Economic Growth
Debate between Ed Balls and Nadhim Zahawi(11 years, 7 months ago)
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Ed Balls (Morley and Outwood) (Lab/Co-op)
I beg to move amendment (g), at the end of the Question to add:
‘but regret that the Gracious Speech has no answer to a flatlining economy, the rising cost of living and a deficit reduction plan that has stalled, nor does it address the long-term economic challenges Britain faces; believe that the priority for the Government now should be growth and jobs and that we need reform of the European Union, not four years of economic uncertainty which legislating now for an in/out referendum in 2017 would create; call on your Government to take action now to kickstart the economy, help families with the rising cost of living, and make long-term economic reforms for the future; and call on your Government to implement the five point plan for jobs and growth, including bringing forward long-term infrastructure investment, building 100,000 affordable homes and introducing a compulsory jobs guarantee for the long-term unemployed in order to create jobs and help to get the benefits bill and deficit down, legislate now for a decarbonisation target for 2030 in order to give business the certainty it needs to invest, implement the recommendations of the Parliamentary Commission on Banking Standards and establish a proper British Investment Bank.’.
Thank you for your ruling, Mr Speaker. It is certainly in line with my understanding of the particular interpretation of that Standing Order, and I hope that it satisfies the Leader of the House as well.
It is an honour to open the final debate on the Queen’s Speech today, and to move the amendment, which you have selected on behalf of Her Majesty’s Opposition. It is a Labour amendment that calls for decisive action and a stimulus now to kick-start the recovery, boost living standards and get the deficit down, including 100,000 affordable homes, urgent action to accelerate infrastructure investment and reforms to get young people and the long-term unemployed back to work, with a compulsory jobs guarantee.
The amendment also proposes radical long-term reforms to promote economic growth and investment in manufacturing, services and our creative industries by implementing the recommendations of the Parliamentary Commission on Banking Standards, legislating now for a 2030 decarbonisation target to give businesses the certainty they need to invest here in Britain and setting up a proper British investment bank. It is a one nation Labour amendment, which stands in marked contrast to the complete and utter shambles we have seen from the Government over the past seven days since the Gracious Address—a divided coalition, out of ideas and running out of road, and a weak Prime Minister, out of touch and fast losing control of his party and his own Cabinet.
Nadhim Zahawi (Stratford-on-Avon) (Con)
How much more money would the shadow Chancellor need to borrow to deliver on his alternative Queen’s Speech?
Ed Balls
As I said in my opening remarks and as our amendment says, we need a stimulus now. We, the International Monetary Fund, the Business Secretary and The Economist all agree that taking action now to kick-start our recovery is the right thing to do. We should borrow now to get growth moving, so that we get our deficit down.
I have to say to the hon. Gentleman that that very question was asked of the Business Secretary on the “Today” programme just a few weeks ago. He was asked by John Humphries, “So, should you borrow more?” Guess what the Business Secretary said? He said:
“Well we are already borrowing more”.
That is the truth—£245 billion more. I will tell you what I want to do—[Interruption.] I will answer the hon. Gentleman’s question. I want to get the borrowing down. Under this Chancellor, the borrowing has flatlined—the same last year, this year and the year after. That is the reality.
Mr Speaker
Order. Mr Zahawi, you have already intervened with some gusto, but I would ask you to behave in a seemly manner, as the people of Stratford-on-Avon would expect and are themselves wont to do.
Professional Standards in the Banking Industry
Debate between Ed Balls and Nadhim Zahawi(12 years, 5 months ago)
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Ed Balls
As the hon. Gentleman will know—because I said this yesterday—at no point at any time when I was an adviser or City Minister was it suggested to me by the Financial Services Authority, the Treasury, the Bank of England, or anyone in the House that there was any reason to doubt the integrity of the LIBOR market. The facts came to light only subsequently, and they are now being properly investigated. I hope that that serves as a full answer to the hon. Gentleman.
