Ed’s interview with the Financial Times

Please find below Ed Balls’ interview in today’s Financial Times. You can also read it on the FT website here and here.

Balls warns King on Bank credibility
By George Parker, Jim Pickard and Norma Cohen

Ed Balls, shadow chancellor, has criticised Mervyn King, Bank of England governor, saying he should step out of the political arena and stop tying his credibility to the coalition’s “extreme” deficit-reduction plans.

In an interview with the Financial Times, Mr Balls drew comparisons between Mr King’s stance and the backing lent by the Bank of England to the Treasury’s fiscal hawks during the Great Depression.

“The last thing you ever want is for the Bank of England to be drawn into the political arena,” said Mr Balls, one of the architects of Labour’s plan in the 1990s to give the Bank its independence. “Central bank governors have to be very careful about tying themselves too closely to fiscal strategies, especially when they are extreme and are making their job on monetary policy more complicated.”

Mr Balls believes that the governor is risking the Bank’s reputation by endorsing policies that could tip Britain into a double-dip recession and a period of mass unemployment.

In a wide-ranging interview, Mr Balls claimed that George Osborne, chancellor, was making the “fatal error” of drawing up economic policy to suit his political objectives.

However, Mr Balls’ argument has been blunted by Mr King’s apparent endorsement of the chancellor’s approach. This week the governor said: “There has to be a Plan A. This country needs a fiscal consolidation starting from its largest peacetime deficit ever.”

Mr Balls said a double-dip recession was a possibility – although “not the most likely outcome” – and argued that Mr King and the monetary policy committee have been right so far to maintain interest rates at 0.5 per cent.

The criticism of Mr King’s allegedly political role echoes that of a number of MPC members who aired their concerns about the “excessively political” stance taken by the governor towards the coalition’s austerity programme.

Mr Balls, appointed shadow chancellor last month after Alan Johnson’s resignation, insisted Mr Osborne should slow down the pace and scale of his fiscal squeeze, in light of slowing growth and rising unemployment. He also endorsed Labour policy of halving the deficit over four years, but said that any plan would have to be contingent on economic conditions, hinting even that strategy might be too rigorous for current conditions.

“If we were in government we would be halving the deficit over four years,” he said, adding that consumer confidence would not be plummeting or unemployment rising if Labour had won the election.

In the interview Mr Balls distanced himself from Gordon Brown, his former patron, and admitted he was too brash in the past.

He also accepted partial responsibility, during his Treasury years, for failing to spot the build-up of systemic risk in the economy.

‘Remember voters’ aspirations, warns Balls’
By Jim Pickard and George Parker

Tony Blair recently wrote that Ed Balls suffered from a deficiency common to all leftwing intellectuals: “These guys never get aspiration.” But the shadow chancellor insists that he is not the unreconstructed leftwinger of popular caricature.

“That fundamental insight – that you could spend money well and be on the side of people who want to get on. If we lose those insights we will be out of power for a generation,” he says in an interview with the Financial Times.

It was once said of Gordon Brown that he could never understand why anyone would want to build a conservatory. Not so Mr Balls, who reveals that as a youth he helped his father to construct one.

What of his own aspirations? Mr Balls stood in the leadership race last summer without success; is he now reconciled to never taking the helm of his party? “Probably, and that’s fine,” he says with a smile. He then proceeds to demolish, albeit accidentally, Ed Miliband’s claim that Labour is now being led by a “new generation”.

“We have been around so long … we have been at a high level of the party for two decades, including 13 years of government. We are experienced but we are also still sort of young,” he says, before adding: “I now have to have reading glasses.”

Mr Balls, Mr Miliband and Yvette Cooper worked together on the policy details of the New Deal for the jobless and the utilities windfall tax in 1997, he recalls. It is an attempt to portray the Labour leadership as one happy ship, despite Mr Miliband’s attempts to keep Mr Balls from the shadow chancellor role last autumn.

But this reminder of his political longevity plays into the central thrust of the Tory attack on Mr Balls: that he was present at many of the crucial decisions in the run-up to the financial crash.

He admits politicians and regulators failed to anticipate the crash, in spite of modelling the downfall of a northern building society long before the collapse of Northern Rock: “The issue was that the actors in the room, the governor [of the Bank of England], head of the FSA, and the senior Treasury people including me didn’t see the building of that risk.”

