Amendment of the Law

Debate between Ed Balls and Andrew Gwynne

Thursday 19th March 2015 Commons Chamber

[Ed Balls]

I understand the hon. Gentleman’s concerns. I know from reading Hansard that he said to the House a year ago that

“for all the huff and puff, when it comes to what it actually puts into and takes out of the economy, the Budget represents a 0.3% change . . . That is somewhat worrying when we consider the very big challenge we face on deficit reduction”.—[Official Report, 20 March 2014; Vol. 577, c. 993.]

I share his concerns about the Chancellor’s track record, and I am going to set out our alternatives in a moment.

Before I do that, let us go back to the Chancellor’s claims yesterday. He seems to have been telling the media this morning that he has retreated from his commitment to austerity, but the OBR’s document sets out the truth. Its verdict on the Budget is that it represents

“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years.”

It goes on to give the details on page 130, where it sets out in graphical form the cuts in public spending that we shall see from the Chancellor. Paragraph 4.108 states:

“One implication of the Government’s spending policy assumptions is a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services and administration in 2016-17”.

I am going to set out a better way to do this, but first I will highlight what the Chancellor is actually doing. The reason he has to set out such deep cuts to public spending—deeper in the next Parliament than in this Parliament—is that, as the OBR confirms, and as the hon. Member for Gainsborough (Sir Edward Leigh) knows very well, in this Parliament he has failed to balance the books. Yesterday’s numbers confirm, according to the OBR, that the Government are borrowing £200 billion more than they planned in 2010. The deficit is set to be not balanced, but £75 billion. For all this Chancellor’s boasts about national debt falling, public net debt in 2015-16 is £217 billion higher than he was forecasting in 2010. He now claims that the national debt is going to be falling. That is based on his forecasts of short-term, one-off money coming in from the sale of bank shares. In 2014-15, he was planning on the national debt falling from 69.4% to 67.4%. In fact, his forecast yesterday has the national debt in 2015 at 80.4%, falling to 80.2%. It takes some hubris for a Chancellor to borrow over £200 billion more and then claim he has succeeded. That is the reality, and we know why. As the OBR confirmed yesterday, income tax and national insurance receipts have come in short of the 2010 forecasts by £97 billion cumulatively across the Parliament.

The result is the deeper spending cuts that the Chancellor had to set out yesterday. The IFS said back in the autumn that these were colossal cuts; they are still colossal cuts. The OBR said in the autumn that this would take spending on day-to-day public services back to the level of the 1930s. The Treasury tried to tell us yesterday that that was no longer the case. Its special advisers tweeted that they are only the deepest cuts since 1964. It comes to something when they have to boast that we are cutting our public spending to a level not seen for 50 years. In fact, the small print of the OBR tables reveals that 2018 spending, on the historical comparative measure that the OBR uses—day-to-day spending on public services—falls to its lowest level since not 1964 but 1938.

The Chancellor claimed that he had changed the position, but he has confirmed the reality—even deeper cuts in the next three years than in the past five years. That is the truth. These are, in my view, cuts that will be impossible for our police services, our defence and armed forces and our social care to bear. Even this Chancellor cannot make this scale of cuts to our armed forces, our police forces or our social care, so he is going to have to end up doing what he always has to do—raise VAT and cut the NHS. That is the reality.

The Chancellor wants us to believe that this does not have to happen. He says that he can instead cut welfare and tackle tax avoidance. The problem is that his record on both is miserable. He is promising £12 billion more cuts to welfare, but he cannot tell us where they are going to come from. We know he has brought in the bedroom tax, but he cannot tell us what else he has in store. In this Parliament, he has overspent on his welfare plans by £25 billion.

Apparently the Chancellor is now going to crack down on tax avoidance. This is the Chancellor who has seen the tax gap—uncollected tax—rise by £3 billion. This is the Chancellor who, with the Prime Minister, appointed Lord Green—who, it turns out, had presided over HSBC’s industrial-scale tax avoidance. Despite repeated questioning, the Chancellor still cannot tell us whether he actually talked to Lord Green about tax avoidance. Why will he not, between now and the general election, come clean and tell us whether he had conversations with Lord Green about tax avoidance? No wonder the Chancellor did not come to Treasury questions a couple of weeks ago. No wonder he does not want a head-to-head debate. We now know why. One member of the Tory Cabinet does not want to talk about Michael Green, and another member of the Tory Cabinet does not want to talk about Lord Green. One is a deluded fantasist who has great problems with the truth, and the other is the chairman of the Conservative party. To be fair, only the chairman of the Conservative party changed his name—although, then again, perhaps the Chancellor did too.

