Balls sharpens his axe: where Labour would cut in 2015

Free schools, Police and Crime Commissioners, Titan prisons and army admirals are targeted for cuts.

There were two main aims of Ed Balls's speech on the economy today. The first was to reassure voters that while continuing to support stimulus now, Labour would pursue fiscal responsibility in office. While refusing to play George Osborne's game by saying whether he would stick to the coalition's 2015-16 spending plans ("when we do not know the economic circumstances two months ahead, let alone two years"), he emphasised that, before the election, Labour would adopt its own fiscal rules to eliminate the current deficit and reduce the national debt as share of GDP. Balls also signalled that, with growth finally returning, he would soon abandon his expensive pledge to introduce a temporary VAT cut (which Ed Miliband had such trouble defending in his infamous World At One interview) in favour of long-term capital investment. He said: 

Today, with growth prospects still very uncertain and interest rates too low to be of use, a temporary VAT cut now is still the right prescription before extra capital spending can come on stream – although any immediate tax cut which helps middle and lower income families is better than nothing. 

But over the coming year if, as we all hope, some kind of recovery does take hold, then the balance of advantage will shift from temporary tax cuts to long-term capital investment.

The second aim was to begin the task of forcing the left to accept that not only will Labour be unable to reverse most of the cuts imposed by the coalition, it will have to make its own. As Balls pointedly noted, "The next Labour government will have to plan on the basis of falling departmental spending."

The announcement that Labour would remove the winter fuel allowance from the wealthiest 5 per cent of pensioners is pretty small beer. While Ed Miliband's abandonment of universalism is politically significant (it opens the door to further benefit cuts), the move will save just £100m a year (less than half a per cent of the £207bn welfare bill), meaning that it barely qualifies as a rounding error. But Balls went on to outline, in greater detail than before, other, larger cuts and efficiency savings that a Labour government would seek to make. Since the shadow chancellor wants to give himself maximum flexibility in 2015, they were proposed in the form of questions (as was the winter fuel allowance cut) but, for now, they are the best guide we have to where Balls's axe would fall. Here's my summary:

- Not opening new free schools in areas with excess places. Balls derided "vanity schools projects" and suggested that Labour would not open new free schools in areas with a surplus of secondary school places. ("With primary school places in short supply in many parts of the country, and parents struggling to get their children into a local school, can it really be a priority to open more free schools in 2015 and 2016 in areas with excess secondary school places?")

- Scrapping Police and Crime Commissioners. ("When we are losing thousands of police officers and police staff, how have we ended up spending more on police commissioners than the old police authorities, with more elections currently timetabled for 2016?")

- Cancelling the new 2,000-place "Titan" prison recently proposed by Chris Grayling. ("Has the Ministry of Justice properly made the case for a major new 'Titan' prison, at a time when the prison population is falling?")

- Abolishing High Speed Two Limited, the company developing the new rail network. Balls suggested that this role could be performed more effectively by Network Rail ("Should we be spending millions on a separate company to deliver High Speed 2 when we already have Network Rail, which after all is responsible for rail infrastructure?")

- Cutting the number of army officers and admirals. ("Do we need more admirals than ships and more officers in our forces than our international counterparts at a time when frontline armed forces are under pressure?")

- Merging the four separate government motorist agencies. ("Do we really need four separate government agencies delivering services to motorists?")

- Combining management functions. in government departments, agencies, fire services and police forces. ("Does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces - the same number as when this Government came into office - all with separate leadership structures and separate specialist teams?")

- Requiring industries to contribute more to the cost of regulation. ("Should industries pay a greater share of the costs of their regulators?")

The aim of these cuts and savings will be to free up funds for Labour's priorities (which Balls promised a "relentless focus" on): employment, housing, childcare, the NHS and social care. Based on his speech today, it is likely that Labour will go into the election promising to spend more than Tories in areas such as infrastructure (borrowing to invest), while giving itself the political cover to do so by adopting new fiscal rules, independently monitored by the OBR, and promising to control welfare spending (Miliband will announce his support for a cap on structural benefits, such as housing benefit, in his speech on welfare on Thursday). The defining political question is whether this will be enough to reassure a sceptical electorate, less than a third of whom believe Labour can be trusted to manage the nation's public finances, that it wouldn't "crash the car" all over again.

