Transcript of interview on Sky News’ Murnaghan programme

DERMOT MURNAGHAN: Do you feel then that the economic argument is moving firmly towards your line? It must have been music to your ears when the Office for Budget Responsibility wrote to the Prime Minister and more or less rapped him over the knuckles for misquoting them.

ED BALLS: Well to be in a position where ten days before the Budget the whole strategy is now being openly debated in the Cabinet, you’ve got Boris Johnson, the Mayor, the International Monetary Fund, Vince Cable, even Theresa May today casting doubt on the Chancellor’s growth plans for the future, clearly there’s a problem. The Prime Minister made, I would call it an Alice in Wonderland speech last Thursday where he said everything’s fine, we’re going in the right direction, stick with the plan. The reality is the economy has flatlined for two years, the deficit is getting bigger, the sense of unfairness in the country is rising and the OBR was just one more notch on the long list of problems for the Prime Minister and the Chancellor. Their plan has failed.

DM: But all those people you quote are saying very different things, the organisations you quote are saying very different things. You’re still pushing for deficit funded stimulus.

EB: Well look, all those people are saying – and the CBI tomorrow I read is going to say move on housing investment, I hope they’ll back my call for a 5% VAT on repairs and maintenance to help the housing market as well, we’ll see tomorrow from the CBI – they’re all saying act. George Osborne’s line seems to be there’s nothing I can do. Even if the borrowing goes up, even if the economy flatlines, he can’t act and that is just irresponsible and I’ve said consistently for the last two and a half years, unless there is a government-led plan for confidence, for growth and jobs, the economy will get worse but also the deficit won’t come down, it’ll go up and unless you’ve got that plan for creating jobs we’re going to be stuck and do long term damage, that’s how it’s turned out.

DM: Now’s your chance, isn’t it Shadow Chancellor, now’s your chance to add the final building block to that plan, to say out loud well okay, the deficit is going up because we’re not getting the growth, we might as well borrow a bit more to try and stimulate the economy, we will borrow a bit more. The AAA rating has gone as well so we might as well go for it.

EB: Well it’s really important if you ask me that question to be absolutely clear first of all, it is the government, the Conservatives and the Liberal Democrats, who are borrowing more, £200 billion more than they planned, a lot more than the more steady deficit reduction plan they inherited from Labour. It’s because there’s no growth that borrowing is much higher …

DM: You always say to me in our interviews, we are where we are, so you if you came into government would inherit this scenario, this deficit reduction strategy going off course. You have to borrow more and borrowing would go up, for a short time if growth comes, would go up even more under Labour.

EB: Well my fear is two more years from the general election it could be even worse. Clearly it is very, very tough indeed, the IMF have said the government should slow the pace of deficit reduction, take more time and act to have temporary tax cuts or public investment to get the confidence back into the economy. I’ve said consistently and I’ll say it again to you, absolutely right, a temporary cut in VAT right now, what it would do is it would get confidence back, it would get people spending, the economy growing and that would mean over the next two, three, four years, the deficit wouldn’t be higher, it would be lower, it would come in lower because the reason we’ve downgraded, we’ve lost that AAA rating is because without growth you can’t get the deficit down …

DM: So the markets would wear that, people estimate that to be, economists estimate that to be about 12.5 billion over a year more borrowing. Do you think the markets would say okay, fair enough, you can have that extra?

EB: The markets, like the country, are crying out for a plan for growth to get the economy moving because they know without that it can’t work. We were told for two and a half years, we’ve debated here many times, the Prime Minister and the Chancellor saying if we deviate any way from our plan, if we do anything we’ll lose the AAA rating. They’ve been downgraded now. They say the downgrade means they have got to plough on with the failing plan, I say that shows you the plan is not working. There must be people in the Treasury and the Bank of England who understand economics, I know they’re there, who are saying to David Cameron, look, you’ve got a degree in PPE but your speech last Thursday would have failed GCSE economics, it was so out of touch but also devoid and disassociated from how our economy works. Either they’re not listening or they just don’t understand it.

DM: Just to use that phrase out of touch, are you in touch with Vince Cable? I’ve talked to Vince Cable and a lot of what he was saying last week sounded a bit like what you’ve been saying, he says he keeps the lines of communications open with Labour. Are you conversing together?

