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Balls shows he's no "deficit denier" at the TUC

The shadow chancellor was heckled as he warned that Labour would cut too.

Shadow chancellor Ed Balls. Photograph: Getty Images.
Shadow chancellor Ed Balls told the TUC, "we will not make promises we cannot keep". Photograph: Getty Images.

Those who denounce Ed Balls as Labour's "deficit-denier-in-chief" should have watched his speech to the TUC conference this morning. While the shadow chancellor made a typically persuasive case for short-term stimulus, he went on to use some of the toughest language we've heard from him on the need for spending cuts and other austerity measures to reduce the deficit in the long-term. To cries of "rubbish!" from trade union delegates (a rebuke that won't have troubled Balls in the slightest), he said:

We must be honest with the British people that under Labour, there would have been cuts, and that – on spending, pay and pensions – there will be disappointments and difficult decisions from which we will not flinch.

Balls went on to reaffirm the position he outlined in January - that Labour, based on current trends, will have to keep "all these cuts". He could not "make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts." Unlike Nick Clegg, he quipped, "we will not make promises we cannot keep".

When challenged in the Q&A session on Labour's failure to oppose George Osborne's public sector pay freeze (and the 1% cap from 2013), Balls replied that "you can't say pay before jobs, we've got to say jobs before pay"  ("shame on you!", one delegate shouted). Asked if the party would take the railways back into public ownership (a demand that prompted the loudest cheers of the session), Balls replied that the policy would cost billions and so the answer was 'no'.  "I’m not sure when we come into government in 2015 that expenditure on that scale is going to be a priority," he said.

Balls's speech was a reminder of why the next election will, in some respects, be more difficult for Labour than the Tories. Osborne likes to say that the coalition is cleaning up "Labour's mess" but, if elected in 2015, Labour will need to clean up his. When the Chancellor delivered his "emergency Budget" in June 2010, the newly-established Office for Budget Responsibility forecast a deficit of £37bn (2.1% of GDP) for 2014-15. But the failure of Osborne's plan to deliver growth (indeed, its success in delivering recession) means that, according to the latest independent forecasts, the next government will inherit a deficit of £96.1bn (5.8%), a figure that is only likely to rise as growth remains anaemic or non-existent.

Given these fiscal constraints, the biggest choice facing Balls and Ed Miliband is whether to pledge to stick to the Tories' spending plans for the first few years, as Labour did in 1997, or to offer a distinct alternative.

24 comments

Indu Pendent's picture

Is Ed Balls supporting Plan A because he believes in it? Or because he is playing to the cameras and would be cricified by most voters for not supporting Plan A?

What a confused mixed up insincere party Labour really is.

Balls gains popularity with most UK voters by crossing the small minority union interest. Yet Miliband and the shadow cabinet fundamentally depends on the unions its base of power.

What a corrupted backward 19th century party Labour really is still run by the unions.

Graeme Hancocks's picture

Ed Balls has shown he has balls. He wall make an excellent chancellor. Not easy for him but he had to say what he ahd to say. I agree with so much the TUC is about but the tories want a strike -a general strike would be better still -so they can blame them for ill the ills of the country. Not a good idea o walk into this trap.

Davidaslindsay's picture

We need a statutory ban on anything paying any of its employees more than 10 times what it paid any of its other employees, with the whole public sector functioning as a single entity for this purpose, and with its median wage fixed at the median wage in the private sector, to which manual jobs would no longer be outsourced. MPs and Ministers would be included in that, and there would be a statutory ban on anything, anywhere in the economy, paying anyone more than the Prime Minister.

In much that vein, there is also the matter of holding Iain Duncan Smith to the logical conclusion of his position, namely a unified system of taxation, benefits, pensions, minimum wage legislation and student funding, to ensure that no one’s tax-free income ever fell below half national median earnings. Some of us have been blogging away for years that there should be a single form of Social Security payment, called simply Social Security, and guaranteeing that minimum income universally.

Ed Balls, over to you.

left turn's picture

Here’s one of the architects of Britain’s economic demise, telling the public sector trade unions how to repair the damaged his own economically discredited government inflicted on the nation. Ed Balls, refused even to accept that high spending and high borrowing had driven Britain to near economic disaster recently calling on George Osborne to spend even more in order to avert recession i.e. [keep digging] A year on, Balls has lost the argument even he now agrees with the urgent need for drastic cuts in public spending. The only remaining matter of dispute between Government and opposition is the relatively minor detail of timing – i.e. how quickly the cuts should be made.

Eddy S's picture

I was pretty impressed with balls speech, jobs has to come before pay and with large deficits not disappearing soon difficult decisions will be the reality, you either are open with the British people and in return earn goodwill and credibility or you take the other path. Reduced current spending will mean greater spending on growth enhancing infrastructure and also to the less defined but extremely interesting concept that is predistribution.

Ludus57's picture

When is the Labour leadership going to admit the presence of the elephant in the room? Thirty years of neoliberalism have so messed up the economic and political landscape across the whole country, that change - major change is going to be the only practical order of the day. The simple question is this ; What kind of country do you wish to see - more of the same, or a beacon of hope for ordinary people? They cannot grasp this simple fact. Are they part of the vested interests that hold us back? I am beginning to think so. Remember the fact that the policy of austerity is in place to protect the status quo and persuade ordinary people that there is little for them to expect for the better - ever.

