain voters have endured.

Signs of modest growth are also starting to emerge, something that, if sustained, could undermine his argument, and he has the tricky task of convincing voters his party can be trusted to run the economy again.

Surveys show the public trusts the Conservatives more on the economy than Labour, and Balls and his party have been vulnerable to one particular government line of attack: That their 1997-2010 stewardship of the country left in its wake the biggest public deficit since World War Two.

Labour, Chancellor George Osborne argues, failed to predict or successfully manage the 2008 financial crisis, borrowing heavily before its onset, and selling off the majority of the nation's gold reserves at a historically low price.

Liam Byrne, Labour's second most senior official in the finance ministry, left a famously depressing note for the incoming government in 2010.

It read: "Dear Chief Secretary, I'm afraid there is no money. Kind regards - and good luck!"

Labour argues that any government would have struggled to mitigate the effects of the global downturn, however, saying its economic policy, like that of many other administrations across the world, was suddenly and unforeseeably blown off course.

Balls, 46, an Oxford and Harvard-educated economist, is closely associated with that strategy.

A former commentator for The Financial Times, he became an economic adviser to Gordon Brown in 1994 when Labour was in opposition, a role he retained in different guises after Labour won power three years later and Brown became chancellor.

FIVE-POINT PLAN

He ended his stint in government in charge of education but is better known for his first-hand knowledge of how Britain's financial system works. In 1992, he advocated the Bank of England become independent, a policy later adopted by Brown.

He is also credited with being one of the people who helped ensure Britain did not try to join the euro, advising Brown against harnessing the country's fortunes to the single currency.

As Labour's economics spokesman, Balls has had to be careful not to be seen to be talking the economy down or of being perceived to want the government's own turnaround strategy to fail, even though his own electoral fortunes depend on it.

Who the public perceives to have won the economic argument is likely to decide who wins the next general election in 2015 with Prime Minister David Cameron's Conservative Party banking on an economic turnaround to hand it victory.

A feisty speaker in parliament despite battling to overcome a stammer, Balls dismissed Osborne as a "downgraded chancellor" after Britain lost its triple-A credit rating.

"There is nothing credible about a plan that leads to a double-dip recession, thousands of businesses bust, a million young people out of work, billions wasted on a soaring benefits bill, and borrowing going up not down," he has said.

One of his main charges has been that the government is unfairly spreading the economic pain it deems necessary to fix the economy, something it denies.

In particular, he says a decision to cut the top tax rate amounts to an unjustified "tax cut for millionaires", while his party has been scathing of reform of the welfare system.

Accusing the government of making lower or no income groups pay for the recovery while shielding the rich is a claim which strikes a chord with some voters who view Cameron and his government - many of whom were educated at the same top fee-paying school - as out of touch.

But polls also show many voters approve of the government's drive to rein in welfare costs and the government has demanded Labour spell out what it would do to fix the economy, something Labour has traditionally only done months before an election.

In April, Tony Blair levelled the same criticism at the party he led to three election wins, warning it was in danger of becoming a protest movement without electable policies.

For now, Labour has put forward a broad five-point strategy to boost the economy if it came to power.

It says it would levy a tax on bankers' bonuses to raise money to create jobs for young people and to build affordable homes, and would bring forward long-term investment projects.

Balls is regarded as one of Labour's "big beasts".

He unsuccessfully ran for the party leadership in 2010, a contest he and others lost to Ed Miliband, the current leader.

An accomplished violin player and a keen marathon runner, Balls has broken ranks with many in his party by saying he thinks Labour should consider offering voters a referendum on Britain's membership of the European Union, something it has so far shied away from doing.

Married to Yvette Cooper, Labour's spokesperson on interior affairs, he has three children. He and his wife were the first married couple to serve together in the British cabinet.

Since 2010, he has represented a constituency in northern England in parliament.

(Editing by Guy Faulconbridge, Patrick Graham and Mike Collett-White)

Source: http://news.yahoo.com/ed-balls-anti-austerity-finance-chief-waiting-050751303.html

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