Ed Balls
Main Page: Ed Balls (Labour (Co-op) - Morley and Outwood)Department Debates - View all Ed Balls's debates with the HM Treasury
Charter for Budget Responsibility
Ed Balls Excerpts(10 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
I will give way in a little moment, but let me make some more progress.
We are creating a welfare state that the country—
Mr Osborne
Of course I will give way, but will the shadow Chancellor confirm, so that we know the terms of this debate, whether he is committed to the specific welfare cap, the list of the benefits included and the level to which the Government have committed? The shadow Work and Pensions Secretary, the hon. Member for Leeds West (Rachel Reeves), said on the radio that Labour would do things differently. Perhaps he could confirm that.
Ed Balls
I will make my speech on the welfare cap in a moment. I want to go back to the remark the Chancellor just made about last night’s vote. We have said that we do not think we should go ahead with the next cut in corporation tax and instead use all the money for a freeze in business rates for small businesses. Is the Chancellor really saying that large companies are business, but small businesses do not count? [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to remind everybody, shorter interventions would be helpful. We have 11 speakers to follow and I know the Front Benchers are desperate to hear the Back Benchers.
Mr Deputy Speaker
Order. I want to hear the Chancellor. All the howling behind the Chancellor is not helping me, or other people who want to listen to him. I want to hear the Chancellor as, I am sure, do those on his own side.
Mr Osborne
If the right hon. Gentleman has something useful to say, let us hear it.
Mr Deputy Speaker
Seriously, I could not hear the Chancellor and I want to hear the shadow Chancellor. I want a little bit more respect to both sides.
Ed Balls
We are proposing that all the money from deferring the cut in corporation tax goes to small business in a business rates freeze. That is not a rise in the taxes on business, unless the Chancellor thinks that somehow small businesses are second class and do not count. Is that really what the Chancellor is saying?
Mr Osborne
We have cut the corporation tax rate for small businesses. We have capped rates for small businesses. We are giving a £1,000 discount to high street stores. Those are the measures we are taking for small businesses, and we are also cutting the corporation tax rate. The truth is that Labour is now committed to higher business taxes in Britain with a high corporation tax rate.
Mr Osborne
May I just say to the shadow Chancellor that he does not need to talk to me? He needs to talk to the business community of Britain, which knows that he is anti-business. His party is anti-business, anti-job creation and, as I am about to explain, it is the welfare party, too. If he waits a little, he can intervene and answer the question that we need answered.
Mr Osborne
I will give way in a moment. Let me make progress with my speech. [Interruption.] All right, I will give way if the right hon. Gentleman answers this question in his intervention: is Labour committed to a higher rate of corporation tax? Yes or no?
Mr Deputy Speaker
Order. I think we have heard enough noise. I want to hear the question that has been posed to the Chancellor of the Exchequer and I want to hear the reply. If people do not want to hear, I can explain where the door is. Somebody will be going through it if we do not have calm.
Ed Balls
The Chancellor must not mislead and misrepresent on the welfare state or on business taxes. Labour is not committed to an increase in business tax. He has said that three times. Every time he has said that, he has misled this House. I am saying that all the money from the corporation tax rate will go back to small business. That is the right position. Every time he misleads this House I will correct him, Mr Deputy Speaker.
Mr Osborne
This is desperate stuff from the shadow Chancellor. If Labour had had its way in the vote last night, business taxes would be higher—yes or no?
Mr Osborne
Yes, they would be, because corporation tax would be higher and businesses would be paying more. No wonder Labour does not have a clue about how to fix the economy or how to deal with the welfare system. That is evident from its period in office, when welfare spending, which will be contained by the cap, went up 42% in real terms. Housing benefit went up by £7.6 billion alone, as a real increase—bigger than the entire police budget. Every single one of the pounds the Labour Government spent on working age welfare was not earned, but borrowed—borrowed because Britain could not pay its way in the world. Rather than using valuable public resources to pay for apprenticeships, science, roads and railways, money was spent on an unaffordable, unfair and out-of-control benefits bill. That economic insecurity is being addressed and control is being re-established. We insist that welfare is affordable and we insist that it is fair: fair to those who need it and fair to those who pay for it.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Labour Members support the capping of social security spending, a policy advocated by the Leader of the Opposition last year. With welfare spending now £13 billion higher than the Government planned in their spending review, Labour will make different and fairer choices to get the social security bill under control and tackle the root causes of rising spending. On that basis, we will support the motion.
