Growing support across business for measures in Labour’s five point plan for jobs – Sky News interview

DERMOT MURNAGHAN: Now to the economy and slashed growth forecasts, record youth unemployment and a continuing political and economic crisis in Europe, things couldn’t look much gloomier for the economy and this before planned national strikes here next weeks. In a moment I will be speaking to the Shadow Chancellor Ed Balls… Well let’s say a very good morning to the Shadow Chancellor, Ed Balls joins me now from Leeds and can I just start Mr Balls with the issue of the capture of Saif Al-Islam in Libya, all this discussion about a fair trial, given that Labour was in power during those years of rapprochement with Libya, many contacts of course with Saif Al-Islam who I suppose so to speak was the points man in Europe for many of the meetings between Labour Ministers and the Libyan regime, do you have anything to fear from what he might say in open court?

ED BALLS: Well I remember being in government and at the meetings at the time when the intelligence breakthrough occurred, and there is no doubt that Tony Blair and Gordon Brown and our intelligence experts at the Foreign Office thought this is a very positive step forward for the world, for the prospects for disarmament and they went into it with open eyes but the possibility of progress. Now clearly Colonel Gaddafi ended up breaking agreements, not making progress and I don’t think a Labour government or any government should have anything to fear from open disclosure because I know at that time the motive was the right motive, for disarmament and progress on peace and that was the right thing to do then. Clearly events have turned out in a very different way and we have had a very important campaign in the last few months which the Labour Party has supported wholeheartedly so I think we have got nothing to fear at all.

DM: There were meetings about investments weren’t there, social meetings as well, were you ever in the same room as him?

EB: No, never.

DM: OK, but there were those contacts, as I say, that extended beyond disarmament and bringing them back in from the cold.

EB: Look, there is no doubt that there were also business discussions and investment discussions, there were a number of important British companies trying to pursue projects, that wasn’t anything that I was ever involved in directly or indirectly so therefore I can’t comment on the detail. But I think it is the right thing for the British government to do, to try to make sure you ensure investment and jobs but the motive of opening up dialogue in the middle part of the last decade was a potential breakthrough on disarmament. Look, in the end governments have to be completely open and accountable, there will be full disclosure, I have no reason to believe there is anything to hide at all and I think ministers were motivated by good and sound motives throughout that period.

DM: You mentioned jobs and growth, let’s get on to that, Labour’s five point plan to achieve that. I mentioned the pretty dire economic circumstances we seem to be facing but you’re sticking to this five point plan which, to boil it down, given the fact that we’re running the third biggest budget deficit in Europe at the moment, bigger even than Spain’s, you want to borrow more to fund growth. It is high risk isn’t it?

EB: Well last week we had the news from the independent forecasting experts for the Chancellor to borrow £100 billion more than he was planning and the reason is because our economy has flatlined, unemployment is rising, there are fewer people working, employment is down and if you have got people out of work not paying tax that makes it harder to get the deficit down. The rational thing to do here is to say: what is the balanced approach to the deficit in the economy? And as I said for a year or more, if you try to go too fast on deficit reduction and destabilise confidence in the economy, you end up with higher borrowing not lower. So therefore it is not about do you not have a deficit reduction plan, I one hundred per cent want one, but it has got to be balanced and sensible and at the moment we’ve got to get this economy moving. The government is cutting too fast, the VAT rise was the wrong tax rise this year and we’ve got five different ways to get the economy moving and creating jobs to get the deficit down and there is growing support to different elements of our plan right across business and more widely – a five point plan for jobs and growth to get our economy moving, people back to work and get the deficit down.

DM: But as Shadow Chancellor you are noted for liking the number, you mentioned there that on the government’s projections and if the growth figures aren’t hit, you estimate that they will have to borrow £100 billion more over the course of the parliament, how much would you …

EB: That wasn’t me, that was the independent guys.

DM: OK, but how much would you have to borrow above and beyond that, presumably it would be more, before the growth kicked in?

EB: Well the 100 billion extra borrowing is over the next few years based upon the Chancellor having to have much lower growth and rising unemployment and I don’t think it has to be that way. Yes, now, right now, I say a £12 billion boost to the economy through reversing that VAT [rise] temporarily. That would be a boost for the economy and that would mean money into the economy but that would get the borrowing down and growth moving. We have also said to have the bank bonus tax for a second year, that’s £2 billion for 100,000 new jobs, that would be money taken from the most rich people in our country who are getting the bonuses to invest in jobs. Now that pays for itself but clearly it would be a boost to spending and jobs in our economy. The question is how much infrastructure can you bring forward at the moment, how much investment which the CBI, the Chamber of Commerce, even George Osborne seems to be saying he would like to do that. But the question is how quickly can you do it and that would make the difference to our overall figure, but yes, you’ve got to get the economy moving now or else you end up with higher borrowing, higher debts and low growth and rising unemployment and that’s a terrible prospect.

