DERMOT MURNAGHAN: Wednesday’s Queen’s Speech was criticised for being too thin so what was missing? Well a long term plan for jobs and growth according to Labour. In a moment I’ll speak to the Shadow Chancellor, Ed Balls, about all that… So we’ll say a very good morning then to the Shadow Chancellor, Mr Balls can we start first of all with this issue of Stephanie Bottrill and her suicide. It’s always difficult to know the precise circumstances of a tragedy like that but do you think it does illustrate the pressures that some people are facing because of this under-occupancy penalty?
ED BALLS: As you said, I don’t know the details of her case, it’s clearly a tragedy but I do know from my own constituents there are people having terrible trauma. If you are living in a home which has been adapted to deal with your blindness, your disability, if you have a bedroom which is there so that your child can come at the weekends because of a custody arrangement and you’re told you are either going to be a lot worse off or you’ve got to give up that special adaptation and access to your child, it puts people in the most terrible stress. Two third of people affected by the bedroom tax are disabled. Now I’m for tough welfare reform but not hitting the most vulnerable, the disabled, it’s not fair.
DM: So driving people to the edge of despair?
EB: There is no doubt this policy is driving people to the edge of despair in their many thousands across the country and I do think that David Cameron and George Osborne and Iain Duncan Smith should stand back from the rhetoric which is always a little bit nasty and a little bit divisive, and said what are we actually doing here? They are not going to save money with a bedroom tax, they are going to end up spending more on housing benefit moving people into private rented houses but in so doing they cause terrible stress, make people a lot worse off who are living on small amounts of money, it’s terrible.
DM: So if not this one, you mentioned it in your first answer there, which cuts do you support?
EB: I’m for tough welfare reform, I would like the government to say there should be a guarantee of a job for every young person at a year but if you don’t take it we’ll cut your benefits and for adults at two years, we are not going to have long term unemployment, we’ll get work but if you don’t take it, unless you get people into work we won’t get the benefit bill down and it’s up by tens of billions since George Osborne became Chancellor because he’s failed on jobs. We’re not going to get housing benefit bills down unless we build more homes and deal with the housing crisis. Yes, to a benefits cap, we support that but in the right way across the country with some differentiation but if you don’t build the homes – and that’s the problem with the Queen’s Speech as you were saying, short term, long term, it’s just more of the same but it’s more of the same which is actually failing to get growth moving, spending down, the deficit down. It’s not working.
DM: Okay so short term, you are absolutely explicit about this, this is from Peter Hain last week, a former colleague of yours ‘we cannot afford to be equivocal about our economic policy: yes, we will borrow more in the short term’. You are now saying that as Labour?
EB: Dermot, I’ve been on your programme many times over three years and have said exactly that, the government is cutting too far, too fast. Their attempt to have fast borrowing reductions was going to backfire and right now, they should have done it two years ago, action now which would be more borrowing this year to cut VAT, build homes, to get the economy moving would actually be the way to get the deficit down. I’ve been told for three years that I was wrong and what’s happened? The economy is flatlining and the government is borrowing £245 billion more.
DM: The first question is, will you be specific how much more you would borrow? Say about, what is it, £120 billion borrowing for the last year, how much more than that would Labour be borrowing now? The VAT cut is at least 12 billion, how much beyond that?
EB: The reason why these discussions are always difficult is because I can’t write a Budget for two years ahead. If George Osborne had done what I’d said two years ago in my view the deficit would be lower today, not higher. We would have a VAT cut for one year that would cost £12 billion, on top of that I would do some more housing and infrastructure investment. We’ve said £4.5 billion from the 4G money could allow you to do 100,000 homes, £2.5 billion. It’s not clear what George Osborne has done with that money because borrowing seems to be high anyway. I think 100,000 more homes, a guaranteed job for young people, get the economy moving, cut VAT temporarily, bring forward some other infrastructure. As I said in my article today in the Independent on Sunday, they’re failing on infrastructure short and long term, they’re failing on welfare reform – they’re not even managing to deliver an energy policy which brings in new investment and new jobs, bank reform – the Chancellor is rejecting the recommendations of his own parliamentary committee. It’s chaos.
DM: Just to stay on the economy, the public would be justified in asking then, given that policy that you’re putting forward, is it an economic law, Mr Balls, that government spending always leads to more growth?
EB: No, because if you spend money badly …
DM: So it’s a gamble?
EB: No, it’s not a gamble but the International Monetary Fund from Washington who are not normally seen of as spendthrift or irresponsible are in Britain at the moment speaking to the Chancellor, saying to him look, your plan is not working. They said if growth undershoots, you should slow the pace of deficit reduction, have a temporary tax cut or some more infrastructure …
DM: But you are hoping that if a Labour government comes into power and it spends more money that there will be growth, that is your hope, it’s not a guarantee?
