The Economy and Living Standards

Debate between Ed Balls and Andrew Selous

Thursday 12th June 2014 Commons Chamber

[Ed Balls]

I will give way in a moment, when I have established my argument. [Interruption.] Hon. Members should not be complacent; they should listen to this.

People have good reason to be sceptical. This stagnation in real wage growth is not just a problem of the past few years. It started in Britain over a decade ago as rapid technological change and global trade pressures put the squeeze on middle and low income households. The UK is not alone. That pattern is reflected across the developed world. Low wage and unskilled employment has grown, but research shows that traditionally middle-income, middle-class jobs in manufacturing and services have fallen as a share of total employment in all OECD countries. As the recent publicity around Google’s driverless car shows, labour-substituting technology is likely, if anything, to accelerate.

So the challenge for this Queen’s Speech and for this political generation is to show that, in the face of globalisation and technological change, we can secure rising prosperity that working people believe they can share in. Of course we have to respond to their concerns about immigration and reform in Europe, but the challenge is to get more better paid jobs for people who feel they have been left behind, and to bring in new investment, new industries and new jobs which could replace those in traditional areas where jobs have gone.

Those of us on the Opposition Benches will, with an open but critical mind, study the proposals in the Queen’s Speech on fracking, annuities, and pensions savings vehicles, but the real test against which this Queen’s Speech and the manifestos of all political parties will be judged over the next year is whether on jobs, skills, innovation and reform this generation can rise to the challenge and build an economy that works for all and not just a few.

[Andrew Selous (South West Bedfordshire) (Con)]

In his quest to re-engage the electorate who have become disenchanted, I am sure the right hon. Gentleman will believe that transparency and plain speaking are important. In that spirit, will he let us know clearly what Labour’s views are on increases in national insurance for employers?

[Ed Balls]

I am happy to do so. I know that my right hon. Friend the Member for Birkenhead (Mr Field), whom I respect a great deal, has a proposal, but that is not my proposal and it is not Labour’s proposal at all. We know that there are pressures in the national health service and that £3 billion has been wasted on an NHS reorganisation, but we also know that there is a cost of living crisis. People are paying hundreds of pounds more a year because of the Government’s VAT rise, and what we want to do is cut taxes for working people.

Charter for Budget Responsibility

Debate between Ed Balls and Andrew Selous

Wednesday 26th March 2014 Commons Chamber

[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.

[Andrew Selous (South West Bedfordshire) (Con)]

rose—

[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.

Amendment of the Law

Debate between Ed Balls and Andrew Selous

Thursday 20th March 2014 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Yesterday’s Budget was the Chancellor’s last chance to make decisions and announce measures that will make a difference before the general election. For all his boasts and complacency, the Budget did nothing to address the central reality that will define his time in office—the fact that for most people in our country, living standards are not rising but are falling year on year, and that working people will, in fact, be worse off in 2015 than they were in 2010.

Yesterday the Chancellor tried to claim that everything is going well and according to plan, but millions of working people on middle and lower incomes are still not feeling any recovery. Young people stuck on the dole for months are not feeling it. Pensioners seeing their gas and electricity bills rise each year are not feeling it. Parents facing child care costs so high that it barely adds up for them to go to work are not feeling it. People aspiring to own their own home but finding that rising prices have put that beyond their dreams are not feeling it. Small businesses struggling to get a loan from the banks are not feeling it. Nurses who have been told that they will not even get the below-inflation pay rise they were promised certainly are not feeling it.

With wages still rising slower than prices, and working people worse off than they were when this Chancellor took office, the Office for Budget Responsibility revealed yesterday, in table 3.6 of its economic forecast, that real wages will be 5.6% lower in 2015 than in 2010. [Interruption.] I will tell the House what is awful—that people are not better off under the Tories; they are worse off under the Tories.

[Andrew Selous (South West Bedfordshire) (Con)]

Does the shadow Chancellor agree with the former Labour adviser who said about pensioners last night that

“you can’t trust people to spend their own money”?

[Ed Balls]

I do not agree, but I will come on to that in a moment.

We will study very carefully the proposals put on the table for discussion. We have just had a statement. The proposals are important, and it is important to have more flexibility and choice. We have been calling for reforms of the annuities market: to be honest, the price of annuities and competition in the market have not been good enough over the past few years. I must say that we all remember the pensions mis-selling of the early 1990s, and we need to make sure that there is a tight grip on tax avoidance. That is why we will look carefully at the proposals.

