Newsnight interview transcript

Emily Maitlis: Let’s start with David Grossman’s point there – support or condemn – do you urge these major unions to call off their strikes?

Ed Balls: I don’t think there’s anybody in the country who wants to return to the strikes and divisions of the ‘70s and ‘80s but it takes two sides to sort out a dispute and I’m afraid when you see the relish in George Osborne’s eyes just then, he wants to get out of jail on the economy through confrontation and strikes. What we want is talks to get this sorted out in a fair way.

EM: He said it was deeply irresponsible and you heard Brendan Barber say we need a new approach and new proposals. Are you willing to say to the unions, or have you said to the unions, call off this ballot, call of the strikes?

EB: The unions have been saying all along they want proper talks to get to a fair deal. The government pre-empted all of that by a huge rise in pension contributions last autumn.

EM: So you won’t ask them to call off these strikes then?

EB: Look it takes two sides to sort this out…

EM: Yeah but I’m just asking you as one side, will you ask them to call off the strike?

EB: No. I’ll say to the unions get round the table but they can only get round the table and talk if the government wants a deal and all the evidence is the government doesn’t want a deal. They want the confrontation.

EM: So you’re happy then for them to ballot their members on this?

EB: Of course. Of course. It’s their right to ballot their members but nobody wants a strike. If in the end though there are men and women in their 50s who feel even though their pensions are low that they’re going to told to pay more and work longer for less money of course they’re going to be upset but the government can sort this out. George Osborne and the unions can sort this out if they want in a fair way. The government has got a big responsibility here.

EM: And if we get to a point after a ballot where we have strikes for millions of public sector workers at the end of November will you be telling them how economically damaging this is, that this is a pivotal point for our economy now?

EB: Emily, we don’t want strikes. They’re a last resort. We want talks and a fair deal on pensions. But what George Osborne wants to do is blame a flat lining economy and rising unemployment on the trade unions. It is his decisions which are getting us into this mess, not the trade unions.

EM: Let’s look at your plans for growth because you’ve been urging the government to roll back the VAT back to 17.5%. Why won’t you do the same with other taxes?

EB: Well I said a year ago that if you tried to get the deficit down this fast it would lead to a flat lining economy, to potentially rising unemployment. Back then the government ‘said what nonsense’. They said if you cut faster in the public sector it will lead to more private sector jobs. But it’s turned out…

EM: OK so you’re sticking to your guns…

EB: More than that. The evidence is clear that I was right and they were wrong.

EM: OK, so you want them to lower VAT to 17.5%. Why won’t you do the same with the 50%?

EB: Well look it’s up to the government to come forwards with proposals on how to get the economy moving. This is a growth crisis…

EM: Yeah but you’ve been banging on about the 50p tax so why wouldn’t you say if cutting VAT could work at one end then cutting the 50p tax could also work at the other end?

EB: The reason why unemployment is rising, the reason why consumers aren’t spending is because of a lack of confidence and squeezed living standards. VAT has hit people, £450 for every family. People on average incomes on £28,000. The idea that the best way and the fairest way to get this economy moving, to get unemployment down is to only cut taxes for people over £150,000…it’s families in our country that are suffering and worrying about their jobs…

EM: Yeah but that sounds like a synthesised position doesn’t it?

EB: What? I’m just saying let’s have some stimulus to get this economy moving.

EM: Yes. Well if stimulus works then give it stimulus at the 50p rate as well. Why wouldn’t you? I mean if you believe that tax cuts can help growth why wouldn’t you do it at both ends?

EB: In January we had a rise in VAT which has hit families in our country, it’s crushed confidence. We now have growth flat lining and unemployment rising and you are saying the priority should not be a temporary cut in VAT for families? It should be the first priority for people only on £150,000?

EM: I’m not talking about priorities, I’m talking about the IFS which you often quote saying that the 50p tax may raise nothing and it could cost millions. Why would you keep it? That could be economic lunacy?

EB: Well look let’s wait to see what George Osborne’s study says. Although if he was actually to deliver on his convictions he’d ask the independent OBR to do this study. But we don’t know yet. I think it’s a nonsense to say the top rate of tax doesn’t raise any money. But if you want to act right now…

EM: VAT cut’s going to cost £13 billion. You can’t afford that either if you’re going to go along that line?