Nadhim Zahawi (Stratford-on-Avon) (Con)
This is a very important point, which goes to the heart of the issue of trust. Can the right hon. Gentleman confirm that, as far as he knows, no other Minister at either No. 10 or the Treasury spoke to the Bank of England about LIBOR during his time in office?
Ed Balls
Here we go again, Mr Deputy Speaker. The reason we advocate an open public inquiry, judge-led, is precisely in order to get to the bottom of all these things.
Given the direction in which the debate is now going, before I set out the arguments before us today let me just say this to the Chancellor of the Exchequer. The cheap, partisan and desperate way in which he and his aides have conducted themselves in recent days does him no good; it demeans the office that he holds; and, most important, it makes it harder for us to achieve the lasting consensus that we need.
I have to say that what we have seen in the last few days makes the case more eloquently than any speech that I could deliver, or any speech that any of us could deliver, for an independent, arm’s length public inquiry to elevate this debate above the deeply partisan tone set by the Chancellor and his colleagues. As for the false personal accusations that the Chancellor has made against me, not on the basis of any evidence but purely in the hope of political advantage, he said yesterday—[Interruption.] Members should listen to this.
The Chancellor said yesterday that I was “clearly involved” in communicating with the Bank of England and Barclays in October 2008 concerning the LIBOR market, a claim that his aides repeat. He made that utterly baseless accusation before any proper investigation, before any witnesses had been called and before any papers had been examined. He did not say it to an inquiry; he said it yesterday to The Spectator. If he has any evidence, he should produce it now, in the House. [Interruption.] If he will not—[Interruption.]
The Economy
Debate between Ed Balls and Nadhim Zahawi(13 years ago)
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Ed Balls (Morley and Outwood) (Lab/Co-op)
A year ago this week, the Chancellor of the Exchequer told the American news channel CNBC:
“We’ve already begun the reductions in public expenditure, and it has not had the impact on demand, not had the impact on economic growth that the critics said it would. So there are plenty of people who said what we were doing was wrong, but at the moment they’re being confounded by the figures.”
Twelve months later, on growth, on jobs and on borrowing, it is the Chancellor who is completely confounded by the figures. Let me remind him of what he boasted a year ago on 29 November in a Conservative party press release:
“Now the independent OBR have confirmed that the British recovery is on track, our public finances are on the mend, our debt is under control, employment is growing and our economy is rebalancing.”
Twelve months to the day, what did the independent Office for Budget Responsibility report? A recovery on track? No. Growth is flatlining—downgraded this year, next year, the year after, the year after and the year after that. Is employment growing? No. Employment is falling, and unemployment is now expected to be 500,000 higher than the previous forecast. Are public finances on the mend? No. Borrowing is disastrously off track: £158 billion more than the Chancellor told the House exactly a year ago.
The boasts of the Prime Minister and the Chancellor that they would eliminate the current structural budget deficit within five years are in complete tatters—in complete disarray. In his March Budget, the Chancellor claimed:
“We have put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 965.]
It must have been the wrong kind of fuel.
It is not as though the Chancellor was not warned. In his Bloomberg speech in August 2010, he claimed:
“There are some political opponents who claim that in setting out our decisive plans to deal with the deficit we have taken a gamble with Britain’s economy. In fact, the reverse is true.”
The Chancellor has taken an enormous gamble with the economy, with jobs and with people’s lives. The reality is that his gamble has completely backfired. Let me quote from an editorial in The New York Times at the weekend:
“A year and a half ago, Prime Minister David Cameron of Britain came to office promising to slash deficits and energise economic growth through radical fiscal austerity. It failed dismally.”
Before the election, we said that, like every country, after the global financial crisis we had to get the deficit down and we needed a tough plan. We needed spending cuts and tax rises. The question was not if we did it but how we did it. That is why the Opposition warned the Chancellor that he was reckless, that he was ripping out the foundations of the house, leaving our economy not safe but deeply exposed, and that is exactly what has happened over the last year.
Even judging by the one objective the Chancellor set himself for getting the deficit down, he is failing. In that CNBC interview a year ago, the Chancellor said:
“We have taken a series of steps, increased some taxes, consumption taxes, had some cuts in public expenditure, which have put us on a path to eliminate the deficit in a period of four years.”
