Strictly Come Dancing star calls for curbs on Bank independence

Strictly Come Dancing star Ed Balls was the chief architect of UK central bank independence. Now, taking a break from learning the cha-cha-cha, he has called for the Bank of England's independence to be reined in.

The paper he has written two colleagues at the Kennedy School of Government at Harvard makes a key distinction between operational and political independence. The former has brought benefits in terms of price stability, but the latter does not bring any such benefits, and there is a need for greater political accountability: Bank independence

It is argued that the assumption that the more independence given to a central bank the better no long holds.

Of course, there are limits to the Bank of England's independence. The Chancellor sets the inflation target and appoints the Governor and key personnel.

The paper from Balls is very much in line with the political wind with prime minister Theresa May making implicit criticisms of the Bank's monetary policy and Donald Trump's criticisms of the Federal Reserve.

The grant of operational independence to the Bank of England formed a central underpinning of academic depoliticisation narratives, but recent political developments favour repolitcisation.

Where and who is the median voter?

A younger Dave Cameron meets Worcester Woman. The real Worcester Woman was somewhat younger, in her mid-thirties, she worked part-time, had children and drove a Ford Mondeo.

In the course on Economics and Politics I taught for several years with my great colleague Ben Lockwood, we spent two weeks on the Downs theory of the median voter and the subsequent literature. As a shorthand, one might say that spatial models like that of Downs have lost popularity relative to valence models which lead to a greater emphasis on leadership competence, although a methodological problem is that spatial positioning may affect assessments of leaders.

Journalists have engaged in a search for the median voter. At one time it was the anonymous 'Worcester Woman', but in 2010 it was 'Motorway Man' with a specific voter in the constituency of Ed Balls being named. In 2015 the garland went to 'Cautious Cathy' from Nuneaton, a 35-year old mother.

A new study by Professor Paul Webb suggests that voters may be more to the left than we assumed: Left leaning

If I was teaching the module again next year, we would certainly look at this new evidence.

Ask the Chancellors

I can't imagine this attracted a large audience live on a Monday afternoon, but, of course, what matters is how it is 'spun' in late news programmes. I thought each slot was going to last an hour, but in fact it was half an hour and George Osborne was cut off in mid flow by a commercial. The use of boom mikes did affect the sound quality sometimes. I thought that the young woman who asked George Osborne a question about zero hour contracts said she came from Greenwich, but George Osborne seemed to think she came from the Midlands. To me, she had a London accent.

The audience seemed to be predominantly made of small business entrepreneurs and this meant that Ed Balls seemed to get a rougher ride, but I thought that he acquitted himself quite well. He had two (tougher) questions from social media and George Osborne had one. At the beginning, Ed Balls seemed to fall into his old trap of seeming to bluster, but became more convincing as time went on, particularly on the question of Europe.

George Osborne gave a smooth and confident performance, reiterating his basic messages although there is a risk that he can seem complacent. He was most put under pressure by the young woman student on zero hours contracts. It is not the case the majority of jobs take that form, but they do particularly affect the young, women and some older people. Ed Balls acknowledged that they perform a useful function for some, but felt that some employers had pushed them too far.

What struck me was that throughout both interviews, no questioner nor either respondent referred to the most fundamental structural problem facing the British economy: low rates of productivity. Neither really had a good answer on getting more houses built. Ed Balls was under some pressure on the mansion tax, but managed to put up a defence, although it isn't going to raise enough revenue to provide more doctors and nurses (the issues there aren't just financial anyway).

0.2 per cent is just good enough

The latest quarterly figures for GDP growth of 0.2 per cent are just good enough in political terms, especially given that special factors knocked off 0.5 per cent: Growth . They are below expectations and disappointing comparatively, but just enough to prevent Ed Balls creating a political firestorm.

Consumer demand is being hit by the squeeze on incomes. But what is not talked about very much is the underlying structural weakness of an economy that is so dependent on consumer demand, something like two-thirds of the total. Debt fuelled 'privatised Keynesianism' as Colin Crouch has called it is not going to return any time soon.