I shall come to the welfare cap in a moment, but let us first be clear about the background to the motion and the charter for budget responsibility. In the charter, the Government have set out their fiscal targets and reforms, and have also included the welfare cap details. Four years ago, the Chancellor promised to balance the budget in 2015. The Prime Minister said:
“In five years’ time, we will have balanced the books.”
But because they choked off the recovery and flatlined the economy, they are not going to balance the budget at all.
Ed Balls
I am going to speak first about what is in the charter, and then about the welfare cap. I will give way in a moment.
Last week, the Budget revealed that the Government were not balancing the books. The deficit is set to be £75 billion. In this Parliament, partly owing to rising welfare costs, it will be £190 billion more than they planned.
Ed Balls
I will give way in a moment. I want the House to know what is in this document first.
The Chancellor pledged to get the national debt falling. Page 7 of the charter says that
“the Treasury’s mandate for fiscal policy is supplemented by: a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16”.
So the charter says that the national debt should be falling in 2015-16, but the OBR said in respect of last week’s Budget that it expects the national debt to be rising next year. The national debt is not falling according to this charter, and it is rising according to the OBR. I want the House to understand what is before us. I have to ask the Chancellor this: how on earth did he end up putting before the House a week after his Budget a motion that puts up in lights the fact that he is failing his own target to reduce the national debt? What an own goal! Is he going to blame the chair of the Conservative party for that one, too?
It gets worse for the Chancellor. The charter goes on to say—[Interruption.] Government Members should listen—[Interruption.] They should listen to this:
“The Treasury’s mandate for fiscal policy lapses at the dissolution of this Parliament.”
Lapses! It has already collapsed. It has expired; it has ceased to be; it is an ex-mandate. The charter goes on to say:
“The duty to set out a fiscal mandate will require the Treasury to set out a revised mandate for fiscal policy as soon as possible in the life of the new Parliament”.
That is what we will do: we will balance the current budget and deliver a surplus in the next Parliament. We will get the national debt falling. We will do those things as soon as we can in the next Parliament, but we will do so in a different way, starting by reversing the Chancellor’s £3 billion tax cut for people earning more than £150,000. That is what we mean by doing things in a different and fairer way.
Julian Smith (Skipton and Ripon) (Con)
Will the right hon. Gentleman confirm his announcement earlier that Labour will be raising taxes on British business?
Mr Deputy Speaker (Mr Lindsay Hoyle)
It was not aimed at an individual; it was aimed at the speech, I presume.
Ed Balls
We have said, Mr Deputy Speaker, that all the money from not proceeding with a further cut in corporation tax will go to small business with a business rates—[Interruption.] When the hon. Member for Skipton and Ripon (Julian Smith) and the Chancellor say that is a tax rise for business, that is only true if they do not think small businesses are proper businesses, which is a bit like saying, “If you didn’t go to Eton, you didn’t go to a proper public school.”
Mark Pritchard (The Wrekin) (Con)
I know the shadow Chancellor always wants to be accurate. Not everybody on the Government Benches went to private or public school, unlike many on the Opposition Benches, including him.
On the specific point, I believe the shadow Chancellor is a fair and reasonable man, so will he join me in welcoming the fact that in the last 12 months 4,000 jobs have been created in Shropshire? Surely that is good news for everybody to celebrate, whatever our party affiliation.
Ed Balls
First, I went to an even lesser private school than the Chancellor of the Exchequer. [Interruption.] Neither of us went to Eton, unfortunately. [Interruption.] I agree with the hon. Member for The Wrekin (Mark Pritchard) that the rise in employment is good news, but I am concerned that in his—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Shelbrooke, we missed you on Budget day, but I am not missing you today, am I?