I must tell the hon. Gentleman that if he looks at table 3.6 on page 87 of the Office for Budget Responsibility’s report on this so-called Budget for savers, he will see that the savings ratio was 7.2% in 2012 and 5% last year and—here is what will happen to savings in the next five years—then goes from 4.1% to 3.6% and down to 3.2%. The Budget for savers will see savings fall every year in the next five years, with each of the figures revised down by the OBR in its latest forecasts. I must say that I am not sure whether this is quite the Budget for saving that it is stacked up to be.

What we desperately needed was a Budget that delivered for the many, not just a few at the top. What a wasted opportunity it was. The annual increase in the personal allowance is outweighed completely by the 24 tax rises that we have seen since 2010. The Chancellor’s welcome conversion to the importance of capital allowances for business investment means that he has reversed the cuts to capital allowances that he made in 2010. Let me tell him what the OBR says in the Budget documents about the overall impact of all the Budget measures:

“The measures in the Budget are, in aggregate, not expected to alter the OBR GDP growth forecast.”

This Budget will have no impact on growth at all.

As for the Chancellor’s 1p cut in beer duty, welcome as it is, it means that people have to drink 300 pints to get one free. This morning’s Tory poster says:

“Bingo! Cutting the bingo tax & beer duty to help hardworking people do more of the things they enjoy”.

How patronising, embarrassing and out of touch that is. The Tory party calls working people “them”—them and us. Do the Tories really think that they live in a different world from everyone else? Does that not reveal just how out of touch this Tory Government are? It is no wonder that they do not understand the cost of living crisis and no wonder that the Chancellor did nothing in the Budget to tackle it.

We are told by the Chancellor that he did not know that the poster was coming out. The Tories’ chief election strategist did not know about the ad campaign that came out straight after his Budget—pull the other one! It gets worse. I hear that the Prime Minister did not properly understand what the Chancellor was saying. Apparently, when he told the Prime Minister that he wanted to cut taxes for Bingo, the Prime Minister thought he was referring to an old school chum: “Hurrah, another tax break for millionaires. Bingo, Bingo!”

It is okay though, because we know that the job of the chair of the Conservative party is safe. No. 10 says that the Prime Minister has full confidence in the Tory party chair. That’s the end of him then! According to The Sun, the Tory party chair is currently on a tour of northern cities, presumably to see how the other half live. I wonder how it is going. Can you imagine, Mr Deputy Speaker? “Goodness me, the houses even have indoor toilets these days.” I wonder whether he is looking for pigeon fanciers up north. My advice to him is to change his name back to Michael Green. That was a bit safer.

The problem with the Budget was not what it did, but what it did not do. Where was the freeze on energy prices that Labour has called for? Where was the 10p starting rate to cut the taxes of 24 million working people? Where was the expansion of free child care to 25 hours a week for working parents? Where was the compulsory jobs guarantee, paid for by a tax on bank bonuses? Where was the cut in business rates for small firms? Where was the new investment in affordable housing? Where was the reversal of the £3 billion top rate tax cut to balance the books in a fair way? We got none of Labour’s cost of living plan to balance the deficit in a fairer way, just more of the same. Working people are worse off, while millionaires get a tax cut—just more of the same from the same old Tories.

Economic Growth

Debate between Ed Balls and Andrew Selous

Wednesday 15th May 2013 Commons Chamber

[Ed Balls]

Unlike the Chancellor, the markets do not pay a huge amount of respect to the credit rating agencies. The hon. Gentleman agrees with me on that. That is why, two or three years ago, it was so ridiculous for the Chancellor to say, “Trust me. I’ll keep us as a safe haven because I’ll keep the triple A credit rating.” We told him, in 2011 and 2012, that the plan was not working, that the economy was not growing and that the deficit was not coming down, but when we told him to change course, he said, “I can’t do that because the credit rating agencies will downgrade us.” Well, they downgraded us anyway, because the economy was not growing.

[Andrew Selous (South West Bedfordshire) (Con)]

The shadow Chancellor believes in plain speaking, so I want to give him a third—and perhaps final—opportunity to tell us the amount of extra borrowing that his policies would require. Just a number—plain and simple.

