The Economy

Debate between Ed Balls and Stephen Metcalfe

Wednesday 22nd June 2011 Commons Chamber

[Ed Balls]

Let me deal with precisely that point by returning to the subject of the United Kingdom. Notwithstanding what I consider to be a rather tawdry attempt to use what seems to be a political claim that a sovereign debt crisis exists here in the UK to give the Liberal Democrats an excuse to ditch everything in their manifesto and support a Conservative party policy, the fact is that the plan is not working here either.

The Chancellor likes to play this game. A few weeks ago, he told the “Politics Show” that if he “abandoned” his plan,

“Within minutes Britain would be in financial turmoil.”

As I have just said, the Greek Prime Minister’s experience shows that simply talking tough does not make someone credible and does not boost market confidence if the plan is not working.

The reason why there is now a question mark over the Chancellor’s credibility is that in recent weeks and months we have had an economy that has not been growing; fewer people in work and paying tax than there should be; and more people on benefits than there should be. That makes it harder to get the deficit down. We have had stagnant output for six months and we have forecasts being downgraded left, right and centre. This is not about bad news now and short-term pain. All that makes it harder to get the deficit down and undermines our long-term credibility, investment and confidence. As the former chief economist at the Cabinet Office, who is now head of the National Institute of Economic and Social Research, said:

“You do not gain credibility by sticking to a strategy that isn’t working.”

That is the situation we are now in.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

Whichever number we use—the £12 billion or the £51 billion unfunded tax cut—can the right hon. Gentleman tell us where that money might come from, or is he happy to bundle up further debt that we can then pass on to our children and grandchildren?

[Ed Balls]

I have just made it absolutely clear that if we do not have a credible plan that works, it makes it harder to get the deficit down, not easier. Borrowing is now going to be £46 billion higher because of an economic plan that is not working. That is the reality.