Autumn Statement

Ed Balls Excerpts

Wednesday 3rd December 2014 Commons Chamber

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The House has not yet seen the detailed—[Interruption.]

[Mr Speaker]

Order. I made it clear that the Chancellor must be heard with courtesy and the same goes for the shadow Chancellor—[Interruption.] Order. I am grateful, Mr Robertson, for your intended helpful gesticulation. I am well aware of the old ruse of people sitting below the Gangway where they think I cannot see them and yelling their heads off, either on their own initiative or because they are rather stupidly following instructions. Either way, it does not work. They should pipe down, and if they will not pipe down, it is very simple—three words that are easily understood: “Leave the Chamber.”

[Ed Balls]

As I was saying, the House has not yet seen the detailed documents from the Treasury and the Office for Budget Responsibility tables—I am sure that they will arrive shortly—but I listened carefully to the Chancellor’s statement. To establish the facts, I want to start by asking him questions about issues that are vital to our country’s future: living standards and wages; tax receipts and borrowing; growth and immigration; taxation; and the national health service.

First, on living standards—[Interruption.] These questions about living standards, wages and tax receipts are important, so I advise Conservative Members to listen to them carefully, and then we will hear the answers.

Wages have not kept pace with prices for 52 of the past 53 months. Today’s OBR forecasts confirm that wage growth is once again weaker than expected. Working people are now £1,600 a year worse off than in 2010. Someone in full-time work is now £2,000 a year worse off. For working people, there is a cost of living crisis, and the squeeze on living standards not only is hitting family budgets, but has led to a shortfall in tax revenues. The OBR confirms that stagnant wages and low-paid employment have hit revenues, saying that

“weaker-than-expected wage growth so far in 2014-15”

is

“depressing PAYE and NIC receipts.”

Does the Chancellor agree with the OBR’s analysis? Will he tell us how much tax revenue has been lost this year because of stagnating wages and forced part-time employment?

The result of that shortfall in tax revenues is that, once again, the Chancellor has had to revise up his forecasts for Government borrowing. He told the House today that the deficit for this fiscal year is now expected to be £91.3 billion—[Interruption.]

[Mr Speaker]

Order. Mr Opperman, you are normally a well-behaved young boy. Try to be a good boy. If you can be a good boy, you can stay; if you cannot restrain yourself, leave the Chamber. Go and have a cup of tea; take a pill—whatever is necessary.

[Ed Balls]

I am trying to establish the facts about the deficit from the Chancellor. He told the House that the deficit for this fiscal year is now expected to be £91.3 billion, but he did not set out in detail how much worse things are since the Budget. Will he tell the House by how much borrowing this year has been revised up compared with his Budget forecast?

Back in 2010, the Chancellor and the Prime Minister pledged to balance the budget by the end of this Parliament and that we would see the national debt falling this year. The Prime Minister said in 2010:

“In five years’ time, we will have balanced the books.”

Today the Chancellor has, I believe, announced that the deficit next year is forecast to be £75.9 billion. Will he confirm that number and the fact that the national debt next year is forecast not to fall, but to rise? While he has clearly missed his targets, he did not tell us the scale by which he has missed them. How much more will he have borrowed in this Parliament than he planned back in 2010?

Wages, income and borrowing have been hit so hard because productivity growth has been so weak. Today the Chancellor announced that he is forecasting that growth will not accelerate but—[Interruption.] The Prime Minister’s Parliamentary Private Secretary will be interested to know that the Chancellor forecasts that growth next year will slow down. I know that the Chancellor wants to blame poor growth performance and poor productivity growth on the eurozone. I share the concerns about the eurozone—we need a plan for stronger growth in Germany and across the continent—but the weakness of the eurozone cannot explain why, despite the notable successes of a number of our companies, our export performance has been so poor, and so much worse than that of other eurozone countries. Since 2010, our export performance has been 16th in the G20. In the EU, we have been 22nd out of 28 countries; three quarters of EU countries have done better than us.

