Charter for Budget Responsibility

Debate between Ed Balls and Richard Fuller

Tuesday 13th January 2015 Commons Chamber

[Ed Balls]

Of course that is exactly what the Chancellor has done in this Parliament. In 2010, when he set his first mandate, he said that this would be done by the end of the rolling five-year forecast period. In 2010, the Prime Minister clearly thought that that meant 2015 but the Chancellor now thinks it means 2018 or 2019, which is why he still says he is meeting his fiscal target. Everybody else can see it is a completely preposterous claim.

[Richard Fuller (Bedford) (Con)]

The shadow Chancellor has called this proposal a load of “pony and trap”, which I believe is a metaphor for something else. He has also called it a “gimmick”. He knows that many in his own party oppose it, but he has not explained to this House why he is forcing them to vote for it.

[Ed Balls]

The hon. Gentleman did not mention the quote from the TaxPayers Alliance, which also said it was a complete gimmick. That simply exposes the fact that the Chancellor has failed to meet his targets. Now let me come on to our fiscal position—

Budget Resolutions and Economic Situation

Debate between Ed Balls and Richard Fuller

Thursday 21st March 2013 Commons Chamber

[Ed Balls]

Perhaps the hon. Lady should also study the book. The interesting thing is that the OBR is also forecasting that unemployment will rise, not fall. More jobs, unemployment rising—maybe there are more people in the country. Does she know what the OBR forecasts net migration to be in the next few years? Tens of thousands? No. Net migration of 140,000 every year. That is what is going on.

It is groundhog day too because, as a result of the present stagnation, the Chancellor’s fiscal plans are even more wildly out of control than they were a year ago. No wonder his fiscal credibility is in tatters. The Chancellor used to claim that the national debt would start to fall in 2015 from a peak of 69.7% of GDP. He now expects it to rise in 2015, to rise in 2016, to rise in 2017 and to hit a staggering not 69.7%, but 85.6% of GDP. And the reason the national debt is rising is that, as the OBR said yesterday, the Chancellor’s deficit reduction plan has stalled. The deficit is now expected to be the same next year as it is this year and as it was last year. It is not a deficit reduction plan anymore. That is why the Chancellor is now set to borrow—[Interruption.] The Chancellor should listen to this. He is now set to borrow £245 billion more than he planned, vastly more than the borrowing he inherited from the Labour Government.

[Richard Fuller (Bedford) (Con)]

While the vast army of PAs behind the shadow Chancellor search for a bullet point on Bedford, let me say that his criticisms are not falling very strongly, in part because his hands are dipped in red—the red ink of years of borrowing and debt. Does he not think that the arguments would be stronger if he moved to one side and gave his seat to the fresh-faced young man sitting next to him, the shadow Secretary of State for Business, Innovation and Skills?

[Ed Balls]

The voters of Bedford might be disappointed to find out the truth: compared with a year ago, the Chancellor will borrow £29 billion more than he planned this year, £59 billion more next year, £73 billion more the year after and £77 billion more the year after that. Mr Deputy Speaker, if you want to know who the borrowing Chancellor is, it is him. Do you know what he managed to do yesterday in his Budget documentation? He fiddled around and managed to say that borrowing this year is lower than it was last year by £0.1 billion. We know why: as the OBR confirms, the Chancellor and the Chief Secretary to the Treasury, when one would think they would be working on a plan for jobs and growth or reform of the banking system, have been scrabbling around and hacking away at spending in this year in a desperate attempt to try to get the borrowing down.

The detail is set out on page 13 of the OBR document. It shows that, compared even with the autumn statement, tax revenues are down this year by £5 billion but that since December the Chancellor has found a further so-called underspend of £3.4 billion, which he says is not like normal underspends. What does the OBR tell us about that so-called underspend. It states:

“It is very rare for the government to under-spend the departmental plans it has set out less than a year ago by such a wide margin...Our overall forecast of under-spending has a number of elements: money that the Treasury has agreed to allow departments to move into future years;…money that departments thought they would spend this year, but which they do not now expect to spend either this year or in the future; and payments (for example to some international institutions) that were due to be made late in the current financial year, but which are being delayed into 2013-14.”

The cheque is in the post, but it will not arrive until after 1 April in order to massage the figures. Who does the OBR say has been hardest hit? The answer is the national health service, which has been cut by over £2 billion this year. At the same time the NHS is losing more than 5,000 nurses, the Treasury scrabbles around to try to save the Chancellor’s face.