Ed Balls emphasised that Labour would have to plan "on the basis of falling departmental spending". Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Theresa May's offer to EU citizens leaves the 3 million with unanswered questions

So many EU citizens, so little time.

Ahead of the Brexit negotiations with the 27 remaining EU countries, the UK government has just published its pledges to EU citizens living in the UK, listing the rights it will guarantee them after Brexit and how it will guarantee them. The headline: all 3 million of the country’s EU citizens will have to apply to a special “settled status” ID card to remain in the UK after it exist the European Union.

After having spent a year in limbo, and in various occasions having been treated by the same UK government as bargaining chips, this offer will leave many EU citizens living in the UK (this journalist included) with more questions than answers.

Indisputably, this is a step forward. But in June 2017 – more than a year since the EU referendum – it is all too little, too late. 

“EU citizens are valued members of their communities here, and we know that UK nationals abroad are viewed in the same way by their host countries.”

These are words the UK’s EU citizens needed to hear a year ago, when they woke up in a country that had just voted Leave, after a referendum campaign that every week felt more focused on immigration.

“EU citizens who came to the UK before the EU Referendum, and before the formal Article 50 process for exiting the EU was triggered, came on the basis that they would be able to settle permanently, if they were able to build a life here. We recognise the need to honour that expectation.”

A year later, after the UK’s Europeans have experienced rising abuse and hate crime, many have left as a result and the ones who chose to stay and apply for permanent residency have seen their applications returned with a letter asking them to “prepare to leave the country”, these words seem dubious at best.

To any EU citizen whose life has been suspended for the past year, this is the very least the British government could offer. It would have sounded a much more sincere offer a year ago.

And it almost happened then: an editorial in the Evening Standard reported last week that Theresa May, then David Cameron’s home secretary, was the reason it didn’t. “Last June, in the days immediately after the referendum, David Cameron wanted to reassure EU citizens they would be allowed to stay,” the editorial reads. “All his Cabinet agreed with that unilateral offer, except his Home Secretary, Mrs May, who insisted on blocking it.” 

"They will need to apply to the Home Office for permission to stay, which will be evidenced through a residence document. This will be a legal requirement but there is also an important practical reason for this. The residence document will enable EU citizens (and their families) living in the UK to demonstrate to third parties (such as employers or providers of public services) that they have permission to continue to live and work legally in the UK."

The government’s offer lacks details in the measures it introduces – namely, how it will implement the registration and allocation of a special ID card for 3 million individuals. This “residence document” will be “a legal requirement” and will “demonstrate to third parties” that EU citizens have “permission to continue to live and work legally in the UK.” It will grant individuals ““settled status” in UK law (indefinite leave to remain pursuant to the Immigration Act 1971)”.

The government has no reliable figure for the EU citizens living in the UK (3 million is an estimation). Even “modernised and kept as smooth as possible”, the administrative procedure may take a while. The Migration Observatory puts the figure at 140 years assuming current procedures are followed; let’s be optimistic and divide by 10, thanks to modernisation. That’s still 14 years, which is an awful lot.

To qualify to receive the settled status, an individual must have been resident in the UK for five years before a specified (although unspecified by the government at this time) date. Those who have not been a continuous UK resident for that long will have to apply for temporary status until they have reached the five years figure, to become eligible to apply for settled status.

That’s an application to be temporarily eligible to apply to be allowed to stay in the UK. Both applications for which the lengths of procedure remain unknown.

Will EU citizens awaiting for their temporary status be able to leave the country before they are registered? Before they have been here five years? How individuals will prove their continuous employment or housing is undisclosed – what about people working freelance? Lodgers? Will proof of housing or employment be enough, or will both be needed?

Among the many other practicalities the government’s offer does not detail is the cost of such a scheme, although it promises to “set fees at a reasonable level” – which means it will definitely not be free to be an EU citizen in the UK (before Brexit, it definitely was.)

And the new ID will replace any previous status held by EU citizens, which means even holders of permanent citizenship will have to reapply.

Remember that 140 years figure? Doesn’t sound so crazy now, does it?

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