EB: Well look, he didn’t send me his 4000 word article for the New Statesman and we’ve not discussed that detail. I’m looking forward, I am expecting to be debating the Budget with him the day after the Budget …

DM: You’ve not discussed that detail but you have discussed other things?

EB: Look, he’s a parliamentarian and therefore from time to time we have conversations but have we sat down and had a detailed discussion about the economy? No, we haven’t. I would be very happy to do. On Tuesday though Vince and his Liberal Democrat colleagues have got a chance to put their money where their mouth is, let’s have a Mansion Tax, which was in their manifesto, above £2 million, and use that to cut taxes for low and middle income families, not cutting taxes just for millionaires which is what the coalition is doing. I hope they’ll join us in the lobbies on Tuesday and I hope Vince will now come out and say when the CBI says more housing investment, yes and go further. I hope he’ll say the IMF is right, I hope he’ll back the Labour plan.

DM: Okay, so you are saying to them we can do business together because you have been highly critical of the Lib Dems in the past and I’ve got this document here from Labour about how they’ve been aiding and abetting the Conservatives cover up their selective memories about all their flip-flops and U turns but you think in the future Labour and the Lib Dems could work together?

EB: Look, the tragedy I fear is that David Laws, he actually believes in the Cameron-Osborne vision, that’s my conclusion, but many other Liberal Democrats don’t and for two years they have been propping up a failing plan but also what unites the bedroom tax, the mummy tax, the granny tax, they are poorly ….

DM: As a fully paid up economist you know a lot of those aren’t actually taxes by the strict definition.

EB: Yes, well look, the Conservatives tried to say the Poll Tax was actually a community charge, David Cameron now says the bedroom tax is actually a spare room subsidy. Good grief, they are one, badly worked out, secondly they hit the most vulnerable in our society or people who need extra help and thirdly, they are only happening because the economic plan is failing and the Liberal Democrats have connived in that unfairness but it is not too late for them to say it’s not worked and change course and if Vince Cable will say that then I’ll applaud them.

DM: Okay, they’ve said that, the Mansion Tax, what about the other point Vince Cable was making within the coalition about pensioners, richer pensioners and the protected benefits they’ve got. The Prime Minister says he’s not going to touch them, what about their free TV licences, their bus passes, is that something Labour would look at taxing?

EB: Look, I think right now when everybody is struggling and pensioners in particular are seeing heating bills going up, they’re seeing their taxes rising …

DM: Yes but some of them are pretty well off.

EB: I was part of introducing the Winter Allowance and the free bus pass and I think it is good in our welfare state to have some measures that go only to the neediest but some …

DM: But they’re not the neediest, Vince Cable himself is a pensioner, he says he gets the Winter Fuel Allowance and he gives it away because he doesn’t need it.

EB: Yes, well most people aren’t like Vince Cable. There are some things that go to the neediest and some go to all and I actually think universal child benefit and universal pension, the winter allowance and free bus travel, I think that it’s right that we support pensioners and make their lives better if we can and so I’m unsympathetic to the idea that targeting pensioners in the Budget is sensible.

DM: Okay now we’ve talked a lot about the economic argument, elements of it moving your way, points that you have been making while you were in power and since you left it, why then is it that there seems to be within your party talk, whisperings, more than that, open talk about your position as Shadow Chancellor? Anthony Seldon writes, saying we should move Ed Balls.

EB: Hang on a sec, within my party, Anthony Seldon, the head teacher of the private school Wellington? I’m not sure he is a Labour party member. I’m not sure Peter Oborne is either.

DM: They are not the only ones.

EB: There are plenty of people in the Conservative Party who would like me out of the way as soon as possible and the more of them there are the better as far as I’m concerned because that shows that Ed Miliband and I are taking the argument straight to David Cameron and George Osborne and saying you’re out of touch and you’re getting it wrong. The real trick, Dermot, if you look in today’s papers, the reason why nobody cheers in the House of Commons David Cameron any more behind him is because he is losing not just the trust of his backbenchers and the country, even his own Cabinet ministers are in revolt.

DM: Is there anyone within the Labour Party talking about moving you on as Shadow Chancellor?

EB: Not that I see.

DM: Okay.

EB: And to be honest, if anybody wants to make that argument they can but I think what you’ll find it is the Tories who are desperate to see the back of Ed Miliband and me and we’re going nowhere.

DM: Okay, Ed Balls, thank you very much indeed, the Shadow Chancellor there.

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Posted March 10th, 2013 by Ed's team