Andrew Marr Show interview transcript

Andrew Marr: Can I start by looking … going back, if I may, to this whole question about whether you in particular, Labour in general, have been ready enough to apologise for and to explain a period of overspending in power because last time we talked you said there hadn’t been a structural deficit. I mean the OECD, the IMF, all these international bodies say oh yes there was.

Ed Balls: Well we’ve had this conversation many times and I’m going to say the same thing to you as before.

AM: I know, but it seems to me to be central.

EB: The truth is that there was a global financial crisis because of a failure of banking regulation, and I’ve apologised for that. But Lehman Brothers in New York didn’t go bankrupt because of excessive spending in Britain on the NHS.

AM: Sure.

EB: In the run-up to the crisis, we had lower national debt than America, France, Germany and Japan, and we had moved the budget deficit – excluding investment – back into structural surplus. So we had achieved that. What I said to you a few months ago was exactly right.

AM: Tony Blair, Alistair Darling, many many other commentators said actually, do you know what, in the late 90s we were spending too much. The civil servants said …

EB: The late 90s?

AM: Sorry, 2007. Civil servants said we were spending too much, we weren’t getting complete value for money and we had to start bringing that spending down. And it does seem to a lot of people that you’re about the only person saying no.

EB: Well, look, I actually think that that’s complete nonsense what you’ve just said. The 2007 Spending Review was a tough review. It slowed down the pace of spending. And at that time David Cameron said this is a tough spending round, and George Osborne said we’ll match those plans. It was never part of the debate that our spending was too high or that our borrowing was too high because we had low borrowing and low national debt.

AM: But with hindsight?

EB: But we then had a global financial crisis. Look, there’s two different things which are said to me. There are some people, who tend to be Conservative commentators, say you’ve got to admit you spent too much or you’ll never be trusted again. There’s others who say you’ve got to defend your record more and say you didn’t spend too much and we actually achieved great things.

AM: But …

EB: But hang on, Andrew.

AM: ..but Tony Blair’s hardly a Conservative commentator. He says that. Mervyn King, Bank of England, is hardly a Conservative commentator. He says that. Alistair Darling’s not.

EB: At no point, at no point did Tony Blair ever say we should reduce the deficit by cutting spending. That was not part of the debate at all in that period. And David Cameron and George Osborne backed our claims. But the fact is, Andrew, I could defend the past or I could attack the past, but the public care about …

AM: Sure, they’re all using hindsight, we don’t deny that.

EB: …the public care about what is happening now and in the future.

AM: Well let’s come onto that then.

EB: And that is really where credibility … Look, I’ve been absolutely clear. George Osborne says he wants to have the fastest deficit reduction of any country in the world. I’ve been absolutely clear that I want to get the deficit down, but not this fast. It’s dangerous and reckless. The public will see who is right and who is wrong. I’m happy to be tested on that and our credibility will come down in the end to is George Osborne right or are we right to make the alternative case?

AM: You’re absolutely right. I want to come onto that. But just before we do – with hindsight, knowing what you know now, would you have spent all that money in government that you did spend?

EB: Yes. Look of course you never spend every pound right in government – you know there was some NHS reform which wasn’t great, we made mistakes on the Learning and Skills Council – but we also made the case for the National Insurance rise for the NHS, we had more police officers, we had short waiting times, we had more teachers. It was actually a huge achievement and our society is stronger and more cohesive as a result. But there was a global banking crisis, for which we’ve all paid a big price. We got bank regulation wrong. That is a huge matter of regret. But in that period, up to 2007, George Osborne, David Cameron and you never ever said to us, “Couldn’t you spend less and reduce the deficit?” Never at any point because that wasn’t the issue at the time and, in retrospect, that was not the cause of the crisis. And, look, I …

AM: You’ve got to live life forward and understand it backwards is well said.

