Transcript of interview with Sky News’ Murnaghan programme

DERMOT MURNAGHAN: Ed Balls, as I say, joins me now from Leeds, a very good morning to you Shadow Chancellor. Is your message ahead of this G20 Summit forget your obsession with debt for the time being now and concentrate on growth?

ED BALLS: Well I think unless you’ve got growth and job creation, then you can’t get deficits down. That’s the lesson of the last year, that’s the lesson of history. I have just come back from America where in America they are debating what more needs to be done to get the American economy growing, to get jobs being created. Over in the eurozone, without a plan for growth and jobs, it’s just not possible to get debts down in Italy and other eurozone countries. Here in Britain we aren’t having that debate because the government is ploughing on doggedly saying whatever happens we’re right and we won’t change course but all the evidence is, and we’ll see more this week, that it’s not working. Our economy is not growing, unemployment is rising, that means borrowing is already set to be £46 billion higher than George Osborne planned. Unless there is a global plan for growth and jobs next week in Cannes and here in Britain, we can’t get our deficits down.

DERMOT MURNAGHAN: Okay, there’s a lot to pick through just in that, first of all the comparison with the Americans, of course discussing growth there and the strategy there, as we are, as the government is in this country, but also having its debt, having its credit rating downgraded because of the size of its debts and almost paralysis in Congress because of debate about what to do with that.

ED BALLS: The interesting thing, after the downgrade in August in America long-term interest rates fell and I think you’re right, that’s reflecting a worry about that political paralysis. There is a debate in America because you’ve got the President saying we need a jobs plan, you’ve got elements in Congress saying ‘no, don’t do anything to stimulate the economy’ and they are deadlocked in America at a time when we need America to be leading. But I have to say Dermot, at least they’re having the debate even if they can’t find a way forward. In the eurozone the most depressing thing last week was there was no plans for jobs and growth as part of the summit discussion. Here in Britain, even though we have now had slower growth than any other country except Japan in the G7, our government says we have just got to carry on. We’ve got on Tuesday the GDP figures, to get to George Osborne’s Budget forecast earlier in the year, he would need 1.3% in the third quarter, even the OECD’s downgraded growth forecast would need 0.9%. And I’m afraid if we had lower growth than that we’re going to see our borrowing coming in higher than expected, unemployment still rising. This is a terrible prospect and there is a choice, it doesn’t have to be this way but you’ve got to have the confidence to say okay, we got it wrong, change course but that is not something David Cameron and George Osborne are willing to do and that’s why we’re stuck as a country.

DERMOT MURNAGHAN: So the choice you’re offering is, and you heard the Prime Minister say last week in Prime Minister’s Questions, they estimate the Labour plan is to borrow £100 billion more over the course of the parliament to attempt to stimulate growth. You would accept that there is no sure-fire formula, if all governments could stimulate growth by borrowing then everyone would be doing it.

ED BALLS: Well that charge from David Cameron is complete nonsense, this idea that we would be borrowing hundreds of billions of pounds but as I said a moment ago, his own plans have seen not just the economy flat line and unemployment rising but £46 billion more borrowing because if you have got more people unemployed, fewer people paying tax, more on benefit, that costs us more. And what I’ve said consistently in the past year, and a year ago there were not many people saying this, I’ve said of course you need a plan for the deficit but do it in a steady and balanced way. If you go too far, too fast, if you are reckless, if you crush confidence, if you put people out of work, it ends up making it harder to get the deficit down. That’s why we’ve set out a five-point plan, an alternative Labour five-point plan for growth and jobs, which would mean immediate action now to create new jobs, to have a temporary VAT cut, things which would get the economy growing, which would get people into work. That is the best way to get the deficit down and at the moment David Cameron and George Osborne seem to say however bad it is for families and for businesses, we’re just going to plough on regardless but that is not cautious, that is a reckless approach to the economy. I think we need some leadership from our Prime Minister, we need some leadership from leaders in Cannes this week, we need a plan for growth and jobs to get deficits down. That is the argument.

DERMOT MURNAGHAN: Let me ask you about another very important part of the British economy, whether you like it or not, which is the City of London, great fears there about a transaction tax on financial transactions which is being discussed amongst the eurozone. Now I know you are in favour of one but it has to be implemented almost globally, is the G20 that forum for those discussions?

