Sunday Politics interview with Andrew Neil

Andrew Neil: Ed Balls good to have you back so soon but we had the –

Ed Balls: Well George Osborne’s come out, I suppose I should too.

AN: Exactly and you’re not so much of a submarine, we see more of you. Now the Chancellor said on Andrew Marr this morning that the economy has been weakened by the Eurozone crisis, high oil prices and a bigger than expected dampening effect of the deficit and all the debt. Do you deny that these are important factors in our economy?

EB: Well did he mention the snow, or the royal wedding? Of course those are factors but two years ago George Osborne made a judgement and I said, and some economic commentators did too, that that judgement was the wrong judgement. He said, cutting further and faster would secure the recovery, get us out of the danger zone. We’re now back in recession. His judgement’s wrong, his plan has failed and that is the reality of where we are.

AN: But these are surely – I mean you may be right on that but these are also important contributory factors, partly because they’re affecting all of Europe. Everywhere in Europe is now slowing down, even Germany.

EB: But I warned two years ago a global hurricane was brewing, particularly in the Eurozone. That was not the time for George Osborne to bet the farm, to dismantle the foundations of his own house. That’s what he did and he said he was right. And what’s happened now is as the Euro storm has built in the last few months – look – we’ve been in recession in the domestic economy now for pretty much a year, before the Eurozone crisis. You can’t blame the Eurozone for a recession made in Downing Street. It’s not about communication, George Osborne can’t get out of this with more spin doctors, it was judgement. His plan’s failed and it’s also been proved to be unfair as well as bad for jobs and growth.

AN: I want to come back to the economy later, but on the reform of the House of Lords going to be a big part of the Queen’s Speech we’re told. The government – there are signs the government is heading in the direction of a referendum which is what you want. If you get a referendum will you campaign for a yes vote?

EB: I will campaign for reform of the House of Lords, absolutely. We’ll need to see what reform exactly means.

AN: But you want an elected chamber?

EB: I voted for 50, 60, 80% last time round. I think we need democratic reform of the House of Lords, no question about that, but Andrew, today is it the biggest priority?

AN: No, I understand that.

EB: Pensioners paying more tax, the economy in recession, is that really the biggest priority? It’s not going to save the coalition.

AN: But if offered an elected second chamber you’ll vote yes.

EB: Yes.

AN: Okay. Let’s move on to the election results. They were good for your party and let’s just take a look at some of the figures to try and put it in to some sort of mid term performances, because you got about 38% of the vote. In ’86 Neil Kinnock, 37, William Hague 38 in 2000, Michael Howard, 38 in 2004. Every one then went on to lose the next General Election. You haven’t got this in the bag by any means have you?

EB: No, of course not. They were good results, they’re no reason for complacency. It’s a concern that lots of people who are very disillusioned with the Conservatives and the Liberal Democrats were staying at home. Turnout was down. We’ve got more work to do to regain trust, but don’t forget in 1999, 2 years in to the Labour government, we won the local elections clearly. This is not just midterm blues, this is actually – and you see this in the Conservative Party reaction, you can see David Cameron and George Osborne so rattled today, because this is quite deep. It’s about an economic failure of judgement and this sense that these Conservative leaders are out of touch and making the wrong calls on tax and fairness in the economy.

AN: But can we agree that your performance, though good, is not out of kilter. There’s nothing exceptional, it’s in line with the regular midterm performances?

EB: Well, the Conservatives were comparing this on Thursday and Friday to 1996 for Labour or to 2007/8 for the Conservatives, both times they had been in opposition for ten years before those local elections. We’ve only been out of power for two years and we did badly in the General Election. So actually if you’re back in the lead, winning the arguments after two years is good, but does it by itself guarantee an election victory? No, it doesn’t. There’s more to do. But I think for the Conservatives this is much deeper than mid-term blues.

AN: OK, I want to stick with Labour though…

EB: That’s fine.

AN: … because one of the things that was impressive about Labour’s performance was that you are the only national party now. That the Labour brand still works across the country, even in the south you made some gains.

EB: The East as well.

AN: Why did you therefore fail to win London?

EB: I think in the GLA elections, the actual popular vote for Labour versus Conservatives we won.

