Austerity Labour is on its way and Ed Balls is leading the charge The 50p move, a long-planned tweak, is important for the signal it sends. Behind the scenes, Labour is gearing up to cut pension tax relief for higher earners. The manifesto will also contain a mansion tax. Since the Lib Dems may pre-empt Labour on both measures, penalties for the affluent cannot fairly be portrayed as the kamikaze mission of one tax-and-spend fanatic. In many other ways, Mr Balls fails to conform to Tory demonology. A more complex and interesting figure than his bullish caricature suggests, he is not immune to the odium he attracts. That hint of frailty was evident both in his Autumn Statement response and in his Fabian speech last Saturday, which struck listeners as unusually hesitant. That is not to doubt Mr Balls's ability. As one influential Labour insider says, he is a "towering, heavyweight economic thinker" who understands the drivers of growth and who looks irreplaceable. Nor is it to question his bravery when it comes to making enemies. Almost everyone has now forgotten that his previous Fabian address, demanding a public-sector pay freeze, elicited from Left-wing union leaders the same squawks of rage now emanating from business circles. That does not mean that Mr Balls yearns to live dangerously. The paradox is that, far from being the reckless chancer of Tory myth, he may get too risk-averse. Hence the (overlooked) first section of his speech, in which he warned his own side of the strictures ahead. Austerity Labour is on its way. According to one insider, the prospects for public services are "horrible." As predicted by the Fabian Commission on Future Spending Choices, Mr Balls's promise to deliver a current budget surplus and a falling national debt by 2020 leaves him (a little) more room to manoeuvre than George Osborne. The Chancellor, however, can make a virtue of running down the state, and welfare in particular. For Labour, such a prescription would be lethal. Given the need for restraint, Mr Balls's remedies are limited. His "Zero Based Review," highlighting potential departmental savings, is said to be hampered by lack of data. Shuffling money between projects will only achieve so much: the possible hit-list of cuts he floated last June, including police and crime commissioners, a huge "Titan" prison and Army officers and admirals, was perfunctory. He has evinced no interest in cutting back on Trident renewal, and any measure that would lay Labour open to Tory charges of a tax bombshell is anathema. That is where Mr Balls's new running mate comes in. As a health secretary-in-waiting, Mr Burnham is the steward of the public service in which Labour's best hopes are vested. For seven decades, the NHS has been the badge of faith that links voters to the party. Now, with annual real terms funding increases of between 4 and 7 per cent pruned to nil, the service is close to collapse. Social care for the elderly, an added burden to the health budget, has been allowed to rot away. For the past year, Mr Burnham has been pushing for an integrated health and social care service. With that battle won, the question is how to fund it. His preference is for a tax dedicated to social care, levied on older people through their estates or in their lifetimes, but he is said to be open-minded on how the money is raised. Hard-pressed voters understandably loathe the idea of higher taxes, but when their elderly parents cannot find care and help, they also understand the necessity of an extra levy. When even the Tory leadership is rumoured to be contemplating an NHS tax, the question is not whether Labour dare take the risk but whether it can afford not to. If Labour wants to spend the election campaign talking about health and social care - as it must if Ed Miliband is to win - then it had better have a good story to tell. Intrinsic to any such account is the party's courage and the scope of its ambition. There has been no shadow cabinet bust-up over health, and nor is there likely to be. If, as is possible, a fudge is arrived at, a great chance would be missed. As Oscar Wilde was fond of saying, a cynic is "a man who knows the price of everything and the value of nothing." Of all the items that Labour cannot afford, cynicism is high on the list. The cost-of-living agenda has served Mr Miliband well, but the leadership must now prove that it will protect the institutions, such as the NHS, that voters cherish beyond price. Pundits muse over whether voters will learn to trust Mr Balls, but he must also learn to trust them. The likelihood is that people would rather pay a little more for health and social care than watch the service wither. As smarter business leaders acknowledge, Ed Balls can be relied upon for fiscal prudence. Whether Labour is bold enough to rebuild society's crumbling pillars is less clear. As a marathon election campaign begins, Mr Balls would be wise to lead the race to secure a health service of which Britain can once again be proud.