EB: Well, look, of course. Look I could come along and say to you, “Yes, Andrew, if you want to call me a deficit denier every time on your programme, in the end I’ll agree in order that I can shut it up”, but I’m not going to because in life you learn that actually it’s better to be truthful.

AM: Just for a moment there, I was optimistic. But let’s move onto the new proposal …

EB: But I do think we should get the deficit down.

AM: …which is the VAT cut.

EB: Yeah.

AM: Now this is an unfunded, £12 billion boost, if you like, which would be £51 billion over the course of a parliament. In other words, you’d be adding to the deficit in quite a considerable time when a lot of international bodies and the ratings agencies are already saying the current government isn’t getting the actual deficit down fast enough to save its triple A rating.

EB: Well, look, the reason why the deficit is now going to be £46 billion higher than George Osborne wanted was because the economy’s flatlined, consumer confidence has fallen very sharply, we’ve got fewer people paying tax than we should have, we’ve got more people out of work than we should have, the economy’s weaker, and that is why it’s making it harder on the deficit.

AM: And do you really think putting more VAT, throwing more VAT spending at that as it were, negative spending at that will change things?

EB: I thought the VAT rise in January was a catastrophic decision for the economy and it pushed inflation up as well. It makes it harder for the Bank of England on interest rates too. So absolutely. We have said consistently George Osborne wants to get rid of this deficit entirely in the Parliament. We say halve it, bring it down in a steady way. That was the Darling plan. I’m not expecting him to go all the way to us – you know to actually adopt our steadier plans on tax and spending – but one thing he could do, meet us halfway, is reverse the VAT rise now and use that money to boost spending in the economy. I said that he should do that temporarily until growth is restored.

AM: For how long?

EB: Well, look, that all depends, doesn’t it, how long it takes to restore growth.

AM: Right.

EB: The interesting thing, the Conservative Party are saying it would cost £50 billion and take four years. That rather suggests they’re expecting four years of slow growth and higher unemployment. That I’m afraid is an admission by them of the failure of this policy. We’re getting into a vicious circle and we’ve got to break out of it. George Osborne has got to learn the lessons of chancellors in our past and change course.

AM: Well he has always said that there will be a reduction in public sector jobs – and that’s what’s going on now – but that will be, he hopes, picked up by a growth in private sector jobs. Now, as you know, the number of private sector jobs is increasing at the moment. The unemployment figures are not that bad. I mean the last figures saw an 88,000 increase. You know it’s not a catastrophe by any means.

EB: Well the last three figures in the last week were manufacturing output falling, better news on unemployment …

AM: Yes.

EB: ..and then retail sales falling. If you look at George Osborne’s claim though – because he attacked the BBC a few weeks ago for not giving more publicity to this – if you look at the increase in jobs in the last year, 70 per cent of them were before his Spending Review and only 30 per cent of them since the Spending Review, which is 6 months ago. So actually there’s been a big slowdown in job creation. The claimant count’s been rising month by month, vacancies are down. We know that unemployment is a lagging indicator; it doesn’t tell the future. That tends to be confidence in sales and those kind of things. So any chancellor at the moment looking at this position and feeling that the data is vindicating him to be honest needs their head examining. We’ve got a debate in Parliament on Wednesday, which we’ve called. I hope George Osborne will come on the year anniversary of his Budget and explain why his Budget forecasts for growth and borrowing and jobs have not actually come right, and we’ll see if he’s got answers. But you know so far I see a lot of bluster, but not many answers.

AM: You have criticised very strongly the government’s tactics in the way they’re handling the pension issue when it comes to public sector unions – that they’ve thrown down ultimatums and accused them of trying to draw the unions into a trap. What you haven’t told us is what you think about the actual proposals themselves; that the public sector workers should work a little bit longer and should make more of a payment into these pensions to put them on roughly the same level as people in the private sector.

