Matthew Hancock-Mp

The global debate about how we live within our means is moving fast. I spent a week in Washington while Congress and the President hammered out their deal on this year’s budget. The deal was significant because all sides agreed on the need to cut spending now. After days of brinkmanship, they agreed to £38 billion in-year cuts. Significant, perhaps, because America has now started to tackle its huge deficit. But everyone agreed it is a small downpayment ahead of a much bigger debate to come.   What’s fascinating for us here is that President Obama’s proposals are to cut the deficit slightly faster than we are here. Congress would go faster still.

Last night, Portugal's parliament voted to reject its latest measures to deal with its deficit. It was the fourth time that the Portuguese parliament had been asked for more taxes and for more spending cuts. The result has been a further loss of confidence in Portugal’s ability to pay its debts. Market interest rates have risen to over 8 percent. European leaders are meeting this weekend to work out a path forward. The lessons for us here in the UK are starkly clear. First, it is better to set out all the difficult decisions needed to deal with the debt crisis, even if these take place over a number of years, rather than continually going back to ask for more. That the Budget was neutral overall shows that a clear plan is being followed here.

One of the hardest tasks of any opposition is to gain the trust and credibility to run the economy. After what happened over the last few years, Labour have an enormous credibility gap. Ed Balls’ decision to oppose any measure to deal with the deficit has reduced Labour’s economic credibility still further. So too has the two Eds’ decision to make attacks based on mis-truths, like denying there was a structural deficit before the election; or attacking the coalition for cutting bank taxes, when it is actually putting them up; and like backing another bonus tax, despite opposing it at the election, and despite Alistair Darling’s careful explanation of why it won’t work.

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.

We already knew Ed Balls was behind Gordon Brown’s economic policy. He devised the policy on spending that left Britain with the worst deficit heading into the crisis, and wrote the bank regulations that his colleague Douglas Alexander attacked earlier today.   What we have discovered today, from Balls’ first foray into economic policy as Shadow Chancellor, is that he was also behind the old Brown ploy of twisted facts and absurd assertions.   First, he claimed the public finances are better than the Treasury forecast. Yet the independent Office for Budget Responsibility found that the structural deficit – the hole we have to fix - was worse than Labour admitted.

Today’s shocking inflation figures have sparked a fascinating debate. I laid out my take earlier, and I thought CoffeeHousers may appreciate a different perspective. Matthew Hancock MP is a member of the Public Accounts Committee, former economist at the Bank of England and former chief of staff to George Osborne. Fraser Nelson. Last week, growth. This week, inflation. Ed Miliband is complaining about both. But the trouble is: the two can’t be taken in isolation. For the main weapon against inflation is for the Bank of England to raise interest rates. Yet the main weapon to support growth is for the Bank of England to keep interest rates lower for longer. You can’t credibly complain about both.

Did he get cold feet? Or was his new spin-team overenthusiastic in their pre-briefing? We were told we'd get an apology from Ed Miliband in today's speech, but instead he entrenched himself in his position that Labour did nothing wrong on the deficit. I'm surprised at this decision. Surely Ed Miliband understands, as his Shadow Chancellor understands, the central importance to an opposition party of economic credibility. That credibility will not return while Miliband bases his economic argument on a denial of the facts. First, and critically, he argues that Britain's deficit was not a problem going into the crisis. Not only is this disputed by an impressive array of domestic and international experts, from Tony Blair to the European Commission and Mervyn King.