Not only is the Chancellor now emphatically not going to eliminate the deficit in four years, but according to the OBR, he is set to borrow £37 billion more than under the plan he inherited from Labour at the last general election—a plan he called “deeply irresponsible.”
The Business Secretary told The Guardian in May that it was realistic for the coalition to eradicate the structural deficit by the end of this Parliament:
“Our credibility hinges on it.”
He was right, which is why the Government’s credibility is now badly undermined. The Chancellor should have listened to the warning from the Business Secretary before the election. This is what the Business Secretary said when he was a Liberal Democrat MP outside the coalition—the old kind of Liberal Democrat:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit.”
The Business Secretary was right before the election. It was only after the election, when he took his Cabinet seat, that he changed his mind.
Unemployment is up. Borrowing is up. Going further and faster has proved to be utterly counter-productive and self-defeating. All this pain for no gain. Eighteen months in, plan A has failed, and it has failed decisively.
Nadhim Zahawi
In The Times today the shadow Chancellor wrote:
“Credibility is based on trust and trust is based on honesty, so we must be clear with the British people that under Labour there will have to be cuts.”
In the spirit of honesty, will he tell the House what he would cut?
Ed Balls
Of course I will. When I was the Education Secretary we said that there would be over £1 billion of cuts in the schools budget at that time. We said, for example, that we would cut the police budget by 12%, but not by 20% with the loss of 16,000 police officers throughout the country. We would have raised national insurance. We raised the top rate of tax, but we would not have raised VAT to 20%, precisely because it would have choked off the recovery, as it has done this year.
I can tell the hon. Gentleman and his colleagues, the friends of the Chancellor, that I was reading a profile of the Chancellor a week ago, a few days before the autumn statement, in which one ally said:
“‘The autumn statement will correct the idea that we are off course’”.
Whatever were they on? One only needs to read the rest of the article to understand what is really going on. It goes on to say that the Chancellor
“has started taking discreet steps towards the Tory leadership. . . Members of the 2010 intake of MPs . . . are invited to discreet drinks at No. 11. The favourites”—
I do not know whether the hon. Member for Stratford-on-Avon (Nadhim Zahawi) is one of the favourites; perhaps he could tell us in another intervention—
“The favourites are invited to bibulous soirees at Dorneywood.”
If you ask me, it sounds as if they have been drinking rather too much.
Let me give the House another quote from one of those allies, because it was so revealing:
“Nobody in the Osborne circle is vulgar enough to talk openly enough about his leadership ambitions. . . ‘George has no agenda. I have never heard any talk of a timetable,’”
said an ally,
‘“But the unspoken assumption is that the party would be a lot safer in George’s hands than with bonking Boris.’”
Ed Balls
In a second. Any Government would be borrowing at the moment. The question is whether it is better to borrow billions more to keep people out of work on benefits, or to act to get people back into work and paying tax, which would get the deficit down. If we let a year of stagnating growth and rising youth unemployment become a lost decade of stagnant growth and high youth unemployment, we will pay a long-term price. It makes much more sense to act now, as the International Monetary Fund has recommended, with temporary tax cuts and investment in jobs and growth. That is the best way to reduce the bills of failure for the long term. It is the only way to get our deficit down sustainably in the long term.
Nadhim Zahawi
The shadow Chancellor is obviously passionate about the subject of youth unemployment, so will he admit to the House that in the last Parliament, youth unemployment in his own constituency went up by 151%?
Ed Balls
Before the crisis, youth unemployment was lower than what we inherited in 1997. It then went up during the recession, but was falling a year and a half ago. It is now rising again. Unemployment was falling in our economy, but now there has been an 80% rise in long-term youth unemployment.