EB: Well, look, it’s not just the bluster and the kind of confrontational approach. It is actually the handling of the substance where I think there is a problem. I don’t think anybody doubts there has to be pension reform in the public sector. We agreed with that before the election. Hutton has set out some issues in his report as well. And I think the unions want to have a proper debate and discussion about these things. That’s why it’s so frustrating to see suddenly the Treasury breaking out of the negotiations and seeming to say we’ve made decisions. But let’s get to the substance.

AM: Yes.

EB: If you are a man or woman in your early fifties who’s worked in the public services for 20 or 30 years, the idea that you suddenly find out, you’re being told you may have to wait years longer to get the pension which you believe you’re entitled to, I think most people would say that’s really unfair. Of course we’ve got to have change…

AM: It’s what a lot of people in the private sector have had to put up with.

EB: Well, look, of course you’ve got to have changes for new workers. It was interesting, the Deputy Director of the CBI was asked about this, in this studio last Wednesday. He said, “Well I have a final salary pension, but new entrants in the CBI have moved onto a funded scheme.” That’s happening in the public sector as well. What is really worrying about these proposals is changing the rules for people in their fifties. That seems to people unfair …

AM: So …

EB: …and the anger in the country isn’t coming from trade union leaders. It’s actually coming from dinner ladies and teachers and civil service workers who in their fifties say, “We feel like we’re having the rug cut from under us.” And that is why the government’s got to look at this again.

AM: So the thrust of John Hutton’s proposals you think are wrong?

EB: No, I didn’t say that at all. What I said was …

AM: Well if the thrust of the proposals are right, then the government has to grapple with the issue and do something about it.

EB: No, but the issue in the Hutton Report is how you achieve these reforms over a number of years. This is not about reducing the deficit this year or next year. It’s about the next 40 or 50 years. I think what the report says …

AM: So, as with the deficit, you would say do the same thing but go slower?

EB: Well, look, that is the right way to approach pensions reform because you’re talking about people’s lives. If you were suddenly told by the BBC your pension which you expected has suddenly had the rules rewritten, you’d say “Hang on a sec, I’m getting my lawyer.” The fact is that people have a right to be treated fairly and properly. The idea that you’ve got women in their fifties suddenly being told on the state pension or public service workers on their pensions, we’re just changing the rules just like that in such a rapid and fast way, I think that people feel that’s not fair.

AM: Do you think they should strike later this month?

EB: Look, I’m not going to condemn strikes which haven’t yet happened. Although, as you know …

AM: Well you could offer them advice.

EB: Well, as you know, I’ve been happy to condemn strikes where I think they’re wrong in the past. I did so over the NUT strike a few years ago. But I think what we want and what I think the trade unions want – you heard it from Mark Serwotka today – is to get back round the table and get discussing this. This is not though … I don’t think it’s a political decision from the unions. This is actually their members feeling very upset. George Osborne though is desperate to have that confrontation. He’s been saying it for months. The trade unions must not walk into the trap of giving George Osborne the confrontation he wants to divert attention from a failing economy. We should make sure we make this about fairness and negotiate. That’s the best way forward.

AM: And if that is the case, then the 700,000 people who are likely to walk out in ten days time should not walk out because they are walking into the trap that you have described?

EB: Yeah, but this is not preordained. This is entirely in the government’s hands. We’ve seen in …

AM: Well it’s also in the hands of the unions and their members.

EB: But we’ve seen in recent weeks and months a government which goes very political, rushes ahead, finds it’s got the detail wrong and handled it badly, has to pull back. On the NHS we saw that, I think on spending cuts as well and the deficit. The same is happening on pensions. If the government wants, they could say tomorrow look, we’re going to pull away quickly and have proper discussions right now, carry this on. If that happens, there’s no need for these strikes. The British public does not want to go back to a decade where we had massive strikes and confrontation. George Osborne says he can’t even remember the miners strike, but we all do.

AM: Let me ask you about another massive confrontation, which is Greece, which is a country whose economy is really on the edge now. Is George Osborne right, do you think, to at least be involved in the talks about putting in more British money for another bailout? I know we’re not in the Euro, but clearly if Greece really goes under in a bad way, it’s going to affect our chances of recovery too.