In terms of short term fixes, a cut in VAT has been recommended. That would stimulate consumer demand and have a positive effect on inflation. However, it would also cut revenues and that would undermine the deficit reduction policy which is already encountering plenty of difficulties.

Alan Johnson is shadow chancellor

Ed Miliband has found an interesting solution to the Ed Balls/Yvette Cooper dilemma by appointing Alan Johnson as shadow chancellor. Balls and Cooper both get senior posts, Balls as shadow home secretary and Cooper as shadow foreign secretary.

What is interesting about this appointment is that both Balls and Cooper were 'deficit deniers' in the sense that they thought that even halving the structural deficit over the lifetime of a Parliament was too stringent a target. Johnson is believed to have been aligned to the halving target, but it will be interesting to see what stance he takes now.

Yvette or Ed?

Husband-and-wife team Yvette Cooper and Ed Balls came first and third in the poll for the shadow cabinet yesterday. But which of them will take the key role of Shadow Chancellor?

Ed Balls is a heavyweight political bruiser and has long experience in the Treasury as Gordon Brown's Deputy Chancellor. But I think Yvettte Cooper, has the forensic skills required to tackle the detail of Coalition Government spending plans and has better presentational skills. I would choose her, but I suspect that Ed Miliband will choose the other Ed, although he could make him shadow foreign secretary.

Jack Straw said yesterday that half a dozen of those elected would not be up to serving in the real Cabinet. Who could he mean? Perhaps the Eagle twins who have both been successful?

The big society

This was the unifying theme of David Cameron's speech to the Conservative Party conference. The implication was that this was the way forward which would enable the country to withstand the cuts in public expenditure necessitated by the budget deficit and take us to the sunlit uplands beyond.

The 'Big Society spirit' was mentioned more than once, as was the notion that 'your country needs you'. The prime minister used the example of the 100,000 people who had volunteered for the Olympic Games as evidence that additional volunteers were available. He attacked the notion that 'if government takes care of this, we won't have to'.

Citizenship was more than a transaction - although citizens have been increasingly encouraged over the years to define themselves as consumers of public services with certain entitlements, not least by New Labour. In other words, this idea has become quite embedded. This is not to say that it should not be challenged, but it's a perception that will be hard to dislodge.

It was noticeable that the attacks on Labour got the loudest applause in the hall. He managed to define Labour, in terms of the views of Ed Balls, as opposed to aspiration and there was a neat dig of Neil 'we've got our party back' Kinnock. Ed Miliband was more or less a non person, which is probably the way to play it for now. The prime minister's defence of the union also went down well with the audience.

The comment that we were geared up to fight old wars did not sound like good news for the Navy or the RAF. It seemed to me that there was a clear endorsement of Ken Clarke's refreshing approach to criminal justice issues.

It was interesting that two references were made to football, the last World Cup and the hope of holding the 2018 one in England.

I didn't think there was much that was new in the speech, but probably there didn't have to be. It was an attempt to define Cameron's distinctive approach and brand. There is such a thing as society, but it's different from the state (Sam Cam's idea originally) and it needs to be an active and engaged society. I don't think it is just cover for the cuts, but I'm not fully convinced either.

Interesting how much the cameras focused on Sam Cam during the warm up video and at other times. But she was looking very glamorous.

What will David do?

David Miliband has to decide within the next 24 hours to carry on in front-line politics, if he has not decided already. His acclaimed speech to the Labour Party conference yesterday could be his last from the front bench.

One can understand why he might not wish to continue. He has been pipped to the leadership of the party by his own brother. Even if Labour regain office, he would never be prime minister.

Moreover, if he did carry on as a front bench spokesman, the media would constantly be looking to expose differences between him and Red Ed - and they do exist.