Ed Balls
The thing I am concerned about—this relates directly to the welfare cap—is that in the constituency of the hon. Member for The Wrekin long-term youth unemployment has gone up by 129% since 2010. I presume the hon. Gentleman would agree that that rise, based on the jobseeker’s allowance claimant count, is a real concern. I think he should be backing our welfare reforms. The fact is—[Interruption.] If the deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands), is saying that because the hon. Member for The Wrekin has got a large majority, he does not have to worry about youth unemployment, that would be rather revealing. I hope he was not saying that.
Let me get on to the subject of the welfare cap. The Chancellor has failed to balance the books, he is contradicting his own charter by increasing national debt when it says he should be reducing it in 2015, and he has failed to control welfare spending. We have had plenty of tough talk and divisive rhetoric from the Chancellor, but his failure to tackle low wages, to deal with the cost of living crisis and to get more homes built means that he is spending £13 billion more than he planned in the spending review of 2010, and in last week’s Budget that was revised up by £1 billion in social security spending next year and the year after.
I want to explain where we are. We support the welfare cap. We support what is in the welfare cap. We agree that long-term bearing down on the costs of ageing is a good idea, but it should not be in the welfare cap in the next Parliament; we have agreed with that all along. We have also said we would match the Government’s spending in 2015-16, and the welfare cap over these five years, which we support, would rise on that basis. Although we support that, however, we will make different—
Mark Pritchard
On a point of order, Mr Deputy Speaker. I said that the shadow Chancellor is a fair and reasonable man, and I know he would not want, even unintentionally, to mislead the House. He has got a lot of figures before him, so I have a great deal of sympathy for him, but the fact is that in my constituency of The Wrekin there has been a fall of more than 27% in youth unemployment over the past 12 months.
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is a point of correction, rather than of order.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Mr Burns, I think you need to relax as well. No hon. Member will mislead this House, and I am sure that is not what the shadow Chancellor intended to say and I am sure he will be happy to withdraw it.
Ed Balls
Let me answer the hon. Member for The Wrekin and then I will come to the soon to be ex-hon. Member for Dover. [Interruption.] If hon. Members quieten down, I will answer the point. Since 2010 there has been a 129% rise in long-term youth unemployment: that is young people on the claimant count who have been out of work for more than 12 months. That figure has gone up by 129%. That is the truth. It is a fact, and I will place the information in the House of Commons Library. There has been a 129% rise since 2010 and I think the hon. Member for The Wrekin should support what I am about to say.
Ben Gummer
I thank the right hon. Gentleman for giving way. He chooses his words carefully, but he should know that youth unemployment is lower than it was in 2010, and not only that: it is lower than it was before the crisis partly caused by his Government.
Ed Balls
In the constituency of Ipswich there has been a 140% rise in long-term youth unemployment over 12 months, and long-term youth unemployment is a real problem. I am glad the hon. Gentleman intervened because I was reading his Hansard remarks from 2012 when he said that asking the Office for Budget Responsibility to audit the parties’ manifestos at the next election was the right thing to do. He said there was no reason why that could not be done. I will come back to him in a moment on that one.
We support the welfare cap. We will make different and fairer choices to keep the social security bill down and tackle the root causes of higher welfare spending. Let me explain—
Mr David Burrowes (Enfield, Southgate) (Con)
Will the shadow Chancellor give way?
Ed Balls
No, I am not going to give way until I have made these points. I will give way to both hon. Gentlemen, but if they shout “Give way, give way” at me in the middle of a sentence, I am not going to do so.
We will do things in a different way. We will introduce a compulsory jobs guarantee to get young people who have been out of work for more than 12 months—up by over 129% in The Wrekin and 140% in Ipswich—and the long-term unemployed all back to work, and we will sort out the shambles of the universal credit. As for the idea that the Chancellor should say to the Work and Pensions Secretary, “Take your time to get universal credit right. Have as much money as you want,” how irresponsible is that?