ED BALLS: Well yes and it was put on the agenda two or three years ago and I would like to see our Chancellor, George Osborne, making the case in Cannes this week. But let me be clear, we all know the excesses of the City of London and some parts of the banking industry were disastrous for our economy in the last few years and that has been true in financial centres around the world but it is also the case that the financial services industry in Britain is a very important part of our future economy. We need more balance, we need more manufacturing but we will be a service orientated economy. The City is important but it must be properly regulated in Britain and round the world. I am in favour of a financial transactions tax but only if it is agreed in the widest possible realm, it needs to include New York as well as London, you can’t just do this at the eurozone or EU level, certainly not just at the British level entirely. That is why I think our government should argue for this. It would be helpful in terms of pursuing our international goals to have the money from a financial transaction tax but it needs to be closer to global rather than European and it is part of I think London and the financial services industry around the world saying okay, we made some big mistakes and we’re willing to pay a price for that. That’s why I also say, as part of our five-point plan for growth and jobs, repeat the bank bonus tax again this January and use the money to create jobs for young people, to build homes in Britain. With these bonuses so high carrying on in our financial services industry, I think it’s pretty difficult for that industry to argue against making a contribution to getting young people back to work and making a contribution to a global financial transactions tax as well.

DERMOT MURNAGHAN: If you were back in power then as Chancellor, given what you have said about the City, I want to ask you to apply that predator or producer test that we heard from Ed Miliband at your conference. Would you therefore say if the banks for instance and others that are paying these large bonuses continue on that path, you as Chancellor would put them definitely in the predator category and tax them accordingly?

ED BALLS: I think most people would say that if you see another round of huge bonuses this year at a time when unemployment is rising, that is a pretty good case for a bank bonus tax, I think it would be a good thing to say. I have just said to you though that …

DERMOT MURNAGHAN: But would you deem them to be predators, it is this issue of good and bad companies, not just applying to the City but many people are puzzled in industry and business more widely how a Labour administration would define their corporate operations.

ED BALLS: Well I’ve just said to you that I think the financial services industry has got a really important part to play in our future and we need Barclays and HSBC and JP Morgan located in Britain playing their part in the global economy. What we want them to be doing is playing their part in helping to get more investment into industry, here and round the world, in helping to get pensions. If you see instead people trying to simply speculate at the margins to make short term money now in a way that is actually damaging to our economy, well that would be bad, that would be predatory. That’s why you need tough regulation, that’s why the bank bonus tax is the right thing to do. I don’t think it is right to come along and say this company is predatory, that one is long term, it’s about behaviour. And I’ll give you another example, if you find examples of companies who are actually fixing prices, working in cartels, that is predatory and it is right that there are criminal penalties for directors. It is not just against the law but directors pay, that kind of predatory behaviour hurts ordinary companies playing by the rules, doing the right thing. It’s about behaviour rather than about the particular company or the particular sector.

DERMOT MURNAGHAN: So it’s not then just companies you don’t like. I was thinking about the company I work for, BSkyB, in which Rupert Murdoch still has a large stake, not a controlling stake of course. We all know about the well-documented spats you’ve had with News International and News Corporation, I mean would you define a company like BSkyB in the predator or producer category?

ED BALLS: Of course not and I’m on BSkyB because you are a public broadcaster in the public interest. Last week in New York I went to visit the editorial team at the Wall Street Journal, in the News International building, the News Corp building, because the Wall Street Journal is a very important and highly respected newspaper serving the American business community and I wanted to discuss with them what needs to be done to get growth and jobs in Britain and in America, so absolutely not. However, I think you’d probably agree with me that certain journalists in certain newspapers actively phone hacking innocent people like Millie Dowler and that being covered up by particular executives, I think you and I would probably call that the kind of predatory journalism that you would not want to be associated with in any way.

DERMOT MURNAGHAN: A lot of people of course are concerned about predators campaigning, demonstrating, camping at the moment in the heart of the City of London outside St Paul’s. What’s your view on whether they should be moved on or not?

ED BALLS: Well we have a fine tradition in Britain of people demonstrating and it is important to do that within the law. I have just come back, as I said, from America where you’ve seen some terrible violence, some real anger on both sides in these demonstrations, the Vietnam veteran who was hurt in Oakland just last week by the tear gas canister. We’ve avoided that in Britain and that I think shows that we as a society can protest in a way which is peaceful and I hope that can continue. Now there are obviously difficult decisions because the people who want to worship in St Paul’s are finding their life disrupted by the demonstrators. It must be possible in our society to have demonstrations without violence, where people can make a legitimate point and I think there is a legitimate point that some people are saying, that they don’t think the economy has worked in the best interests of all people and it is fine to demonstrate and say those things but not in a way where we’ve stopped church goers, stopped people going about their business. And I think I am right in saying that the senior leaders at St Paul’s are talking to the demonstrators today, trying to negotiate a way through. I hope that can succeed because that is the right way to do things and it’s the way in which we’ve tended to do things in Britain.

DERMOT MURNAGHAN: Okay Ed Balls, thank you very much indeed Mr Balls, Shadow Chancellor there.

ED BALLS: Thank you Dermot.

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Posted October 30th, 2011 by Ed's team