Ed Balls speaks at the Labour conference in Manchester last year. Photograph: Getty Images.
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Balls launches new assault on Osborne's "extreme" cuts

The shadow chancellor will unveil a full analysis of how the Tories' plans would hit public services. 

George Osborne's last Autumn Statement gifted Labour a new attack line after the OBR calculated that the Chancellor's plans would mean public spending falling to its lowest level as a share of GDP since the 1930s (35.2 per cent). Today, nine days ahead of Osborne's pre-election Budget, Ed Balls will launch a new assault on his opponent. In a speech at the RSA, the shadow chancellor will unveil a full analysis of what spending reductions of this size would mean for public services. 

David Cameron has frequently sought to give the impression that most of the cuts have already been made. But as Balls will say in his speech, the Tories' plans mean "spending cuts larger in the next four years than in the last five years. We are not even halfway through the cuts the Tories are planning. Spending cuts which are larger than any time in post-war history -  a bigger fall in spending as a share of GDP in any four year period since demobilisation at the end of the Second World War. Spending cuts which are larger than any other advanced economy in the world. More extreme than in this Parliament, the most extreme in post-war history and the most extreme internationally."

Labour's number crunchers have found that Osborne's cuts would mean the equivalent to over a third of the older people in social care losing their entitlement. "This would mean eligibility to care services further restricted, meaning hundreds of thousands of vulnerable older people missing out. It would mean even more elderly people trapped in expensive hospital beds when they don’t need to be. And it would mean even more elderly people turning to A&E because they are unable to access the care and support they need." 

Balls will also warn that "at a time when the terror threat is increasing and child protection under great pressure", the Tories' plans would result in dramatic cuts to the Home Office budget: the equivalent of 29,900 police officers and 6,700 community support officers lost. The cumulative outcome would be to reduce the total number of police to below 100,000 - the smallest force since comparable records began. Balls will say: "It’s no wonder that the Institute for Fiscal Studies has said these cuts are ‘colossal’ and questioned whether they could be delivered without 'a fundamental reimagining of the role of the state'. These are extreme, risky and unprecedented cuts to policing and social care which many will see as totally undeliverable, even by this Chancellor." 

For Labour, the political challenge is attacking Osborne's austerity programme while remaining committed to cuts of its own. The Greens, the SNP and Plaid Cymru will all charge the party with following the Tories' agenda. But as I've noted before, there is a significant fiscal gap between Osborne's plans and Balls's. The IFS estimates that Labour's programme would require cuts of around £7bn, compared to £33bn under the Tories'. By promising to introduce new tax rises (a 50p rate, a mansion tax, a bankers' bonus tax, a steeper bank levy), to leave room to borrow to invest and to only eliminate the current account deficit (rejecting the Tories' target of an absolute surplus), Balls has avoided the need for reductions on the scale proposed by Osborne. 

He will say: "While the Tories have extreme and risky plans – an ideological second-term Conservative project to shrink the state which go far beyond the necessary task of deficit reduction. And while some other parties say we do not need to get the deficit down. Labour has a better, different, fairer and more balanced plan which means we are the centre-ground party in British politics today. 

"We will cut the deficit every year and balance the books – with a surplus on the current budget and national debt as a share of GDP falling, as soon as possible in the next Parliament. And unlike the Tories we will make no unfunded commitments.

"There will need to be sensible spending cuts in non-protected areas. But we will also make fairer choices including reversing this government's £3 billion a year tax cut for the top one per cent of earners. And our plan will deliver the rising living standards and stronger growth needed to balance the books.

"The choice for the British people is now clear. A tough, but balanced and fair plan to deliver rising living standards and get the deficit down with Labour. Or an extreme and risky plan under the Tories for bigger spending cuts in the next five years than the last five years, which would cause huge damage to our vital public services."

By vowing to continue cutting even after the deficit has been eliminated, Osborne has enabled Labour to depict him as a dangerous ideologue. Balls's claim that his party now owns the "centre ground" was supported by a recent ComRes/Independent survey showing that 66 per cent do not believe that cuts should continue until the deficit has been eradicated with just 30 per cent in favour. Polls have also long shown backing for the party's pledge to impose higher taxes on the rich, such as a 50p rate of income tax and a mansion tax. 

The question now is whether Osborne will do anything to neutralise Labour's attack when he rises to his feet at 12:30pm on Wednesday 18 March. 

George Eaton is political editor of the New Statesman.

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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