We will stop paying the winter fuel allowance for the richest 5% of pensioners; we will scrap the bedroom tax, which is not only unfair, but may end up costing more money than it saves; we will get more houses built; we will restore the value of the national minimum wage; and we will tackle the low wages which the OBR has said have pushed up the bill for housing benefit. We will make different and fairer choices to keep the social security bill under control and tackle the root causes of higher welfare spending.
Mr Burrowes
Now that the shadow Chancellor has explained that he is going to support the welfare cap, will he also clarify whether he will increase housing benefit? If so, where will he make the welfare savings to keep within the welfare cap? When he finds the statistics on Enfield, he will be able to get confirmation that the youth unemployment claimant count is at its lowest since 1997.
Ed Balls
As we and many others have pointed out, including the National Housing Federation, the Government’s bedroom tax is pushing people on to housing benefit in the private sector—on higher rents—so there is a grave risk that it is going to cost money, rather than save money. We will abolish the bedroom tax, within the welfare cap set out on page 87 of the Red Book. That is our very clear position. I have to say to the hon. Gentleman that in Enfield, Southgate there has been a 500% rise in long-term youth unemployment, and he should be backing our compulsory jobs guarantee.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Will the Chancellor take this opportunity to confirm that he will never follow the shameful record of the Conservative party, which in the 1990s took people off jobseeker’s allowance and actively put them on the sick? We still bear the scars of that policy today.
Ed Balls
It started in 1986 under a Conservative Prime Minister and social security Secretary, it was called “restart” and it actively moved people from JSA— unemployment benefit—on to long-term sickness and invalidity benefits. It meant that very many people then spent many years out of work. It was a shameful policy.
Stephen Doughty
I am glad that my right hon. Friend has mentioned the compulsory jobs guarantee, because is it not an absolute contrast with the manifest failures of the Work programme? Does he agree that the Government ought to be learning from, rather than smearing, the Welsh Labour Government and the success of the jobs growth Wales programme?
Charlie Elphicke
Is the shadow Chancellor committed to a welfare cap on the same benefits and of the same numbers as this Budget—yes or no?
Ed Balls
Yes.
Let me end by discussing the role of the OBR, because that is also set out in this charter. Page 5 states:
“The Coalition Government’s major reform to the fiscal framework has been the creation of the Office for Budget Responsibility”.
We agree with that, which is why we have proposed a reform to enhance the OBR’s role and allow it, as the hon. Member for Ipswich has advocated, independently to audit the tax and spending commitments in the manifestos of the main political parties. Why has the Chancellor not used the opportunity of this updated budget responsibility charter to make that reform? If he were to think again, he would be joining not only me, but the Chair of the Treasury Committee and the Chief Secretary to the Treasury, who have both supported this reform. We need legislation in the Finance Bill to make that happen.
Ed Balls
I will not give way. We know from the head of the OBR that if an agreement is reached by this summer, this reform independently to audit all tax and spending commitments, including all issues referring to social security spending, can be done in time for next year’s general election. It is a matter of political will. The Chancellor seems to be happy to spend his time, and that of the House, trying to set political traps—traps that keep backfiring on him—but he does not seem happy, and neither do other Government Members, to join the hon. Member for Ipswich and allow the OBR to audit the Conservative party manifesto or our manifesto, so that we can have a proper, open and transparent debate at the next election. Why does the Chancellor not join this cross-party consensus and let the OBR play that role? What has he got to hide? This is really not a trap—it is just the right thing to do.
Mr Deputy Speaker (Mr Lindsay Hoyle)
May I just announce that we will start with a five-minute limit and see how we go from there?
Ben Gummer
I will give way, but does the right hon. Gentleman want to let me finish my point before he intervenes? [Interruption.] I will say merely that I was proposing a fiscal rule on the Swedish model in which, as the Swedes have, there would be an opportunity for all parties’ budgets to be judged. That clearly is not possible under the existing settlement, not least because the head of the OBR said it would not be.