On the other hand, if he does stand down, Ed Balls is likely to be the Shadow Chancellor. Balls is a leading deficit denier. Or to put it more generously, he believes that a lot of the gap can be closed by clamping down on tax evasion and avoidance. If it was that easy, it would have been done years ago.

It all kicks off in Labour

It hasn't been very festive or fraternal/sisterly in the Labour Party over Christmas with a row breaking out over Gordon Brown's so-called 'class war tactics'. Unreconstructed Blairites Mandy and Tessa Jowell have made their concerns known and Jack Straw has also weighed as a so-called party statesman. In the other corner Ed Balls, Gordon's preferred successor, has weighed in with the argument that Gordon's remark about the playing fields of Eton was a joke which has only upset the Conservatives.

Given that voters (somewhat unrealistically) tend to favour united parties and don't like intra party bickering this won't do Labour any good in so far as anyone has noticed while they enjoy the festive period.

One complaint of the Blairites is that this is a 'core vote' strategy of the type used with little success by the Conservatives until Dave Cameron took charge and re-positioned the party to appeal to voters in the middle of the spectrum. However, a core vote strategy is not irrational if you think you are going to lose and want to minimise your losses so that you have a springboard for recovery. If you lose by 30-40 seats rather than 100, you have a chance at the next election (and, meanwhile, the Conservatives have to try and clean up the post-crisis mess).

One can't use an anecdote in academic evidence as it is the ultimate example of the individualistic fallacy but you can get away with in a blog. I was talking to a friend at our Christmas party and he said he had been a lifelong Labour voter but probably wouldn't vote at all at the next election or might vote Liberal Democrat (which is a rather odd thing to do in Warwick and Leamington given that, as another friend pointed out, the 'progressive' vote here has always been Labour rather than Liberal Democrat). Labour actually needs to hold on to and also mobilise this sort of voter. There is some poll evidence that the 'class war' tactics may have solidified the core Labour vote.

Personally I don't mind that Dave went to Eton, which is a rather good school, although I am more impressed by the fact that he got a first in PPE in Oxford which you can't do if you are spending your time on high jinks with the Bullingdon Club like Bozza (which perhaps explains why Dave is the party leader and not Bozza, leaving aside a helpful intervention from the Palace at the outset of the former's career). What irritates me somewhat is Dave's attempts to be 'blokeish', no doubt on the advice of his image makers. He should just be true to himself, i.e., a decent, intelligent, caring person. What concerns me is that a quite a few people in his party of a rather different ilk and he may have a problem controlling them.

The Conservatives may have some problems filling all the most junior posts (and certainly PPS roles) from serving MPs (or members of the Lords) given the turnover that is occurring in membership of the Commons and that may create interesting opportunities for the brighter and more clued up new MPs.

A failure on three fronts

Alastair Darling's pre-budget report has been something of a disaster. It has failed on three counts:

1. From an official Treasury viewpoint, the main short-term objective was to stabilise the markets. But there has been a flight from gilts.
2. It has not provide a platform for a Labour revival, given that it has managed to upset a range of target voters.
3. It has failed to provide a credible plan for dealing with the structural deficit.

Indeed, the fiscal position has got worse because Ed Balls and Yvette Cooper managed to persuade Gordon Brown that there should be a real increase in capital spending on school buildings. The more programmes are ring fenced, the harsher the axe that has to fall elsewhere to the extent that it is likely to do real and lasting damage. The authoritative Institute for Fiscal Studies has estimated that public spending will be have to be cut by as much as a fifth in areas such as defence, higher education, housing and transport.

Gordon Brown is also reported to have vetoed a VAT increase, meaning that there had to be a national insurance increase which in terms of the addditional levy on employers is a tax on jobs. The Conservatives are likely to increase VAT and possibly broaden its range, although targets such as children's clothing, books and newspapers would be controversial.

The IFS has also pointed out that the government's calculations do not really take account of the effects of an ageing population which would mean high public sector debt levels for a generation or more unless taxes were raised substantially or public spending was cut further.

Stand by for ten years of 'fiscal consolidation'.