Is Ed Balls the problem or the solution?

The question Ed Miliband and the Labour shadow cabinet has to work out at this party conference is as much about Ed Balls as anything else. Is he the economic mastermind or the electoral liability?

In his speech the shadow chancellor tried to acknowledge that he and his boss Gordon Brown made mistakes – but not the ones the Tories and Lib Dems assert. As Labour tries to regain economic credibility they must decide whether it can be done by him.

The case is his favour simple: not only is he the most experienced Treasury expert in the shadow cabinet, he is also the man who, with Gordon Brown, invented “prudence” for the start of the Labour administration in 1997.

It was their fiscal conservatism, sticking to Tory spending limits and rigid “golden” rules that helped give Labour a reputation for economic competence in those days that had long been missing.

So he understands the need for discipline – and repeated that today with a promise of new fiscal rules which would be independently monitored by the Office for Budget Reponsibility (as opposed to the way the “golden rule” was judged by Gordon Brown). His declaration that he could not promise to reverse any cuts or tax rises was met by silence in the hall – but was an important thing for a Labour politicians trying to regain an economic reputation to say.

Balls also admitted the same old mistakes they have admitted before about the Labour years : the 75p pensions rise, scrapping the 10p tax rate, not having tougher controls on immigration and not regulating the banks enough to stop the credit crunch.

However the key accusation the government hurls at the Labour Party is that it overspent in government – that it didn’t fix the roof while the sun was shining – and that is the one Balls rejects, pointing out: “We went into the (financial) crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany or Japan”.

The basic claim Labour is sticking to is that it wasn’t public service spending that caused the global financial crisis. There are two other factors that have escaped the debate right now. First the fact Britain was running a structural deficit between 2002 and 2008 before the crash and recession. And second the fact the Treasury got their predictions of tax revenues in 2009/10 massively wrong. Neither of those things have been apologised for. Whether or not Labour spending was irresponsible remains a judgement call – but a decent size of the electorate, the media commentariat and the Blairite wing of the Labour Party have already decided that it was. And they may not be able to be convinced that Balls can ever be responsible again.

Of course the other man on whom the past could be pinned – if you are one of those who believes Labour spending was irresponsible – is Ed Miliband. And we know from past experience how ruthless he can be about politics.

He and his team might one day conclude that even if they do not believe their spending in government was wrong they need to do more to convince voters that they understand those who think it was. Is that the point at which Balls might start to look like a political sacrifice worth making?

Follow Krish on Twitter at: krishgm