Ed Balls
I most certainly would not want to misrepresent the hon. Gentleman, so let me read out the quote from Hansard. He said:
“I…further suggest that the Office for Budget Responsibility be required to assess the major parties’ manifestos at election time, at the request of those parties…A similar role is performed by the Congressional Budget Office in the United States, and there is no reason why it cannot be so here.”—[Official Report, 25 January 2012; Vol. 539, c. 305.]
I agree, and so does the head of the OBR, and this can be done before the next election. In no way have I misrepresented the hon. Gentleman—the problem is that he disagrees with the Chancellor.
Ben Gummer
Actually, I do not. If the shadow Chancellor reads further, he will find the key point. There is an entire portion beforehand suggesting something, which his colleague, the hon. Member for Leeds West (Rachel Reeves), said that the Opposition disagreed with. Here we come to the crux of the matter. The fact is that people will not believe the Chancellor when he talks about sticking to a cap—[Interruption.] I mean the shadow Chancellor—[Interruption.] Yes, it is as close as he will get. He was the author of the golden rule, which claimed that there would be no excess debt over the economic cycle of his Government. None the less from 2002, the Government were running a deficit—[Interruption.] Will he deny that the Government were running a deficit from 2002?
Ed Balls
We said that we would balance the current Budget over the cycle, which is exactly what is in the mandate before us. It says that there will be
“a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.”
That is the golden rule. If the hon. Gentleman is attacking the golden rule, it is the second thing on which he is attacking the Chancellor today.
Ben Gummer
The shadow Chancellor is again digging himself into a hole. He wrote a golden rule that claimed that there were would be no deficit over the cycle. He ran a deficit and he is now proposing that there should be a cap on welfare spending. I wish to pin him precisely on the terms of his agreement with the Government. What he has told his Back Benchers in private seems to be rather different from what he is saying in public. [Hon. Members: “Ah.”] Let me list what we have within the frame of the welfare cap proposed by my right hon. Friend. If the shadow Chancellor disagrees with any one of these items, he should stand up and intervene, and his own Back Benchers can draw their own inferences. We have the attendance allowance, bereavement benefits, carer’s allowance, Christmas bonus, disability living allowance, employment and support allowance, financial assistance scheme, housing benefit, incapacity benefit, income support, industrial injuries benefit, in-work credit, maternity allowance, pension credit, personal independence payment, return to work credit, severe disablement allowance, social fund, cold weather payments, statutory adoption pay and statutory maternity pay, statutory paternity pay, universal credit, winter fuel payments, personal tax credits, child benefit and tax-free child care. Is there any single element of that that he would change in the next five years?
Ben Gummer
Not at all. Now his Back Benchers may wish to draw their own inference from that. In private, the shadow Chancellor has been going round saying that he would change it. He would put one in and take one out. [Hon. Members: “Ah.”] Even in the House, he will say that he will supplement one benefit—withdrawing the winter fuel allowance from richer pensioners will raise £100 million and he would use it to pay for the reversal of the under-occupancy charge, which will cost £500 million. How does he make up that £400 million difference? He has been forced to come to this House to explain his maths. That is precisely why this cap is important. It forces a degree of accountability on the shadow Chancellor in making him explain to the British public how his sums add up, when it is clear that they do not. How does he account for the £400 million difference between the two? [Interruption.] I wish to know the answer as does the British public. [Interruption.]
The Chief Secretary to the Treasury (Danny Alexander)
I am grateful to the shadow Chief Secretary for his support for this measure, albeit that from him and the Chancellor we heard another two flatlining speeches from a flatlining political party.
Danny Alexander
Shadow Chancellor. I am glad he agrees that he is flatlining.
This has been an important debate, and I agreed with the hon. Member for Hackney North and Stoke Newington (Ms Abbott) in one respect. She was right to say that this was an important debate on an important subject and should be treated as such. However, it is for precisely those reasons that I support the cap that we are debating, as does my party. Let me explain why. During the debate a few myths have grown up about the cap, which I want to tackle. Fundamentally, as my hon. Friend the Member for Birmingham, Yardley (John Hemming) made clear, the motion is about accountability to Parliament and about the transparency of public expenditure decisions.