Ed Balls on Growth and HS2
GDP Growth 0.8% in Third Quarter
Carrie Gracie: On the path to prosperity?
Ed Balls: Well it is good news that, finally, we are starting to get some growth back. It is long-overdue. We have had three wasted and damaging years. As the Governor of the Bank of England said, from a very low base we are now starting to get some growth back to catch up the lost ground, but for millions of families, not just here in Leeds but right across the UK, this is no recovery at all because for families, for pensioners, for people in our country, their living standards are going down, not up. And what we need is a recovery which is not only strong and lasts, but delivers for working people. And for all the Chancellor’s complacency, there is no sign yet he is delivering for people in our country.
CG: The Bank of England did also say that the UK was growing towards the top end of the advanced economies, do you think the Chancellor deserves some credit for that?
EB: Well what has happened is the Chancellor has pushed our economy down so much in the last three years that, from a very low level, we are starting to claw back some lost ground, and that is a good thing, but it has been half the level of growth of America, we’re still way below where we should be and that is why we have high youth unemployment, why living standards are falling, why the deficit hasn’t come down. I think the Chancellor choked-off the recovery in 2010. I think he did terrible damage in the last three years. I am pleased, finally, we are getting growth, but is it going to last? Will it be sustained? Where is the business investment, the new homes, the rising living standards for families?
CG: Greame Leach, chief economist at the IoD, says we should expect wage growth to pick up as a result of higher output and productivity further helping the recovery. Does that deal with some of your worries about the cost of living crisis?
EB: Well in the last 40 months wages have risen slower than prices so that people have got worse off in 39 months of 40. For three years people have got worse off. And it is still happening today. The only time when they actually went up faster was when the government gave a top rate income tax cut for people over £150,000. Now, there aren’t very many of those top rate taxpayers in my constituency in Yorkshire, there are not that many across the country. They have gained, everybody else is worse-off and …
CG: But we should expect wage growth to pick up, do you agree?
EB: Well I hope so, but I don’t see any evidence of that happening so far. And it will all depend on whether companies feel confident to invest, and they’re not; on whether exports take off, and they haven’t; whether we build the homes we need …Look, the problem is, if we have an unbalanced or short-lived recovery, if it is not strong enough and sustainable enough, that doesn’t deliver rising living standards for families. And we have lots of people forced to work part-time on zero-hours contracts, trying to find better work, who are seeing their living standards falling. If you want to make people better off, don’t wait for wages to rise, freeze energy prices as we are urging the government to do right now. That would make people better off right now. Increase free childcare for 25 hours. David Cameron and George Osborne can do that if they want, but they haven’t so far, other than for the very richest.
CG: It was your team in charge when we went into recession?
EB: That’s true. There was a global financial crisis, there was a recession here in Britain and in America and France and Germany, and we got our way out of that. And in 2010 the economy was growing strongly, the deficit was coming down, unemployment was falling. And the problem is, as we predicted at the time, George Osborne the Chancellor choked that off and has delivered three years of falling living standards for people in our country. And I think he has got that wrong, badly wrong, and we have paid the price. We continue to pay the price. I think that he should listen now. We need investment, more homes, a recovery which is built to last and works for working people. He made big mistakes, in my view he is continuing to do so. Good news on growth, but not for families …
CG: You didn’t make any mistakes in 2008 or 2010?
EB: The reality was there was a failure of regulation in Britain and in America, France and Germany. Of course we were part of that failure, and that is something that I have acknowledged many times. We made some good decisions, like not joining the single currency, we didn’t get bank regulation right. Grown up people admit when they make mistakes, and we have admitted that mistake; George Osborne should admit he made a big mistake in 2010, he doesn’t and that is why he sounds complacent and out of touch.
CG: How will you convince the electorate that you can be trusted on the economy again?