This is the truth: the Chancellor promised to make people better off, and they are worse off. He promised to balance the books in this Parliament; that pledge lies in tatters. He promised, “We’re all in this together”, and then cut taxes for millionaires. Now he is forced to confirm extreme and risky cuts to public spending in the next Parliament, bigger than in this Parliament.

We need a fairer, more balanced approach to the deficit and living standards. That is why Labour is now the only centre-ground party in British politics. We will cut the deficit every year and balance the books, with a surplus on the current budget and the national debt falling, as soon as possible in the next Parliament. Unlike the Conservatives, we have no unfunded commitments on welfare or on taxes. We were the party that wanted the independent OBR to audit all our manifestos—blocked by this Chancellor.

[Andrew Gwynne (Denton and Reddish) (Lab)]

I am glad that my right hon. Friend mentions the OBR. I do not know whether he has had a chance to look at the online version of the Liberal Democrats’ document “An alternative fiscal path beyond 2016-17”, table 2.A of which is entitled, “Scenario input assumptions”. Can he guess who the source is? It is not the OBR, it is not the IFS: it is the Chief Secretary to the Treasury.

[Ed Balls]

We know from the autumn statement that the OBR confirmed that the scale of these spending cuts was agreed by the Prime Minister, the Chancellor, the Deputy Prime Minister and the Chief Secretary, and the same thing is clear about this Budget document. The OBR says:

“This profile is driven by a medium-term fiscal assumption that the Treasury has confirmed ‘represents the Government’s agreed position for Budget 2015’ and that was ‘discussed by the Quad and agreed by both parties in the Coalition.’”

The Liberal Democrats now come along and say that they were not really in favour of the bedroom tax, and not really in favour of these fiscal plans, but we know the truth. That is why we need a fairer and more balanced approach.

We will have sensible spending cuts in non-protected areas. We will cut winter fuel payments for the richest 5% of pensioners. We will cap child benefit at 1% for two years. The shadow Chief Secretary has been setting out in our zero-based review of every pound spent by Government cuts from rooting out waste and inefficiency in policing, in local government, in defence, and in schools. We are going to get rid of the police and crime commissioner elections. We are going to get rid of the free schools. We are going to stop the overpayment of housing benefit. We are going to deal with the issue of—[Interruption.] I meant new free schools. The shadow Chief Secretary has set out ways in which we can make those sensible cuts in non-protected areas.

We will also make fairer choices. We will reverse—[Interruption.] If the Chancellor wants to intervene, I will happily give way.

Charter for Budget Responsibility

Debate between Ed Balls and Andrew Gwynne

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

I will explain that in my speech. What we have before us—this so-called trap—is not a trap at all, as I will explain. I will discuss the new fiscal charter in detail in a moment, but let us first be clear about the background to today’s motion and the new charter before us. This is not the first fiscal charter before us in this Parliament, but the second. The first was presented at the beginning of the current Parliament when the Chancellor lay before the House a charter committing the coalition to balance the books in this Parliament, to get the cyclically-adjusted current budget back into balance and the national debt falling by the coming financial year 2015-16.

As I reminded the House on the day of the autumn statement, the Prime Minister actually went further in 2010. He said that he would balance the Budget in 2015. However, just a few weeks ago, in the autumn statement, independent forecasts from the Office for Budget Responsibility confirmed that this Chancellor was not going to balance the books in 2015, or in 2015-16. In fact, public sector net borrowing in 2015-16 is now forecast to be £76 billion, £7.7 billion higher than was forecast even as recently as the Budget.

