Transcript of Ed’s interview about VAT and National Insurance on Sky News

ED BALLS – VAT, National Insurance

Sky News
Wednesday 25 March 2015

Speakers: Ed Balls & Gamal Fahnbulleh

GF: David Cameron has ruled out a VAT increase in the next Parliament if the Conservatives get back into power at the general election. What do Labour make of the announcement? Shadow Chancellor Ed Balls joins us now. Is it fair to say that Ed Miliband was caught off guard?

EB: I don’t think anybody is going to believe a word David Cameron said. This was the Prime Minister who in 2010 said he would not raise VAT and straight after the election he raised it from 17.5% to 20%. Every Tory Prime Minister has raised VAT and the Tories will do so again and the reason is very clear: they’ve got £10 billion of tax cut promises they can’t say where they are going to pay for it. And the Budget confirmed spending cuts deeper in the next three years than in the last five. These would be so decimating to our police, to our national defence, to social care, that the only way the Tories will make their sums add up is cutting the NHS and raising VAT. As night follows day, Tories raise VAT. David Cameron has got a problem because he knows his sums don’t add up. But nobody is going to believe a word of it.

GF: But nonetheless, Mr Balls, so close to a general election in May, this announcement this afternoon will play well with many?

EB: Well, let’s wait and see. Every day now until the general election, David Cameron will have to defend the fact that he broke his promise on VAT in the last Parliament and try and persuade people he’s not going to do the same thing again. Every day between now and the general election he will have to explain how he can have deeper cuts to public spending in the next three years than in the last five years, without cutting the NHS or raising VAT. Every day he is going to have to explain how he can tell people he has got £10 billion of unfunded promises on tax with no idea where the money is going to come from. I think this is a huge problem for David Cameron and George Osborne. The reason why George Osborne has resisted this for weeks is because he knows it’s the wrong thing for the Tories to do because nobody will believe them. It’s why it wasn’t in the Budget last week. David Cameron though, is in a panic. That’s what we’ve seen. But I remember John Major and Norman Lamont being in a panic in 1992, ‘93, ‘94 about taxation. They broke their promises and David Cameron will do the same thing again.

GF: Yeah, you say this is something that is not to be believed by the general public, but what about National Insurance contributions?

EB: Working people in our country have been hit really hard in the last five years. They are paying £1,000 more in tax than they were in 2010 – £1,127 – because of that VAT rise and cuts to tax credits and we’ve made it really clear that we’ve got a balanced plan to cut the deficit every year but not as extreme as George Osborne’s plan. We’re not signing up to his big, extreme spending cuts which we think will be really dangerous. We’ve set out how we can raise taxes for those on high incomes like putting the 50p top rate back up for people earning £150,000, the Mansion Tax to pay for the NHS. I said yesterday – we will make our tax pledges in our manifesto – but I said yesterday the next Labour government will not raise the main rate of VAT. I said we will not increase the basic and higher rates if income tax and I said yesterday, and I’ll say it again to you today, the next Labour government will not raise National insurance. That will be in our manifesto. A year ago there was a big Tory attempt to say Labour would raise National Insurance for the health service and I said it’s not our policy then and it’s not our policy now because our plans on the NHS are costed and paid for. And working people have been hit hard by the Tories and I would like to cut the tax burden for working people rather than put it up. So we’re clear: no rise in the main rate of VAT, no rise in the basic and higher rates of income tax, no rise in National Insurance under Labour because our plans are balanced and careful and fair plans that don’t require it. It’s the Tories who will cut the NHS and raise VAT and that is the debate we will now have every day until polling day.

GF: Okay. Ed Balls, the difficulty though the Labour Party faces right now is that many people will say that look, we have heard this all before, so close to this general election. How can you prove to them, how can you assure them that you’re going to keep to your word?

EB: I said yesterday that the rise in VAT on pensioners and on low-income families is so unfair, it’s such an unfair tax, which you can’t avoid, which you pay from the first pound, which is a tax which you pay the same rate of on the lowest income or a millionaire. I would rather resign than raise VAT. But the important point, Gamal, is that our plans add up without us needing to hit working people because we’ve not signed up to the extreme spending cuts and the overall surplus that George Osborne is promising. Our manifesto will be very clear on VAT, that we won’t raise National Insurance, and on income tax because we are the party which wants to support and cut taxes for working people. But the Tories have got form. You know, Geoffrey Howe in 1978 promised not to raise VAT, then he raised it. Norman Lamont and John Major promised not to raise VAT before the ’92 election and then they raised it. David Cameron and George Osborne promised not to raise VAT before the 2010 election and then they raised it. And they are going to do the same again because it’s the only way they will make the sums add up and they are happy to hit working people. That’s why they are resisting our plans on a Mansion Tax and on repeating the bank bonus tax and on putting the top rate of income tax back up to £150,000. They don’t support our tax rises for those on high incomes with broader shoulders, but the Tories, as night follows day, raise VAT, and they will do the same.

GF: But would you cut VAT?

EB: I’m afraid we are going to inherit a deficit of £90 billion and much as I don’t like the rise in VAT we have seen there is going to be other things which are going to be a priority for us, like making sure we invest in our schools and in transport and in the NHS, and I’ve said I will [introduce] the 10p starting rate of income tax and I will do that by getting rid of this perverse married couple’s allowance David Cameron has introduced which doesn’t go to two-thirds of married couples. I’m afraid I can’t promise to cut VAT but I can pledge not to raise it. That’s a pledge I can make and people will believe because Labour does not think raising VAT is fair. The Tories have got form: David Cameron broke his promise in 2010 on VAT, he’ll do the same thing again because he has got unfunded tax cuts he can’t pay for and spending plans so extreme they would decimate policing and our defence forces and social care. I think they are impossible for him to deliver without a cut to the NHS or an increase in VAT and this is now going to be the election debate from now until election day. I’ve got to say to you, Gamal, no wonder David Cameron and George Osborne are ducking head-to-head debates between me and with Ed Miliband because when it comes to discussing who raises VAT, everybody knows the Tories do it time and time again.

-ends-

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Posted March 25th, 2015 by Ed's team