AN: So why did you fail to win the Mayor’s office?

EB: Because there was a personality contest between Ken Livingstone and Boris Johnson and Boris Johnson just squeaked it. I think it’s partly that people were judging it on the basis of, you know, personality and joke cracking and all that kind of stuff.

AN: Was Ken Livingstone the best candidate for Labour?

EB: I backed Ken Livingstone. I think he was the best Mayor we’ve had so far. I think he’d be a better Mayor than Boris Johnson. I think many Londoners thought that. Not quite enough. But as you said…

AN: Was he the best candidate? I mean you won London, this is a Labour city we’re in at the moment. You won the London Assembly, you couldn’t win the Mayoralty, he must have not been the best candidate?

EB: The thing is in the end though, if you look at houses in London, the South Bank regeneration, Ken did these things…

AN: So why didn’t people vote for him then?

EB: Because in the end they didn’t think – I mean it’s interesting, if you’d had an elected Mayor in Leeds or Birmingham they’d have had far more power than an elected Mayor in London. Many of the tax raising powers are actually with the boroughs. Boris Johnson, I have to say if I was Boris Johnson looking at these results, I’m not sure if I’d be quite as –

AN: No, but he won and can we agree on one thing? If another Johnson had been standing here he’d have walked it. Called Alan Johnson.

EB: Look, who knows, who knows

AN: Right?

EB: Who knows, who knows

AN: OK.

EB: The important thing which I’m not going to glide over, is we won Norwich, Thurrock, Harlow…

AN: No, I’ve given you all that.

EB: The south and the east. People said, Labour couldn’t win in the south. David Cameron can’t win in the north, Labour’s winning in the south, that’s a big difference.

AN: I’ve given you all that. Let’s –

EB: I know, but I was having it again!

AN: No, I know that. You’re like Boris Johnson, you’re in favour of having your cake and eating it. Let’s move on.

EB: I think Boris has eaten even more cake me though, don’t you think?

AN: Well that’s cos you’ve been doing the Marathon. Let’s have a look at something.

EB: The Marathon, not a sprint.

AN: This is what the Chancellor had to say in his article in the Mail on Sunday today. This is what he said: ‘Balls and Miliband, they’re like a pair of heavy drinkers, trying to wash away problems by opening another bottle.’ Will your thirst ever be quenched with more public spending?

EB: Look, George Osborne’s looking a bit rattled today isn’t he and you learn with David Cameron and George Osborne when they’re rattled and under pressure they always get personal, they always lash out, but the country agrees we need a plan to get the deficit down. I agree with that, we all agree with that. If George Osborne thinks that’s a vote of confidence in him he’s making a big mistake. Because the country also knows his plan has failed and the public are now saying where’s the jobs? Where’s the growth? This is not about communication, it’s not about spin, that is very complacent from George Osborne. People want a plan which will work and they’re all saying too as well you’ve cut the top rate for millionaires and put up taxes for pensioners and families, that’s not fair either.

AN: All right. If we want to look at an alternative can you flesh it out a bit? Can you answer the question you wouldn’t answer when you were last on this programme with me? How big would the fiscal stimulus be if you were in power? How much extra would you add to the deficit?

EB: Well, look I’m not going to reduce this to simplistic slogans and one year plans. It’s actually about what would happen in the economy over three or four years. George Osborne is borrowing to play for unemployment. I say a job’s plan, a VAT cut, bring forward infrastructure, would actually be better over three or four years at getting the deficit down.

AN; But how much would it add to the deficit?

EB: Well, George Osborne’s borrowing £150 billion more than he planned because he’s failed on the economy. In the end, this austerity doesn’t work. It’s self defeating. Even the head of the European Central Bank is now saying you need a growth plan in the Eurozone.

AN: Ah, but he’s talking – well we’ll come onto that, but he’s not talking about the kind of growth plan you want. He’s talking about labour market reforms. Let me ask you this again –

EB: Are you sure, are you sure?

AN: We’ve come on for a second time. How much would the deficit go up in the early years? Go on tell us.

EB: We’d have a VAT cut.

AN: No, we know all that, how much?

EB: which would cost us £12 billion.

AN: No, we know all that, how much? How much?

