Can Balls be just austere enough?

Ed Balls here at Labour's conference in Manchester has a difficult trick to pull off.

He wants to be seen to be austere and fiscally righteous - so that investors in Britain do not become anxious that Britain's high public sector deficit, which is currently running at around 6% of national income, would persist for many years yet.

To put Britain's deficit into perspective, that gap between revenues and spending is about 50% higher than France's - which has a lower credit rating than the UK's and is widely seen to be in a much bigger economic mess than this country.

But he cannot be seen to be as austere as the Chancellor, George Osborne. Because then there would be little reason to vote Labour.

So his target for reducing public sector borrowing is a lot less demanding than the Tories'.

They have promised an overall budget surplus, including capital spending, by 2018/19.

By contrast, Ed Balls has pledged that at some point by 2020, the budget - excluding capital projects (housebuilding, infrastructure spending and so on) - would be in balance.

The soft option?

Osborne also has a more onerous target for when our trillion-pound-plus national debt should start to fall as a share of national income.

The difference in public spending cuts needed to achieve their respective goals would not be trivial, according to the Institute of Fiscal Studies.

The Chancellor is committed to unspecified additional public spending cuts of £37.6bn in the next parliament - which implies real reductions of more than 10% in resources available to departments.

Balls by contrast could get away with cuts of £9.3bn.

He would have to cut £28.3bn less than Osborne.

Which may look as though he is taking the soft option. And of course in a way he is. His squeeze would be less onerous to the tune of a couple of per cent of national income, or so.

But after years of belt tightening in the public sector, quite a few Labour-supporting pips are already squeaking at the prospect of being ordered to find more savings.

And there is plenty of work for him to do in finding those cuts.

His announcement that he would limit a child benefit rise to 1% is only a bit more effective than hoarding buttons to pay the mortgage - it is a symbol of the burden we will all have to shoulder to fix the public finances, rather than yielding an important sum.

Choices for voters

What matters most to Balls is not conceding Osborne's argument that a small state can be an effective state. If Labour is not all about the public sector improving the quality of people's lives, it is not about very much.

Osborne is making a different judgement. He thinks the great crash and recession of 2008 has demonstrated to most the imperative of cutting debts - and not just for its own sake.

He will argue, and does argue, that his more rugged plans to shrink the public sector will encourage the Bank of England to keep interest rates lower for longer - by reducing demand and inflationary pressures.

So among the choices voters may face at the election next May is Labour offering to protect quality of life through relatively less of a public sector squeeze, versus Tories suggesting there will be more pounds in pockets via relatively lower interest rates.