The figures on page 15 of the OBR’s “Economic and fiscal outlook” show that this Chancellor, in this Parliament, is borrowing—staggeringly—over £200 billion more than he proposed to spend in the 2010 plans. As a consequence, the national debt, compared to the 2010 forecasts, will be much higher in 2015-16 than he suggested. Back in 2010, he said that in 2015-16 the national debt would be 67.2% of GDP. According to the latest figures, it is now forecast to be not 67.2% but 81.1% of GDP, 14 percentage points higher than the Chancellor’s 2010 figure. Worse than that, according to the 2010 fiscal mandate the national debt would be falling, but the OBR figures show that in 2015-16 it will be rising again, from 80.4% to 81.1%. On the deficit, on the current deficit and on the national debt, the Chancellor made promises in 2010, in a clear fiscal charter, and he has broken every one of them.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Was my right hon. Friend as surprised as I was that, in all his political bluster, the Chancellor of the Exchequer did not mention once that, while he used to say that he wanted to balance the overall budget, he now wants to commit himself to Labour’s policy of balancing the current budget, excluding capital investment? Moreover, he did not mention the fact that the fiscal mandate had been downgraded from a target to an aim.

[Ed Balls]

I shall provide an analysis of the new charter and why it is different from the old charter in a moment, but my hon. Friend is quite right. The Chancellor did not explain either that he had failed to meet the requirements of his charter in the current Parliament, or that he has now changed it for the next Parliament for reasons that are surprising and a bit confusing.

The Economy and Living Standards

Debate between Ed Balls and Andrew Gwynne

Thursday 12th June 2014 Commons Chamber

[Ed Balls]

I am afraid that the Queen’s Speech missed out the key elements of a long-term economic plan that would deliver rising prosperity for all. That is the problem. We know that there is a problem with housing—demand has run ahead of supply—so where was the action in the Queen’s Speech to deliver new towns, Treasury guarantees, planning reform, affordable homes, reform of Help to Buy and a new help to build scheme, which would deliver what we need? We have lower levels of house building than at any time since the 1920s, and the Chancellor is tinkering. It is about time that he showed some leadership on housing; otherwise, the aspirational majority will not get on the housing ladder. The danger is that interest rates will rise much earlier in the recovery than they should, choking off the living standards of people across our country.

The same point applies more widely to the Queen’s Speech. On skills, where was the action to deliver a gold standard for vocational qualifications? Where was the tax on bank bonuses to ensure that every young person who is out of work for a year is guaranteed a job? Where was the action to ensure that we incentivise a non-statutory living wage, improve the minimum wage and tackle the abuse of zero-hours contracts?

Although we welcome the extra investment in child care, that will not happen until the next Parliament. It will fail to help too many families who are struggling with the costs of child care, which have gone up so much. Why will the Chancellor not increase free child care for the under-fives from 15 hours to 25 hours a week for working parents? It is a Labour policy, but it is a good policy and should be in any sensible long-term economic plan.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My right hon. Friend is absolutely right to seek to raise prosperity and ambition in this country. Is not the Government’s strategy utterly self-defeating? We now have record numbers of people in work but in poverty. Do we not need to ensure that those people have work that pays, and pays well?

Economic Growth

Debate between Ed Balls and Andrew Gwynne

Wednesday 15th May 2013 Commons Chamber

[Ed Balls]

I have answered the hon. Gentleman’s question. For us to join him, or the Prime Minister, in committing ourselves now to a referendum four years ahead would lead to lost investment and lost jobs, and would be the wrong priority for Britain. Our amendment makes it absolutely clear that we disagree with that strategy.

If there were a treaty change that altered the balance of powers, we would support a referendum. I think it important for us to listen to and understand people’s concerns about Europe, and show that we can reform. I must say to the hon. Gentleman, however, that we will not get the reform that we need by walking out of the room in a flounce, as our Prime Minister did in December 2011. That was one of the worst pieces of statesmanship we have seen for many years.

[Andrew Gwynne (Denton and Reddish) (Lab)]

In order to be a member of the European economic area outside the European Union, would we not still have to pay a membership fee and accept most of the rules and regulations coming from Brussels? Would we not also lose our seat on the Commission, lose our seats in the European Parliament, and lose our voice on the Council of Ministers?

[Ed Balls]

My hon. Friend is entirely right. The problem is that the Prime Minister no longer knows whether to agree, disagree, or sit on the fence on that question, which is why we are in such a mess.