EB: Well I do think George Osborne is getting this wrong, but not on that particular point. We’re a member of the IMF. If there’s IMF money, we’ll be part of it. I don’t think people should be expecting, I don’t think there will be a British contribution. But the real question is: is George Osborne arguing for a sensible way forward on this issue? My fear is what’s happening is the European Union is saying to the Greeks have more austerity, have more cuts, we’ll give you some temporary finance …

AM: But what’s the alternative? That’s the problem.

EB: Look, the lesson of history here – and you see this in Latin America as well – is if economies aren’t growing and creating jobs, the debt goes up, the deficit gets worse, the catastrophe in the end is bigger. I think we are heading for really dangerous times. But the European Union has got to realise if this carries on in this way – temporary package, temporary package – in the end it will be even more destabilising, and I fear that our Chancellor is not standing up in Europe for a better and more sensible way forward and will rue that day.

AM: Do you think we’re going to lose members of the Euro Bloc? Do you think some of these countries are going to actually exit?

EB: I think the political commitment in those countries for staying in is very strong. I think the problem is that Germany never wanted that to happen on any terms and it’s very hard to see how they can stay in without a substantial restructuring, which will cost a lot of money for the rest of the Union. Either way, I think it’s very difficult. But the longer the wait, the worse it gets. And the fact is over the last year, in other countries too, they’ve put up VAT, they’ve cut spending. And what’s happened? Debts have gone up, growth has gone down, the crisis has got worse. Austerity alone never solves these problems, but you know at the moment I think there’s a rather blinkered view in the European Union, we’ll wait till the next meeting and hope it goes away. It’s not going away and George Osborne should start making the alternative case.

AM: On the central economic argument where you’ve been locking horns with the coalition so aggressively on both sides, public opinion doesn’t seem to be with you at the moment. Quite small majorities of people, minorities of people saying that they agree with the Labour approach. Why do you think that is?

EB: Well, look, it’s not surprising if after three years – and we’re partly responsible for this – all they’ve heard from the Conservatives, the newspapers, and I have to say from the BBC too, is that it’s all Labour’s mess, it was caused by spending, and the only way to get the deficit down is rapid cuts right now. But I think what actually will make the difference is what actually happens and turns out, and I’m happy to be judged on that. Ed Miliband I think has rightly as a leader said, “I want to make the argument about the future and an optimistic future for our country”, but it’s hard to have optimism when the economy is flat-lining. That’s what we’re seeing and our credibility will depend upon in the end is George Osborne right or are we? I think we can win this argument.

AM: Ed Balls, for now thank you very much indeed.


AM: Ed Balls is still here, joined again by David Aaronovitch & Damon Albarn, it is Fathers’ Day so we should say something about that I think, David what do you make of the call for, to be much tougher on absent fathers, people who walk away from Children, from David Cameron?


EB: I left home at 5.30 to be on your programme and our kids thought that was outrageous behaviour on Fathers’ Day. I have to say I also think it’s pretty outrageous from David Cameron: he said something which is correct, fathers should take their responsibilities seriously but he is charging mums when the father leaves now to go into the CSA. He’s going to make it harder and his marriage tax cut would disadvantage the woman left behind and give the tax-break to the father that goes off. So I think it’s important to get behind the headlines here – the substance here is David Cameron’s policies are deeply flawed on this.

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Posted June 19th, 2011 by Ed's team

2 Responses to “Andrew Marr Show interview transcript”

  1. doreen ogden says:

    Really good answers to Marrs questions. Surprised his socks didn’t put you off !

  2. Mary nash says:

    Brilliant and impressive interview. As always, an indefatigable, courageous fighter. Glad Ed Balls chided BBC for repeating endlessly the Tories’ mantra like a broken record that Labour created the mess. The shadow cabinet should do this more often.

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