Karl Monkey Tennis Star's picture

Spot on. If the Labour party isn't going to oppose the coalition cuts then what is it's purpose?

Sam Gisoad's picture

well, that's rather what the Labour Party is going to have to decide, isn't it? It can either oppose the cuts on ideological grounds, or it can demonstrate that it is economically credible enough to be allowed another shot at running the country.

But not both.

Herbert's picture

'... there will be disappointments and difficult decisions from which we will not flinch.'

Ah, the old tough and difficult decisions by which you hurt the poor and defend the rich. Same old Labour party, unfortunately. If I had a penny for every the Labour politician I've heard claiming their 'bravery' in protecting the wealthy I'd probably throw up. Here's something to think about - what was the Labour party established for?

Drivel Spouting Pleb's picture

Labour... we're the Tories, but we care about the pain we inflict!

Maybe a bit too harsh, but as a long term Labour voter i feel myself succumbing to the same indifference the rest of my family has to the party, we've all been disappointed a few too many times now.

Drivel Spouting Pleb's picture

Labour... we're the Tories, but we care about the pain we inflict!

Maybe a bit too harsh, but as a long term Labour voter i feel myself succumbing to the same indifference the rest of my family has to the party, we've all been disappointed a few too many times now.

Drivel Spouting Pleb's picture

Labour... we're the Tories, but we care about the pain we inflict!

Maybe a bit too harsh, but as a long term Labour voter i feel myself succumbing to the same indifference the rest of my family has to the party, we've all been disappointed a few too many times now.

Indu Pendent's picture

Do you think Ed Balls putting his hand up to any of these questions (I dont think he would):

"who manipulated treasury forecasts to inflate government borrowing to keep Labour in power?"
"who said Labour's borrowing was because of the banking crisis (Labour borrowed £600Bn
of which £350Bn borrowed before 2008 and the banking crisis)?"
"who swaggers in a nazi uniform because they think it fun?"
"who is a millionaire and could not wait to leave politics before starting to earn consultancies and get paid appointments on the back of their position in addition to being paid as an MP and party representative?" (oink oink oink)

matthew fox's picture

Did you get the email Inastew, Gordon Brown was cheered at the Paralympics?

Didn't Osborne coin the phrase " deficit denying"? Considering your been ignoring the bad PSCNR figures, are you being ironic?

Indu Pendent's picture

Matt

Seen the figures
- exports to non-EU at record high
- industrial output up
- private sector employment up
- trade deficit down
- public sector employment down

Basically, the opposite of Labour in every respect.

Swavesey Sage's picture

I long to hear the words that , if elected in 2015---to say when is too big an assumption from Balls---a vigorous Labour Government would simplify the taxation system. The plethora of tax by a thousand bites is currently the inheritance we suffer from the Blair/Brown days. Stop focusing on Income tax, look at VAT, NI, and the distortions that causes from business VAT reclaim. Reform & simplify needs to be the policy. Low tax means higher yield; the transition from tax and spend (oops, I mean "invest") would invigorate the economy.

Balls is the best Chancellor we haven't had. Question is whether he can rise to the challenge of radical tax category abolition wholesale, and replace with an Income tax and Corporation tax that gets paid.

Herbert's picture

'Low tax means higher yield...' Does it? Show us without mentioning the Laffer Curve which has long been debunked.

Swavesey Sage's picture

Common sense, not Laffer, tells me that the plethora of Taxes introduced mainly in the Blair/Brown years aided by Balls has run counter to Colbert's dictum that "The art of Taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing". Trouble is that over complication results in lower yield. For instance, why does Amazon with massive UK sales pay so little in Corporation Tax?

We need a simple tax system where tax gets paid, not transferred out of the country. Abolish some of the more absurd, eg Insurance Tax, which encourages the reckless and feckless to drive uninsured. There are too many taxes!

Chairman Ding's picture

Now let MPs wages, and Councillors be linked to the 2.5% that pensioners get in a reducing income link.

Catsmeat's picture

Wouldn't letting the rail franchises lapse back into public hands as they fall due for renewal cost nothing and likely save money in the long run?

Chairman Ding's picture

One business owner instead of several!

One Board and one list of payments - sounds alright to me.

I remember when British Rail ran a good company and then politicians starved it of income for stock update to feed the world.

Well they fed their own pockets. Many have investments in the many smaller rail firms and then they arrange contracts to feed their pockets.

Politicians underneath a stone and well-soiled!

Karl Monkey Tennis Star's picture

I wish he was a deficit denier. Its a lie created to justify huge spending cuts. If politicians insist on paying off the deficit within the next 5 minutes then do it by taxing the wealthy.

The Ventriloquist of Teeth's picture

True. To the Tories, the deficit is an opportunity, not a problem ("oh, these difficult decisions, they will surely be the death of me - er, you...")

Karl Monkey Tennis Star's picture

I wish he was a deficit denier. Its a lie created to justify huge spending cuts. If politicians insist on paying off the deficit within the next 5 minutes then do it by taxing the wealthy.

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