Mr Miliband resisted making Mr Balls shadow chancellor, instead handing the job to Alan Johnson, who resigned last month. Colleagues predicted that Mr Balls would overshadow his leader, given his intellectual self-confidence and bulldozer personality. The two worked together as advisers to Mr Brown at the Treasury while young men. But Mr Balls dismisses the idea that he still sees Mr Miliband as the office junior.

“I don’t look at Ed Miliband and see someone I sat next to 10 years ago. It is complete garbage.”

Now, he insists, his generation of New Labour is older and wiser. “I think back in 1996, 1997, when we first came into government, we were green and I think a little naive, and I think we were probably more sure of ourselves than anyone ever should be.”

The duo share the offices in parliament previously occupied by David Cameron and George Osborne while they try to create a single, integrated team of advisers.

It was late one January evening when Mr Balls got the call from his old colleague asking him to replace Mr Johnson in the key opposition role. Mr Balls agreed to stick to the existing economic plan, promising not to “lurch” off in a different direction. But he asked Mr Miliband: “Do you want me to do this? I’m not going to do things by half.”

Mr Balls, often portrayed as a Machiavellian bully, is nothing of the sort, he insists – saying that David Cameron and George Osborne are much more “personal” in their attacks.

“If I was five foot one people wouldn’t call me a bruiser, unfortunately in politics if you are male and a bit heavy, a broad frame, you always get a bit of that,” he says. “I’m the opposite of somebody who throws things around the room.”

Brown study

Ed Balls says he is now far more focused on “Labour winning” than the idea of being party leader, writes Jim Pickard.

The shadow chancellor alludes to the impact of excess ambition on his former mentor, Gordon Brown: “I have seen what it is like when people worry more about the job they want than the job they have got. That’s very destructive.”

Now his mission is “getting Ed Miliband into Downing Street”, he says. People had hoped in 2007, he says, that Labour would be able to break out of the old “Blair-Brown” prism. “Gordon Brown never managed to do that,” he admits.

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Posted February 18th, 2011 by Ed's team

3 Responses to “Ed’s interview with the Financial Times”

  1. Patrick Boyle says:


    I am really pleased that you are the Shadow Chancellor as I believe you have the knowledge,skills and experience to tackle the Cameron/Osborne phoney arguments about deficit reduction.
    One thing I feel the Party needs to be clearer about is the Tax Justice agenda–the work of UKUncut and 38 Degrees,amongst others, is to be commended

  2. Mary Nash says:

    It is impt Bank of England maintains its independence. Timely to remind Governor Mervyn King of this in order to keep its respectability and reputation. Well done Ed.

    As for the unmandated fullscale reorganization of the NHS, pls remind Ed Milliband and John Healey that Andrew Lansley as far back as July 2005, explained his philosophy of public service reform invoking his experience while a civil servant working with Norman Tebbit opening up the telecommunications sector to competition to set out seven principles to guide reform….maximise competition, transfer risk to the private sector, ensure strong and independent regulation, set out standards and accountability clearly, specify universal service objectives and how they are to be funded, provide quality information for customers and maximise the number of providers, and ensure equitable access without sacrificing efficiency for equality

    The Health and Social Care Bill 2011 is to draw on his experience of privatising the utilities in taking forward the reorganization of the NHS. But how applicable are these principles bec of the differences between Healthcare and Telecommunications sectors? Will choice and competition lead to fragmentation as Monitor(the economic regulator) exercises its duty “to promote competition where appropriate”

  3. Mary Nash says:

    Please pass the reference for Andrew Lansley’s 7 guiding principles to Ed Milliband and John Healey.
    Lansley A. Extract from “The Future of health and public service regulation” speech .2005.www.andrewlansley.co.uk/newsevent.php?newseventid=21.

    The NHS is the second overall ranking in the 2010 Ranking of Countries Healthcare on quality care,access, efficiency,equity, long healthy productive lives. Presently, the Satisfaction Rate with the NHS is the highest ever since recording started. We all know we need to continue improving our NHS, but we do not need the fragmentation and devastation of the NHS with Lansley’s adventurous gamble. Wasting 3-4 Billion Pounds plus an additional 2 billion pounds on redundancy payments is wasting money we cannot afford during this time of austerity. This can only mean that the enormous undertaking by Lansley is simply ideological.

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