Jobs and Growth

Debate between Ed Balls and Richard Fuller

Thursday 17th May 2012 Commons Chamber

[Ed Balls]

Credibility is about getting things right, not about getting them wrong. We were told that we were out of the danger zone and that the recovery had been secured, but what has happened? Plan A failed in Britain and in the eurozone too, and it is the very plan that the Chancellor has been urging on us. What did he say to The Daily Telegraph in August last year? He said:

“Britain is leading the way out of this crisis”,

and

“The eurozone must follow our lead and act decisively”.

The Prime Minister is off to the G8 summit this weekend. The only countries in recession that will be represented there are Italy and Britain. How are we leading the way? The fact is that the austerity policies that are failing in Europe are the very same policies that have failed in Britain, and which the British Government have been urging the German Government to urge the eurozone to stick with. That is the reality.

Opposition Members have consistently argued that it will not work for all countries to try to reduce their deficits at the same time, that tough medium-term plans to cut the deficit will work only if Governments also put in place a plan for jobs and growth, and that a time when a global hurricane is brewing is precisely not the time at which to rip out the foundations of the house here in Britain.

[Richard Fuller (Bedford) (Con)]

rose—

[Penny Mordaunt (Portsmouth North) (Con)]

rose—

[Ed Balls]

I will give way first to the hon. Member for Bedford (Richard Fuller). We have nothing in the file for him, because unfortunately we were unable to find anything interesting that he had said during the last two years.

[Richard Fuller]

I appreciate the compliment from the right hon. Gentleman, who has often demonstrated that he does not have a sound grip on economics. He is continuing to say something that I do not think is correct: he is continuing to compare austerity policies with growth policies. Does he not accept that growth is an outcome, which all policies are intended to achieve, and will he have the honesty to answer the question put to him by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) and cost his plans?

[Ed Balls]

The right course is to take a balanced approach that combines medium-term deficit reduction with getting jobs and growth moving. The problem with austerity is that it chokes off jobs and growth and ends up costing more in spending, more in unemployment and more in borrowing. We have set out a clear alternative. We have said “Repeat the bank bonus tax, and use the money to create jobs.” We have said “Rip up the failed national insurance cut introduced by the Chancellor, and use the money for a tax cut for small businesses.” We have said “Yes, cut VAT by £12 billion for a year to get the economy moving.” We have not said how many shovel-ready infrastructure projects can be launched, because we do not have the details.

The Prime Minister says that you cannot borrow your way out of a debt crisis, but unless you grow, your debts get bigger and your deficits get worse. That is what the Chancellor has proved over the last two years. It is not only the Labour party that is advancing that argument. Only last week, the managing director of the International Monetary Fund said:

“We know that fiscal austerity holds back growth and the effects are worse in downturns... so the right pace is essential”.

Even the head of the European Central Bank is now pressing for a jobs and growth plan.

The Prime Minister and the Chancellor must wake up to the fact that our economy has not grown on their watch for a year and a half. Instead of trying to divert the blame for their failure and using the eurozone as an excuse for Britain's problems, they must admit that they got it wrong—that they gave the eurozone the wrong advice—and start pushing for the right solution to the eurozone crisis. I agree that there should be a proper role for the European Central Bank and a greater emphasis on fiscal burden-sharing, but there should also be a change of course on austerity, because only a balanced plan that puts jobs and growth first will succeed in getting the deficit down. When the International Monetary Fund, the OECD, the European Commission, the European Central Bank and even the United States are urging policies for jobs and growth, this Chancellor and this Prime Minister are looking increasingly isolated and out on a limb.

The Economy

Debate between Ed Balls and Richard Fuller

Tuesday 6th December 2011 Commons Chamber

[Ed Balls]

The hon. Gentleman makes an important point: there was a major financial crisis that hit Britain and all countries throughout the world. The Chancellor always wants to blame Labour, as he does the snow, the earthquake and the euro area.

[Richard Fuller (Bedford) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

In a second. I will answer the previous intervention before I turn to the next one.

The financial crisis hit every major country in the world, and bank regulation was not tough enough here in Britain or in countries throughout the world—[Hon. Members: “Ah!”] There is no doubt about that. The Chancellor of the Exchequer, who was then the shadow Chancellor, spent his whole time urging us to deregulate, complaining about “burdensome, complex” regulations—but there we are.

By spring 2010 the economy was growing, inflation was low and unemployment was coming down. More people were in work and paying taxes then, so borrowing came in £20 billion lower than had been forecast in the pre-Budget report of 2009. How things have changed in 18 months! Then borrowing came in lower than was planned; now it is coming in at £158 billion more than was planned. The country is tired of the Chancellor’s excuses, and it is time he admitted that his failing plan is hurting but not working. His reckless gamble has not made things better; it has made things worse.

