George osborne

Balls is a bit like a vampire – he has bite, but he works best in the darkness. In the House of Commons, with those lights shining on him, his powers drain. George Osborne had the better of him in their brief exchanges at Treasury Questions. Balls led on the snow joke. But Osborne had pre-empted that earlier, when he first stood up. Balls teased him about going to Klosters in the winter, but these things only work in newspapers where you can run a picture of Osborne in ski gear. It leaves the House cold.   The key Osborne line was that Balls is “the man with a past” – and how. It was said with just the right touch of menace. And he had a fairly decent gag: that Eds Miliband and Balls both “know what's it's like to be people's second choice.

Tomorrow is the first Osborne Balls Treasury Questions clash. It should be a fiery encounter. There’s little love lost between the two men, they are both aggressive despatch box performers  and the two of them know that their clash over the economy is likely to be the major factor in determining the next election result. Balls has a fair amount of material to work with: the disappointing growth—or, more accurately, non-growth—figures for the final quarter of last year, the limited success of the national insurance holiday for new small companies and the failure to publish a growth plan.

No doubt about it, George Osborne is being pulled in two directions ahead of the Budget. There are those, such as the Lib Dems, who would have him reduce taxes for the least well-off. There are those, such as Boris, who would have him reduce taxes for higher earners. As I suggested yesterday, this debate pivots around two particular measures: raising the personal allowance and cutting the 50p rate. Rachel Sylvester develops the story in a typically insightful column (£) for the Times today. It quotes an "ally of the Chancellor" to the effect that Osborne is minded more to raise the personal allowance than to cut 50p. "Not many Tories want to reverse the 50p top rate," says her source, "We are big fans of raising the threshold and would see that as the priority.

One of the most eyecatching political reports of the weekend was squirrelled away on page 16 (£) of the Sunday Times. It's worth clipping out for the scrapbook, even now. In it, Marie Woolf reveals some of the fiscal sweeteners that Osborne might sprinkle into the Budget. There are two particularly noteworthy passages: i) Raising the personal allowance. "The income tax threshold is already set to increase by £1,000 to £7,457 from April 1. However, Osborne is expected to raise it by about a further £500. Details of the additional concession are still being worked on, but it marks a victory for the Liberal Democrats, who have been arguing within government for tax cuts for the poor." ii) Holding off on 50p.

So Ed Balls has made his decision. In articles and a TV interview today, he has decided that, instead of apologising for his part in bringing Britain to the state it's in today, he will deny what he did. It was the consensus that Britain had the biggest deficit in the G7 going into the crisis, because that's what the facts show. Contrary to Balls' assertions, Britain ran a structural deficit for the seven years running up to the crisis – the figures are right there in Labour's own Budget red books. And it's the consensus that Labour left the biggest deficit since the war, since it's a fact. Given Balls' role in creating these two disasters, he should try owning up, not covering up.

David Cameron and George Osborne must have hoped that their message from Davos today would be broadcast unimpeded. It is, after all, a blunt message, designed to smash through all the radio chatter: we must continue with deficit reduction, there is no alternative, etc. But, inconveniently for them, there are other voices saying what we must do – among them Boris Johnson. The Mayor of London's interview with the Telegraph is at once typical and quite intriguing. Typical, because he holds aloft the same standards as always. "I understand 50p tax politically," he says, "but there has got to be a sense of where we are going and where we want to be as a country.

One thing worth noting before we discuss Balls’ appointment is that the reasons Johnson have resigned are personal. It is not about his competence or otherwise. The Tories are wasting no time in getting stuck into Ed Balls. One just said to me, ‘the man who created this economic mess is back. He designed the fiscal rules that failed, he designed the FSA that failed…’ Certainly, the Tory attempt to make Labour’s economic record the premier political issue has just become a lot easier. Balls will be a more aggressive opponent for Osborne. But I suspect that he will prefer facing Balls to Yvette Cooper.