Interview with The Politics Show on fuel prices and the economy

Transcript of Politics Show interview
(Speakers: Jon Sopel, Ed Balls, Nick Watt, Eve Pollard)

JS: Would you concede that Labour’s most important job now is to regain its reputation for economic credibility?

EB: I think the most important job is to stop George Osborne making a colossal mistake with jobs in our economy, with our economic recovery which we are seeing around us. Now part of that …

JS: That’s George Osborne, what about you?

EB: Well look, we are the opposition and we have got to show where he is getting things right, but also where he is getting things wrong and that is what I am determined to do. Now it is also important for us to set out our stall as a party of government with a better, clearer alternative and we have got to do that in a credible way. You are absolutely right, my first duty is to stop George Osborne, and I don’t know if I can, being in denial about the economic mistakes he is making at the moment.

JS: But are you in denial about Labour’s lost credibility for economic competence? I could give you endless stats on the recent figures on who would you trust to take the right decisions for the economy … the coalition way ahead of you .. and so on, since the last election you have been blamed for the economic downturn and the deficit?

EB: Well look, we didn’t win the election and we then went through a period last year where everybody pretty much, not everybody, but most people said look there is only one choice, you have got to cut the deficit now. George Osborne and David Cameron said there is no alternative, it will work, it will strengthen the economy, let’s go faster. And what has happened is, as you were saying in your report, the economy didn’t grow faster, it has ground to a halt; unemployment isn’t falling, it is now rising, and for the first time people are saying well hang on, maybe these guys don’t quite know what they are doing and lets listen to some other people who have been saying, as I have and others have for some months, actually they are making a big mistake, they are not learning the mistakes …the lessons of history, they are making the mistakes of history, this is a 1930s/1980s error and George Osborne should listen a little and get out of his bunker in my view.

JS: At times you have quoted Timothy Geithner very favourably and he would say that they are doing absolutely the right thing?

EB: Well look Timothy Geithner said it was important for them to have a long-term plan …

JS: “I’m very impressed with the basic strategy he has adopted [George Osborne] What he did is a very remarkable thing, he locked his coalition and the government into a set of reforms that are very good”? That was a couple of days ago.

EB: It is good to have a plan, the question is: is it the right plan or the wrong plan? And the interesting thing is that Tim Geithner …

JS: Think so?

EB: …Tim Geithner is pursuing in America, the American Finance Minister, the opposite plan from George Osborne. He said just a couple of weeks ago slamming on the brakes is not a credible economic policy …

JS: Different countries, different economic circumstances, different amount of internal market and all the rest of it?

EB: Only Greece is trying to hit their economy with fiscal cuts as hard as a Britain. This is an extreme approach, it is the biggest attempt to cut spending and cut the deficit in the post-war period ..

JS: So Tim Geithner is wrong?

EB: I think look, it is always good when people are diplomatic, but the fact is if George Osborne was doing what he ..

JS: He’s not being diplomatic, he’s agreeing?

EB: If George Osborne was doing what Tim Geithner is doing we would be in much better shape because actually George Osborne is going too deep, too fast. He’s doing something which flies in the face of, in my view, economic logic. It is very risky and reckless, and we are seeing …Look, it is not possible Jon for you to deny the fact that in the last quarter of last year, when we were told by George Osborne judge me on the figures, David Cameron [said] ‘we are out of the danger zone’. The economy actually ground to a halt, it contracted, unemployment is rising, this is the reality …

JS: When the Conservatives said there is no alternative, they won that argument did they? Isn’t it incumbent upon you to say as a Labour government we made a lot of mistakes, but we need to move on? The public may not like some of the cuts but the coalition is broadly right in tackling the deficit?

EB: Well in that argument you would be taking a different tack to the Financial Times’ columnists, the Guardian, the Times, there are many experts out there …

JS: The people are wrong and Ed Balls is right?

EB: No, look I just said to you, Martin Wolf, Anatole Kaletsky, Bill Keegan, Larry Elliott, people who have been watching this economy for 20 years saying look …

JS: But they are not the voters, the public’s settled view seems to be that you are to blame for the deficit?

EB: But we are not having an election today and you don’t judge your strategy .. in politics the most dangerous thing to do is to hear simply what the public say to you on one day and just reflect that back to them, what you have got to do is win the argument and there is an argument …Look, look, of course the public say we were angry with Labour because there was a global financial crisis and we lost the election, of course. They also want us to be clear we’d cut the deficit, we will. They want us to accept there have to be cuts, and there have to be …

JS: Fine …

EB: But, if you do this in a dangerous and reckless way when unemployment is going up, people will turn and say hang on a sec George Osborne has sold us a pup …

JS: Are we going to finally hear fro you on Budget day what Labour would do in detail?

EB: No because it is George Osborne’s Budget and he’s got to set out his Budget. If we had been in government we’d be halving the deficit over four years, we set out our plans in the last Budget of the Labour government in March. But as the shadow Chancellor …

JS: But the public still scratch their heads as you keep telling us you’d halve the deficit but you’d never tell us what you’d cut …

EB: Come on Jon, I came on to your programme a year and a half ago and set out the detail ..

JS: Of some of your education …

EB: .. on £1.1bn of education savings. In policing …

JS: But that is not halving the deficit?

EB: .. we’d have made a £1bn of savings, we raised the top rate of tax, we would have raised national insurance. But what we wouldn’t have done is clobber people on VAT in the way the government are because …and we wouldn’t be cutting spending this year and next year in the pace and depth which they are doing because it is economically …

JS: I want to …

EB: …and make it harder …it is hard to get the deficit down if you have got fewer people in jobs paying taxes and that is what George Osborne hasn’t yet reckoned, he is putting politics first, he’s not actually being an economic chancellor and the history in Britain is that if you do it that way, as Ken Clarke has often said, if you let politics come before economics you make grave mistakes and in the end the electorate find you out.