DM: OK, we’ve heard the strategy what about specifics. You mentioned infrastructure projects there and a lot of business leaders have been talking over the last few days and weeks in particular about airport capacity. Now in government you supported a third runway at Heathrow, now you don’t, do you support an entirely new airport perhaps in the south-east?

EB: Personally and historically I always supported the third runway at Heathrow but the government has taken that off the agenda, they say it is not going to happen. We in the Labour Party accept that they have now killed that off certainly for the foreseeable future. The question is: are there other places where you can get the capacity into the south-east? I think it is really important for business and for job creation, it is important actually for the northern regions too, that we have extra capacity so we are saying to the government: you have taken Heathrow off the agenda, have a review, we will support you, find the capacity in the south-east to boost airport capacity which is really needed for jobs and growth, and I wish the government would listen. It seems to me to be very anti, not just business but of regions, jobs and growth for them just to turn their face against it.

DM: It sounds like you are backing Boris Johnson on this one.

EB: Well let’s have a look at Boris’s plans. I have to say that backing Boris Johnson is not what I normally do but I’m willing to have a completely open mind look at airport capacity right across the south-east. I think if George Osborne was sensible he would do the same thing, see where we can find the capacity to keep our economy moving.

DM: Where do you stand on money going to the poorest in our society, I was going to say lowest paid but they are not even the lowest paid, it is people on benefits. We have got many bishops writing, being reported in the Observer today, saying they oppose this cap, the £500 cap on benefits to families. There is also the issue of the rating of benefits, that link with the retail price index.

EB: On the former point, the benefits bill of course is going to be going up at the moment because of higher unemployment which we just talked about. We’ve always been in favour of getting people into work and have limits. But as I understand it Eric Pickles, the Local Government Minister himself, has said this benefits cap, the way the government is proposing it is going to lead to 40,000 more homeless people because of the way they have designed it and he has warned the government it will cost us billions of pounds more and not less. I think the bishops have got a point, I don’t think the government has designed this well at all. They have got legislation coming up soon in the Lords which has some really perverse incentives here, let’s not do this in a way which hurts the poorest by throwing them out of their homes.

DM: Okay and the latter point, the linking of benefits to the retail prices index, many people are saying that September’s figure, which is what it is based on, was a blip and that inflation is going to head down quite quickly yet that means benefits will go up by 5.6% if they stick with that?

EB: The reason why inflation has gone so much higher in Britain, higher than any other country than Estonia in Europe, is because George Osborne put VAT up to 20% in January. It was an own goal from him and now he is saying that the poorest in society have to pay the price.

DM: But do you think the link should remain?

EB: Well the link that was made on Friday … I think we should wait to see what he is going to propose but I have to say that the idea that people with disabilities, with kids, should pay the price for his mistake on VAT, I think that’s pretty unfair. He is now saying that’s the only way to pay for freezing fuel duty but he told us before if oil prices were high he would do it anyway. I think that’s the right thing to do, that he should freeze fuel duty in January, but I think he should cut VAT now to get fuel prices down and ease inflation. The idea instead that he is going to hit the poorest in our society, that seems to be pretty unfair. Let’s see what he proposes, and I’m not going to comment until I see his actual proposals rather than leaks, but I think it is pretty unfair to hit the poorest.

DM: And finally, Shadow Chancellor, can I just ask you, you are using your hands pretty expressively there in this interview, have you been told to sit on your hands so to speak during Prime Minister’s Questions? Particularly that flatlining gesture you tried to use so effectively against Mr Cameron, so as not to upstage your leader?

EB: The reason why I’m moving my hands is because it’s freezing here in Morley and the fog is right around us and it’s the only way to keep warm. But the fact is, as you said, well before this eurozone crisis, the economy has flatlined. It has been flat as a pancake. That’s why unemployment is rising, that is why our borrowing is going up and what we’ve got now is a government cynically trying to divert attention either by talking about hand gestures or the eurozone crisis or trying to provoke a strike a week on Wednesday by hitting the poorest paid workers in the public sector. David Cameron is saying the unions have walked into his trap on this strike is deeply cynical and very, very unfair and I am going to keep saying to him it’s the flatlining economy which is the biggest problem.

DM: OK, we’ll take it as a yes then, the hand gestures are there to stay. Shadow Chancellor, thank you very much indeed, Ed Balls there.

EB: Thank you very much.

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Posted November 20th, 2011 by Ed's team