EB: Look, of course it’s not a guarantee because it depends on whether you do it well or badly. A Labour government coming in would have to be very tough on deficit reduction. All my colleagues know we can’t make spending commitments or irresponsible promises. The tax rises – we can’t promise to reverse any of those tax rises or spending cuts but I think the clear law for the last three years is if you think faster tax rises and bigger spending cuts makes the economy stronger, we have had a weaker economy than pretty much any major industrial country. Even in the eurozone we’ve had a weaker economy. What’s gone wrong? They believe there is a law, faster spending cuts would lead to more growth. That has been disproved entirely, that’s the law that has been broken.
DM: There is a lot of revisionism going on here on the state of the economy over the past few years, it now looks not only like not a triple dip, that didn’t transpire, maybe not even a double dip, which leaves one dip which of course was the Labour recession.
EB: Goodness gracious, Dermot, in the last three years the economy has flatlined for three years. There’s a debate about whether last year in one quarter growth was zero or minus point one. To be quite honest zero is absolutely terrible and disastrous. I’ve been on your programme many times and said I don’t predict a double dip, I don’t want a double dip, I don’t want a flatlining economy, what I want is growth, investment in jobs to boost living standards and get the deficit down and that the government has absolutely not delivered in the last three years. We’ve done worse than America, worse than Germany, it’s terrible.
DM: Okay, government delivery, they say they are, this government, or this Conservative led government says it is going to deliver us a referendum eventually on Europe. What is the Labour position as you watch the turmoil, as it has been described in some quarters, going on in the Conservative party at the moment about this amendment to the Queen’s Speech? What would Labour do and would Labour guarantee a referendum in its manifesto?
EB: Our response is disbelief, disbelief. How can you regret the thing missing from the Queen’s Speech being an EU referendum when what was actually missing was action on growth, jobs, investment in the economy? That’s what we regret. The idea that now the priority for Britain – when the rest of the world is looking at us, we are trying to get our economy moving, we need to say we’re open for business and get people to invest here – the idea now that we decide the priority is to legislate for a referendum on an uncertain prospect, on an uncertain timetable, nobody knows what it is actually about – I think the rest of the world would say ‘my gosh, they’ve lost their marbles’. Then you sort of think the Conservative Party feels as though it’s lost its marbles at the moment. David Cameron has entirely lost control not just of his back benchers but it seems from Michael Gove today on the BBC, he has lost control of his front bench too.
DM: What, saying that he would vote for the amendment?
EB: How can you have a member of your Cabinet on the television today saying he would vote to leave the European Union, I presume if he could to vote for this amendment, when the Prime Minister says he would like to vote to stay in the European Union and what’s he going to do? He’s going to sit on the fence on an amendment to question the integrity of his own Queen’s Speech. He is supposed to be the Prime Minister, he is supposed to be leading the country.
DM: But moving it forward, not now, do you want Labour to go into the next general election without offering a referendum, without offering the British people a choice of either renegotiation or in/out of the European Union? That would not be there?
EB: Look, I think we have to acknowledge the deep concerns in the country, which is not just a UKIP vote but in the Labour Party and the Conservative Party as well, about the direction the European Union is taking and the direction our economy is taking at the moment and if we give the appearance in some sort of elitist way, we’re burying our head in the sand, we’re just going to ignore those things, people would say they are as out of touch as David Cameron. That’s why we must be the party for reform in Europe, for change in Europe and I think we should stay in the European Union.
DM: But this is about giving the British people a choice, would Labour offer that at some point? The Conservatives are saying by 2017 you will have a choice, what is Labour saying?
EB: We are clear first of all if there is any proposal to change the powers between Britain and the European Union which would take powers away from Britain we would support a referendum …
DM: We know about that, we know about that. What about a renegotiation?
EB: I think the first issue is getting the reform we need in the eurozone and the European Union more widely, budget reform, CAP reform. I don’t think it’s sensible, it’s not wise, it’s not balanced and it’s not statesmanlike for political parties, for their short term political advantage, to start making claims about referendums when we don’t even know where we are going to be.
DM: So a commitment to a referendum will not be in the party’s manifesto?
EB: I think it’s the wrong thing to do now. I don’t think we should set our face against consulting the British people, I don’t think we should say anything which gives the impression that we don’t understand their concerns but I think if we were to start answering your question by saying well maybe in two years’ time we play the same destabilising, political, tactical, short term game which is actually making David Cameron look like he’s not really fit to be Prime Minister at the moment.
DM: Okay, Shadow Chancellor, thank you very much indeed. Ed Balls there.