[Ed Balls]

I am not going to write our Budget for 2015 two years ahead. That would be the wrong thing to do. Right now, if the Chancellor had done what I recommended a year ago, borrowing would be coming down. At the moment, however, it is absolutely flat.

What have we learnt in the last seven days? What have we learnt from today’s Tory amendment about the priority of the Conservative party? What are Conservative Members demanding in their amendment? What are they rebelling on? Accelerated bank reform? Energy market reform? Housing investment? Infrastructure investment? Tough welfare reform through a compulsory jobs guarantee? If they want all that, they can vote for our amendment today. But no, according to the Tory amendment, the No. 1 priority that is so vital that Conservative Members are planning to vote against their own Government’s Queen’s Speech involves enabling legislation to allow Eurosceptic Conservative MPs to try to take Britain out of the European Union.

The Tory amendment states that those Members

“regret that an EU referendum bill was not included in the Gracious Speech.”

Let me tell the House what they should be regretting. They should regret the fact that, after three years of pursuing a failing economic plan, the Chancellor is still ploughing on regardless, even when the IMF is telling him to change course. They should regret the fact that, when calculations based on Institute for Fiscal Studies figures show that families are, on average, £891 worse off this year, the Government have cut taxes for the highest earners, giving a £100,000 tax cut to 13,000 millionaires. They should regret the fact that the Government have refused to use the Queen’s Speech to put in place the long-term reforms necessary for our economic future—reforms that I fear will not be in the spending review, either. The Chancellor and the House should regret, too, the fact that the Conservative party seems to have been hijacked by those within its ranks, including within the Cabinet, who are determined to lead Britain out of the EU regardless of the impact on investment and jobs.

--- Later in debate ---

[Ed Balls]

Normally there are plenty of interventions in debates on the economy, jobs and growth, but it seems to be Europe that really gets them going. I give way to the hon. Member for South West Bedfordshire (Andrew Selous).

[Andrew Selous]

The shadow Chancellor is being very generous in giving way. Will he explain very briefly what he meant when he said hat he did not want his party to be caricatured as the anti-referendum party?

[Ed Balls]

We are not against the idea of referendums. We proposed the first referendum, in the 1970s. If there were a change in the balance of power in the treaties, we would support a referendum, but it would be wrong to do so now.

Jobs and Growth

Debate between Ed Balls and Andrew Selous

Thursday 17th May 2012 Commons Chamber

[Ed Balls]

I will make some progress.

Is it not the reality that we have an economy in recession and a Queen’s Speech that entirely failed to deliver on growth, jobs and investment? The Chancellor’s economic strategy is now in tatters, but have we had any admission in recent weeks that he got it wrong? We have had none. The Foreign Secretary says that British business needs to work harder, but it is this Chancellor who needs to work harder to get things right.

[Andrew Selous (South West Bedfordshire) (Con)]

rose—

[Ed Balls]

I will not give way.

Let me say this to the Chancellor. We all know why he has wanted to be a part-time Chancellor: in order to make room for his other role as the Conservative party’s part-time political strategist. But with the Budget botched, the Queen’s Speech a flop, the local elections a disaster for his party, and the economy back in recession, it is now dawning on all of us—I think it is dawning on many Conservative Members too—that he is not a very good Chancellor and not a very good political strategist either. Although should we really be surprised? This is the Chancellor who claimed to his colleagues that hiring Andy Coulson would be a triumph; that taking away child benefit from middle-incomes families would be a masterstroke; that saying that the economy was “out of the danger zone” was smart forecasting; and that cutting the top rate of tax in this Budget would wrong-foot Labour, and outfox his leadership rival Boris Johnson too. With judgment like that, perhaps the Conservative party does not need just a new political strategist; perhaps it needs a new Chancellor too.

[Andrew Selous]

Will the right hon. Gentleman give way?

[Ed Balls]

No, I will not.

What an eight weeks it has been! The transformation has been startling, with the Chancellor’s long-held dreams turning to dust. He dreamed that his brilliant economic plan would bring unprecedented growth and finally deliver a Tory majority in 2015, and that a grateful Prime Minister would then stand aside, as he was finally cheered into 10 Downing street. How far away those dreams seem now!