Jobs and Growth
Debate between Ed Balls and Nadhim Zahawi(13 years, 2 months ago)
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Ed Balls
I am not sure about 1830, but if the hon. Gentleman was in the House in 1930—he might have been—he will know the dangers of very low bond yields accompanied by rising national debt, rising unemployment and economies locked in stagnation. I do not know whether he was around at the time, but some forefathers and foremothers certainly were. Let me quote the director of the National Institute of Economic and Social Research, the think-tank of the year, who said:
“The reason people are marking down the gilt yields is because they think that the economy is weak.”
That is the truth.
Let me make a prediction. I do not expect the Chancellor to announce a change of course today, but will we hear him repeat his boast made this time last year that the British economy’s recovery is on track? I doubt it. Will he repeat the Prime Minister’s deeply complacent boast that Britain is out of the danger zone? I doubt that, too. Will he describe Britain as a safe haven that is immune from the global storm? Will he repeat his naive forecast that cutting public jobs will boost private confidence and create more private jobs? Even this Chancellor cannot fly in the face of the facts. Employment has fallen in the past 12 months. On the day when unemployment has risen again, will he give any indication that he understands at all how hard things are for families up and down the country? Is he so out of touch that he really believes that a £1.40 a week council tax freeze can compensate for a £9 a week rise in VAT?
Nadhim Zahawi (Stratford-on-Avon) (Con)
On unemployment in manufacturing, why does the shadow Chancellor think that manufacturing was 21% of GDP in 1997 and 12% when Labour left office?
Ed Balls
Well, unemployment has fallen as a percentage—[Interruption.] As I said, that whipping operation knows no bounds. I was hoping that the hon. Gentleman was going to repeat what the hon. Member for West Suffolk (Matthew Hancock) said earlier this year. He said that
“manufacturing is expanding under this Government”.—[Official Report, 23 March 2011; Vol. 525, c. 1024.]
The trouble is that manufacturing output has fallen in every one of the past three—[Interruption.] I am going to agree with the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who wrote on his blog that
“deficit reduction alone isn’t enough. If we are to smooth the waters of this choppy recovery we need to ensure that we also support sustainable growth in the private sector.”
Where is that growth? Will the Chancellor repeat his claim that—
The Economy
Debate between Ed Balls and Nadhim Zahawi(13 years, 6 months ago)
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Ed Balls
I will take as many interventions as hon. Members want me to, but I am going to establish my argument first. I think that the House knows that I enjoy interventions, and I will absolutely take them all—Members should not worry!
The Chancellor also ignored the fact that we were not in the euro, that our debt maturity was long—
Ed Balls
Whether or not the Chancellor comments, the fact remains that since the last OBR forecast, Britain’s growth forecasts have been downgraded by the International Monetary Fund, the OECD, the CBI, the British Chambers of Commerce and the National Institute of Economic and Social Research. Everybody else is downgrading growth forecasts; we will have to wait for the OBR finally to catch up.
Nadhim Zahawi
I thank the shadow Chancellor for finally giving way. I must push him a little bit harder. When did he discuss his VAT cut with the shadow Cabinet? Will he tell us that?
Ed Balls
That tells you, Mr Speaker, how on the defensive Conservative Members are about the economy. The shadow Cabinet decided—[Interruption.] Look, just shouting does not get people to listen; the hon. Member for Stratford-on-Avon (Nadhim Zahawi) has got to learn that. The shadow Cabinet decided that the Opposition would oppose the VAT rise. In January, the Leader of the Opposition said it should be reversed. Last week, two days before I made my speech, I discussed the matter in detail with the Leader of the Opposition—[Hon. Members: “Aah!”] What do they mean, “Aah”? I discussed it 48 hours previously with the Leader of the Opposition, who backed me 100%—in marked contrast to the Prime Minister’s inability to grasp the detail, to stick with a policy or, most importantly, to support his own Cabinet members.
Ed Balls
The irony of a Conservative MP opposing tax cuts in VAT for families while allowing a tax cut, compared with last year, for the banks, is almost overwhelming. As everyone who studies the figures and not the political spin knows, we went into the crisis with lower national debt than France, Germany, America and Japan. Every country had a rise in its deficit, so of course we did. The fact is, however, that our gilt yields were very low and falling month by month before the general election, even as the opinion polls narrowed—