[Richard Fuller]

As the shadow Chancellor’s soon-to-be replacement, the hon. Member for Leeds West (Rachel Reeves), rustles through her papers to find a data point to throw back at me, may I ask him whether he has had the opportunity to look at McKinsey’s debt and deleveraging report, which identifies that on his watch and under his Government we became the most indebted major economy in the world? Does he not bear some responsibility for the enormous pain that families are going through in order to remedy some of his excesses?

[Ed Balls]

In the hon. Gentleman’s constituency 10,800 families are actually losing out as a result of the change in tax credits. We look forward to seeing that in his press release.

The fact is that we went into the global financial crisis with a lower level of national debt than France, Germany, America and Japan—

[Richard Fuller]

rose—

[Ed Balls]

If the hon. Gentleman calms down and lets me answer his point he will be able to intervene again. I shall be happy to take another intervention.

The fact is that when we went into the financial crisis our level of national debt was lower than that in America, France, Germany and Japan—and lower than that which we inherited from the Conservatives in 1997. I will give the House one good reason why: in 1999, when we raised £20 billion from the auction of the 3G mobile spectrum and they urged us to spend the money, we used the entire amount to repay the national debt.

[Richard Fuller]

The shadow Chancellor makes potentially a fair point about Government debt, but the Government are responsible not just for Government debt but for the total indebtedness of the nation, and he fails to understand that under the previous Government the total indebtedness of this country grew to become the largest of any major economy in the world. That is his legacy, and that is why 10,000 people in my constituency will be hearing why his policies led to the pain that they feel today.

[Ed Balls]

Over 1 million more homeowners than in 1997, and over 1 million more new businesses—with overdrafts and borrowing facilities—compared with 1997! The hon. Gentleman should be careful about giving the impression that borrowing in an economy is a bad thing for consumers, households and businesses. Many businesses want to borrow at the moment; it is just that the banks will not lend.

What did we get last week from the Chancellor? We got a cobbled-together package of growth measures which he knows, and the OBR forecast confirms, does not address the fundamental problem that his rapid and deflationary plan has choked off the recovery and pushed up borrowing. It is a so-called plan for growth that, according to the Treasury’s own figures, hits women harder than men, pushes up child poverty and delivers lower growth and higher unemployment.

Jobs and Growth

Debate between Ed Balls and Richard Fuller

Wednesday 12th October 2011 Commons Chamber

[Ed Balls]

I think the hon. Gentleman got the name wrong. He does not mean Norwich City—he means premiership Norwich City, which is more than one can say for any football team in Suffolk. I will back his campaigns to stop the cuts and to spend more, and I fully support the dualling of the A11. At last some Conservatives have persuaded some Conservative councils to do the right thing about these proposals, which is very good.

[Richard Fuller (Bedford) (Con)]

It is all very humorous here today, but in my constituency we already have above-average national levels of unemployment and unemployment has increased. It is always interesting to hear an economist debate with another economist. However, may I ask the shadow Chancellor what direct personal experience he has of working in business, helping to create jobs, and knowing what it is like to make payroll each week? If he does not have any of that experience, will he please undertake to this House that he will go out and get some?

[Ed Balls]

I have worked in Government and at the Financial Times. I have never run a business, but I respect people who run businesses and I understand why they are so worried at the moment. In the hon. Gentleman’s constituency, where unemployment has gone up by over 400 in the past 12 months, there will be some very worried businesses, and it is important that we listen to them and hear what they are saying.

That is why now is the time for our oh-so-political Chancellor to put politics aside and start to do the right thing. Protecting our economy and protecting valuable businesses and jobs is more important than trying to protect a failed plain. We do not have to wait for another month of unemployment rising, or for 46 more days until we finally get the economic and fiscal forecast from the Chancellor, to know what he is going to have to say. He is going to have to downgrade his growth forecast for this year for the fourth time in 18 months and downgrade his growth forecast for next year. As I have explained, we already have £46 billion more borrowing in the pipeline, and unemployment is now rising. He is going to have to admit that borrowing will be billions higher still than at the time of his last forecast. The Prime Minister says:

“You can’t borrow your way out of a debt crisis”,

but he just doesn’t get it. [Interruption.] No, he doesn’t get it. Because with growth flatlining, and with today’s bleak news of rising unemployment, the Chancellor’s failing plan is leading to not lower borrowing but higher borrowing than he planned.