EB: If you want to act now to get this economy moving what you do is you have a temporary cut in VAT, you move to a more balanced approach to the deficit. You reinstate Building Schools for the Future. Today we had a speech from Nick Clegg which was an insult to the intelligence because after all the hype, what did he say? Absolutely nothing at all. There is no Plan B from this government and the longer they put politics before substance and just come along with these parroted lines the more people will lose their jobs, the more our economy is going to suffer and we’ll not get the deficit down if unemployment is rising. This is lunacy.

EM: Let’s get away from parroted lines because your leader Ed Miliband admitted yesterday in his speech that some cuts that the government’s introducing will be impossible to undo. Now what are those then?

EB: We came forward in government with cuts to public spending and tax rises. The rise in National Insurance, the top rate of tax. In education I set out £1 billion worth of education cuts. In policing £1 billion worth of cuts. Of course there have to be tough decisions, of course we’ve got to get the deficit down but fundamentally if the economy is not growing and unemployment rises, if there’s fewer people paying tax, more people are on benefits, that means billions of pounds more in spending, the deficit is higher not lower. This is not working and what we’ve got is a government which wants to use political language but it flies in the face of economic reality. We see that in the evidence.

EM: And yet when you were in government and the economy was tanking you blamed global forces. You blamed the global situation and this government is now fighting a globally bad legacy as well as what they would say is the mess they’ve inherited from you?

EB: Look it was a global financial recession, there’s no doubt about that…

EM: And is.

EB: And is. There’s no doubt about that. But the question you’ve got to ask is why is it the case over the last year Britain has grown more slowly than all these countries? Why did we go into the downturn before people in the last year? The reason is because we’re cutting faster than any other major economy and it’s not working and I said this a year ago and the government said ‘don’t talk nonsense’, they said, ‘look the economy is strong, we’re out of the dangerzone, unemployment is falling’. What’s actually happened in the last 12 months they’ve got this so so badly wrong.

EM: And what’s happened in the last month is that government ministers have started carrying round the autobiography of your former Chancellor Alistair Darling who admitted you had no credible economic policy when you were in government?

EB: Look Alistair Darling has said we had a credible plan to halve the deficit. George Osborne ripped that up, went faster. He said if you went faster on public cuts it would lead to private confidence. There was never any evidence or history or economic theory to stand up that political rhetoric and he’s been proved so badly badly wrong.

EM: But when the public is asked in a Times poll if they can see Ed Miliband as the next leader they say no. it doesn’t matter what you come up with, they don’t see it?

EB: Look. We lost the election last year, we’ve got a new leader and we’ve all got a lot of work to do but the fact is the more people see…

EM: Did they get the wrong Ed?

EB: No. The more they see a Conservative government making the wrong calls, unemployment rising, the economy flatlining, the deficit not coming down as they promised, the more they see their pensions being cut, school buildings not being built they’ll say actually ‘is this fair?’ And what do we hear from the government? Well cut the top rate of tax for people over £150,000. What planet are these people living on?

EM: Ed Balls, thanks very much.


EM: Your response to that Ed Balls because essentially what we’re saying is their hands are tied, they don’t want to be doing this but they can’t see any other option right? It’s just fear.

EB: Well I think Paul [Mason], I think the things Paul is saying are right but I’m not sure if we’ve got weeks. I think Europe is really staring down the barrel of the gun here. This is potentially catastrophic. You know for Italy to have its debt in doubt in this way, for the European Central Bank to be unable to act and the German government still refusing to support action, this is potentially totally catastrophic. In the end it’s a political failure because in the eurozone, if the countries don’t stand together, if the markets doubt this as they now are then you could have complete disaster. Not just in Italy…

EM: So what should happen? Short, sharp pain now?

EB: Well I think the European Central Bank has got to be the lender of last resort and guarantee Italian debt. But it can’t do that unless it’s going to have all countries including Germany backing it. But if the Germans don’t want to face up to that reality they’ve got a choice. Either the eurozone collapses or Germany has to leave and I think that is fundamentally their choice but if they can’t face up to that we’ve got the American Treasury secretary flying in on Friday to plead with the Europeans to sort this out. George Osborne should be backing him 100% because you know all of it sounds technical, economically this could be much much bigger than anything we’ve seen in the last three years. We are staring down the barrel of a 1930s style crisis and political leadership in Europe is just not there. It’s terrible.

EM: OK, Ed Balls thank you very much indeed.


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Posted September 14th, 2011 by Ed's team