JS: To be clear, we are not going to get a detailed breakdown of how Labour would have halved the deficit?

EB: We will set out our tax and spending proposals as we go into the election. If we were the government today we would have been halving the deficit in four years but look, when we were the government …

JS: So we are not going to hear ..

EB: … but we would have made cuts and we would have raised taxes but the most important way to get the deficit down is by having more people in jobs in a growing economy and the fact is Alistair Darling’s plan got the deficit down by £20bn more than he expected. George Osborne is putting, I’m afraid, the economy back into reverse gear.

JS: You wanted a 50p tax rate for people earning £100,000?

EB: The quote there is from last summer in the leadership election where I said, in the interview this week, I said last summer when we were fighting the leadership election I thought that the VAT rise was really unfair and hit lower and middle income families, the squeezed Britain, really hard. The top rate at tax at £100,000 would have been fairer last year, for the future we are not going to make any commitments on tax until we get much closer to the election, I have no sort of instinctive desire to hit people hard, I want tax to be fair …

JS: What is your instinctive desire? Is it to get rid of the 50p tax rate?

EB: My instinctive desire is to want to reduce taxes where you can consistent with a strong economy and strong public services and that’s why when we were in government ..

JS: But in terms of priority, yours would be to reduce VAT rather than income tax rates?

EB: I think the VAT rise is so painful for families but also it is so damaging for the economy. The Governor of the Bank of England is now dealing rising inflation and people saying he should raise mortgage rates because in part of George Osborne’s I think foolish decision to shove VAT up in January.

JS: On the VAT rate, isn’t this absolutely necessary as part of .. if you are not going to do that you have to say what the alternative is?

EB: In our Budget of a year ago we said we wouldn’t do VAT, we would do national insurance, national insurance was a better way to do it. Secondly, the VAT rise and the cuts this year and next are too deep and too fast and it will be damaging for the economy ..

JS: One of the things we know you want to do is VAT on fuel?

EB: Two weeks ago on the Today Programme George Osborne announced a mini-Budget, a change in taxation for the banks. What we now see, and it is partly to do with the international event you have been talking about already, the oil price really high, petrol prices going up around the world but in Britain they have gone up more because George Osborne has raised VAT on fuel prices, on petrol prices. I think he should say now to families who are having a tough time across the country ‘actually the VAT rise on fuel was a mistake’. I think he should do it before the Budget, he should say I will reverse that now. He can think about duty when he gets to the Budget. As you know when we were in government we often didn’t put the duty rise through if the oil price was high. That’s a budget decision but he could reverse the VAT thing now and give relief to families and hauliers all around the country. I think it would be a really good way to show he was in touch and to get out of his bunker.

EP: I just think the irritating thing is you don’t say what you would have done so it allows Cameron to say they are the only party that say they have ring-fenced the money on the NHS.

EB: I understand that though, but look it is really important to get the deficit down, I agree. It is really important that we make tough decisions, including some spending cuts and I proposed spending cuts in my department. We can’t avoid spending cuts and did we spend every penny well in government? Of course we didn’t. But the point is, if you try and go too deep and too fast, you end up with unemployment going up and fewer people paying tax, it makes the deficit situation harder, it makes the economy weaker. And that is why there is a genuine economic argument. Jon doesn’t like this because he wants to say there is no choice. I am saying there is a choice and George Osborne is making the wrong choice …I think we should slow this down, I think this is too reckless.

NW: Surely the reason why you are not decisively ahead in the polls is that Labour hasn’t had a reckoning with what went wrong and the question surely you have to answer is not was it right to have a fiscal deficit of 11.6% after a crash, but was it right to have a fiscal deficit of 2.4% going into that?

EB: I think that at that point, look, we’d got our national debt down to pretty much the lowest level of any international country. We had a small deficit for investment, but actually if you take out the investment, and it is sensible to borrow to invest, actually the public finances were sustainable and those Budgets showed that there wasn’t in the year or two ahead a structural deficit. There was then a massive global financial crisis, and look at the Irish election result, look at the Obama mid-terms, the Blair-Brown era will always be remembered in part for the global financial crisis and it will take us some time to show that we have learnt the lessons from that. Although I think people also know Bank independence and not joining the euro were pretty good calls on the economy but it is going to take me time to build this credibility, to build trust. I can’t say to people ‘trust me today’ because they have got to see as we set out the detail of what we propose over the next weeks and months and years up to the election that we are credible and we are tough and we will make the right calls. But also they will see that David Cameron and George Osborne’s hubris of last summer actually is now looking pretty foolish and pretty reckless and that will, in my view, tilt this debate about credibility.


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Posted February 27th, 2011 by Ed's team

One Response to “Interview with The Politics Show on fuel prices and the economy”

  1. mike pickering says:

    As an x international haulier I lobbied Parliament many years ago regarding the unfair advantage European truckers have over the UK haulier.
    They could buy cheaper fuel in europe espectially in Luxenbourg where it is virtually half price ,we British have to pay for a Vignette or pay tolls in Europe and have to obey road restrictions, being forced to park up at weekends and holidays.
    Foreign trucks enter the UK free of charge 365 days per year with no vignette to pay, they carry up to 1500 litres of EU fuel on board which enables them to enter and exit the UK without purchasing our expensive fuel.
    Why does the British government allow the EU to ride rough shod over our country ? our truck are at a disadvantage and rules and regulations imposed on British hauliers are often ignored by the european hauliers.Millions is lost in fines to european hauliers who do not pay fines where as in europe we have to pay on the spot.
    Make the foreign trucks pay a vignetteand introduce a maximum amount of fuel allowed to be brought into this country

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