Britain Needs a Plan That Works: UK Opposition
Associate Editor, CNBC
The UK’s opposition finance spokesman Ed Balls called on the government to provide a credible policy to encourage economic growth telling delegates at the Labour party’s annual conference the coalition government’s austerity plan “just wasn’t working”.
In a bullish conference speech Balls added “these are the darkest, most dangerous times for the global economy in my lifetime.”
In an interview given earlier in the day to the BBC the shadow chancellor warned "there was something of Margaret Thatcher" - the former Conservative prime minister - about the UK finance minister, George Osborne, suggesting the chancellor of the exchequer was actively seeking confrontation with trade uninons over issues such as public sector pensions.
It was a theme he returned to in his conference speech when he mimicked Margaret Thatcher's famous Conservative party speech of 1980 when the UK faced the prospect of falling back into recession because of swingeing government cuts.
“The global economic crisis is deepening, our economy is badly exposed. And what do we hear from ministers? However bad things get, even when we can all see it’s not working: We are sticking to the plan, they say. We are not for turning. There is no alternative. There is no better way,” he said.
Balls called for the coalition government to taken action now to encourage growth in the British economy.
Setting out a five point plans he said the government should repeat the tax on banker’s bonuses and use the money to build 25,000 affordable homes, bring forward long term infrastructure investment projects including school building, road building and transport projects. He called for the government to reverse the rise in value added tax (VAT), from 17.5 percent to 20 percent, which took place in January, and announced a one year cut in VAT to 5 percent on home improvements repairs and maintenance. Finally he called for a one year national insurance tax break for small businesses which took on new employees.
“If they do so, we will back them, he added. “Call it Plan A plus, Call it Plan B, Call it Plan C. I don’t care want they call it. .Britain just needs a plan that works.”
Balls also confirmed that before the next general election, likely to be in 2015, Labour would set out tough fiscal rules that the next Labour government will have to stick to – to get out country's current budget back to balance and national debt on a downward path.
And he pledged to spend the windfall from the sale of nationalized banks Royal Bank of Scotland and Lloyds Banking Group although he refused to outline any further details.
He apologized for some of the mistakes of the previous Labour government.
“When they say we made mistakes in government we must say they were right and that we’ve learned,” he said.
Among those mistakes he included scrapping the 10 percent tax rate for those on the lowest incomes in Britain and failing to manage immigration to the UK from Eastern Europe.
And he added that whichever political party was in office now they would have had to make public spending cuts. He also refused to promise to reverse public spending cuts the coalition was making now if Labour won the next general election.
But Balls refused to accept that Labour was to blame for the global financial crisis.
“Don't let anyone say it was public spending on public services here in Britain which caused the global financial crisis. It wasn't too many police officers or nurses or teachers here in Britain that bankrupted Lehman Brothers in New York,” he said.
And he went on the attack telling Labour party members it was not all the last government’s fault that the UK economy was suffering.
“We didn't spend every pound of public money well,” he admitted. “And yes - we didn't regulate the banks toughly enough and stop their gross irresponsibility - here in Britain and all around the world.
“But don't let anyone tell you that Labour in government was profligate with public money - when we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan.”
Balls attacked the coalition government for abolishing the previous government’s Future Jobs Fund and cutting 100,000 jobs for young people out of work. He also slammed the coalition government for scrapping Regional Development Agencies, ending educational maintenance allowances for poorer college students and for cutting childcare tax credits for working parents.
He also said the current government was wasting money on “a reckless NHS reorganisation” on elected police commissioners and a 1 billion pound ($1.55 billion) tax break for banks, calling them “Reckless, ideological, unfair.”
A Conservative spokesman said Balls had "deliberately fiddled" fiscal rules in the past, and the public would not trust his announcement of new restrictions.
However, the Labour finance spokesman's speech was met with some limited enthusiasm from John Cridland, director-general at the Confederation of British Industry (CBI) who said: “Given that public spending cuts are vital to eradicating the deficit and protecting our triple A credit rating, it is right that Ed Balls commits to new fiscal rules. Labour has not got this right in the past.
“If affordable, some of Mr Balls’ proposals for stimulating growth are worth considering, but they must pass the affordability test. In my view, a VAT cut is not affordable," Cridland added.
“Getting young people into work is an important objective we all share.”