EB: I’ve not costed the whole programme, because it would depend on how much infrastructure we can bring forward, but George Osborne’s plan means more spending, less taxes and more borrowing. Over three or four years we would get the borrowing down faster than George Osborne because our plan would work. That’s what America has proved, that is what Britain would do.

AN: But it’s truly at least a legitimate concern that any departure from the current policy would spook the markets, push up interest rates, undermine sterling. I mean there is a risk. It’s not risk free what you’re saying.

EB: Well the current plan has failed, that’s a problem for George Osborne

AN: But your alternative’s a risk.

EB: The current plan has failed. And George Osborne has spent two years and David Cameron, saying, any change of course will make things worse. If you’re in a hole you should stop digging. You should listen to the International Monetary Fund, the OECD. You should look at examples of countries around the world. A more balanced plan, boost for jobs and growth, tough decisions on spending and tax, would actually get the deficit down. He’s failed on jobs, he’s even failing on borrowing, Andrew, that’s his problem. This is a failed plan. We’re back in recession.

AN: Hollande is probably going to be elected in France today, we’ll see. He’s kind of singing from your song sheet? But what bits of Francois Hollande’s economic policy do you disagree with?

EB: Well look the problem Francois Hollande has got is that in the context of the current Eurozone policy, a European Central Bank not working, a fiscal compact which is crucifying growth and jobs, it’s very hard for Francois Hollande himself to take a difference course. I’m very concerned – look

AN: So what bits do you disagree and agree with of his policy?

EB: Well I agree with him and I’ve had direct conversations with him with Ed Miliband that we need to change the direction of policy in the Eurozone. Without that, it’s very hard for France alone to make a difference. That’s the difficulty. I don’t think it’s actually in his gift, and to be fair President Sarkozy a year ago was saying to Germany, you’ve got to change course on austerity. You’ve got to get the ECB working, it’s not happening.

AN: Well Mr Hollande would add an extra 20 billion Euros to government spending over five years. Is that a good idea?

EB: Well, I think if it gets the deficit down, if it gets jobs and growth moving…

AN: Well obviously you don’t get the deficit down if you’re adding 20 billion to spend.

EB: We’ve had this conversation before Andrew, so many times. George Osborne’s plan means £150 billion more borrowing, because unemployment’s up, growth is down and if you choke off the recovery, if you’re back in recession, if people aren’t paying taxes anymore you make your borrowing worse, and that’s the economics of this. I know you don’t like this but it’s true.

AN: But if Mr Hollande gets in and he does a Gaelic version of the Ed Balls’ stimulus plan and if he then falls on his face, your position becomes intellectually bankrupt?

EB: But as I said to you, the problem for France is it doesn’t have its destiny in its own hands because of the single currency. In Britain we don’t have to have French, Spanish, Italian problems, because we’re outside the Euro, we actually could have a devaluation of sterling. George Osborne’s imposed upon Britain the policies of the Eurozone. That is his big mistake. The problem for Hollande is he can’t actually do this unless he persuades Germany in particular and the ECB to change course. If that doesn’t happen I’m fearful that we may see even with a Socialist President in France continued stagnation in the Eurozone for a few more years.

AN: Who do you think will mug Mr Hollande first? Will it be Mrs Merkel or the bond markets?

EB: I think French leaders in the last few years have had huge problems with German politics and I think that is at the heart of this. The Germans went into the single currency on the basis they weren’t going to bail out Italy and Spain. Unless Germany stands behind Italy and Spain this crisis is going to continue and it’s very hard for any political colour of government in France to buck that trend. We’re sort of in a similar position here. George Osborne, Mrs Merkel, both digging a hole, both making some things worse. This austerity is self defeating, their plan’s failing, in Britain you’ve got the added problem of pasties, granny taxes, top rate of tax cuts for millionaires as well.

AN: I was wondering when you’d work that in. You got it in in the final five seconds. Ed Balls thanks. Come back, come back for the hat-trick.

EB: Well listen, I won’t come back next time George Osborne’s out because that might be months and months and months. Maybe I’ll have to come back more recently than that.

AN: Ed Balls, thank you very much.

ENDS

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Posted May 6th, 2012 by Ed's team