EB: Everybody in life makes mistakes and grown up people acknowledge them and learn from them. And that is what we have done on bank regulation. The test at the election will be: who do you trust to secure growth in the economy and to make things fair for you and your family, with rising living standards. And I think we have shown in recent weeks – an energy price freeze, more childcare, a bank bonus tax to get young people back to work – Labour is the party which is in touch with people up and down our country, working people, who are currently worse-off. David Cameron and George Osborne are flailing all over the place on energy prices and more widely because they don’t understand. They are out of touch and that is where I think we will win the election because people will look at us and say these are experienced people who have made some mistakes and learned from them, but they are on our side, not just the side of the few. And that’s an argument I’ll have with George Osborne right through to general election day.
High Speed Two
BBC Radio 5 Live
Victoria Derbyshire: Can you be clear on Labour’s policy on HS2?
Ed Balls: Yes, there is no blank cheque from the next Labour government for HS2. We’ve always supported the idea of a new north-south rail link, but when I listen to David Cameron and George Osborne giving the impression that, even though the costs are going up billion by billion, and even though the benefits are becoming less clear, they are going to go ahead regardless. I think that is completely irresponsible. A Labour Treasury won’t treat public money in that way …
VD: Can you be clear what “no blank cheque” means? Does that mean at £50bn Labour would go ahead with it and if it rises above that, you scrap it?
EB: No, because there are two sides to this ledger. There is both the cost and the benefit. And we need to know, one, are the costs under control, and they have been spiralling in recent months; and secondly, are the benefits really there so that this would be the best way to spend that money, rather than using it on other ways to improve our transport network or our rail network. And that is something which we are looking hard at, as is the new chair of HS2, and the NAO and the PAC. Because, at the moment, those questions haven’t been answered. And you know, I …
VD: Once they are you can be definitive with voters?
EB: Absolutely. And if the case is clear, the benefits are strong, it’s the best way to spend the money and the costs are under control, at that point I would be happy to say we’ll support it. But what I am not going to do is say we support it when the costs are rising, the benefits are unclear and the government are acting like cheerleaders rather than proper stewards of public money. That is not a road I am going to go down and …
VD: Well you did with the Millennium Dome, let’s be fair?
EB: As you know Victoria, government and being a grown up is partly about learning from mistakes and in the case of the Millennium Dome that was a Conservative Michael Heseltine vanity project which the Labour government should have scrapped in 1997 and didn’t and it was a mistake and I think you should learn from your mistakes.
VD: Is HS2 a vanity project then?
EB: I’m not saying that at all. What I am saying is that we need to know the costs are under control and the benefits are real. And if we judged that it wasn’t in the national interest, we would not go ahead. And if it is in the national interest, if this is the best way to spend £16bn on transport in the next Parliament and the extra billions in the years after, then we’ll give it the go-ahead. But, at this stage, I genuinely don’t think that the evidence is there, the case has been made, the NAO has been very critical and the government can’t answer the questions. In those circumstances, it would be irresponsible for me to say, regardless of the benefits, we are going to pull the plug, but it is also really irresponsible for me to say ‘well OK, whatever it costs and however obscure the benefits, we will go ahead anyway’, because I don’t think that is the job of the Chancellor or the Treasury or proper government. George Osborne seems to be a cheerleader, that is not the job of the Treasury and that is not the role I am going to play. I am going to be …
VD: So it will be your final decision on whether Labour backs HS2?
EB: No, of course it won’t. It will be a decision for a Labour Cabinet or a Labour shadow Cabinet led by Ed Miliband of which I am an important player, but only one voice amongst many. My job though is to be absolutely clear: a Labour Treasury will keep a tight grip on costs and always want to know the benefits are there. You are right, there have been times in the past where that wasn’t done – the Dome. There have been times in the past where we were hard-headed and said ‘yes go ahead with that project’ – like the Olympics – completely the right thing to do. Even on the Olympics, though, it was the Treasury’s job to say ‘are you sure the costs are under control, make sure it is managed well’. But the benefits were there and real. In the case of HS2, we need to see these benefits, it needs to be properly set out. I don’t think that case has been won yet. And as I said, a Tory Chancellor being a cheerleader, a Labour Chancellor being disciplined with public money. I think the public want discipline on public spending and that is what I am going to deliver.Tagged in: economics, ed balls, hs2
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