Business investment, which has also lagged behind that of our competitors, fell in the last quarter. Bank lending to small businesses is falling. The number of apprenticeships for young people is falling this year. House building under this Government is at its lowest level since the ’20s. On infrastructure, for all the Chancellor’s preheated re-announcements, barely a fifth of projects are in construction, and infrastructure output is down over 11% since 2010.

On business rates, the research and development tax credit and air passenger duty, we welcome the action that the Chancellor has taken. We will support what he has proposed on APD, but let me ask him—[Interruption.]

[Mr Speaker]

Order. There is far too much noise in the Chamber. Mr Opperman, I have told you three times, and I do not want to have to tell you again: be quiet, sit and listen. If you do not wish to do so, get out. The same goes for the Government’s Deputy Chief Whip, the right hon. Member for Chelsea and Fulham (Greg Hands); I have been looking at and listening to him. Let me make it clear to him that he ought to know better. Behave or get out, man.

[Ed Balls]

We’ll get him out next year, Mr Speaker.

I would like to ask the Chancellor about the air passenger duty proposal. We will support what he has proposed, but following the Smith commission proposal to devolve air passenger duty to Scotland, will the Chancellor urgently lead work across Government, with the Scottish Government, on a mechanism to ensure that English airports, particularly in the north of England, are not disadvantaged by that devolution?

On business rates, while the review is welcome, it will not report, I believe, until 2016. Why can the Chancellor not take immediate action and adopt our plan to cut business rates for small companies? Why will he not increase the bank levy now and increase free child care for working people? Why will he not properly capitalise the business investment bank? Why will he not raise, as a proportion of earnings, the national minimum wage? Why will he not repeat the bank bonus tax and guarantee a compulsory job for all people? On regional devolution, why will he not devolve full growth in business rates to all city and county regions, to give them real control? We need a real plan for good jobs and more balanced growth.

On the subject of growth, the figures that the Chancellor announced reveal that growth has been revised downwards in 2016 from 2.6% to 2.2%, in 2017 from 2.6% to 2.4%, and in 2018 from 2.7% to 2.3%. Why is growth being revised downwards year after year? This is an interesting fact from the OBR: if our economy grew by just 0.5% a year faster than forecast, Government borrowing would come in more than £32 billion lower in the next Parliament. Does the Chancellor not see that those downgrades to growth are bad news? Without decisive action to sustain growth and raise living standards, and without a recovery for the many, not the few, he will carry on missing his deficit targets year after year.

Let me ask the Chancellor about another missed target. Over the past 12 months, net migration to the United Kingdom has been 260,000 people. Can he tell the House—this will be an interesting question to many Back Benchers in all parts of the House—the OBR estimate for net migration over the next 12 months that underpins the growth and public finance forecasts? It seems highly unlikely that it will be anywhere near the Prime Minister’s forecast, which is for tens of thousands. Will it be over 100,000 next year? Over 150,000? Over 200,000? This time, did the Chancellor remember to tell the Prime Minister the facts?

Turning to spending and taxation, the Prime Minister claimed in The Times a month ago that 80% of the planned spending cuts had been made. The Institute for Fiscal Studies says that it is less than 50%. Can the Chancellor clarify who is right and who is wrong? He claims that in the next Parliament he can cut welfare spending by over £10 billion, but in this Parliament, spending on social security is over £20 billion higher than he planned in 2010 because of what happened to housing benefit in particular. He is planning a £3 billion real-terms cut in tax credits that will hit 3 million working people on middle and lower incomes, and once again he is hitting women harder than men.

The Prime Minister rather let the cat out of the bag earlier when he referred to “masosadism”. As I understand it, masosadism is when someone enjoys having pain inflicted on them and enjoys inflicting pain on other people. We know the Chancellor’s views on the first; it seems, from the way he smiled when he announced the tax credits cuts, that he is rather enjoying the second as well. How can it be fair to hit working people with a £3 billion cut to their tax credits when he has spent £3 billion giving a tax cut to people earning over £150,000?

When families are paying £450 more in higher VAT, does the Chancellor really think that people will fall for the Prime Minister’s latest promise of a £7 billion unfunded tax cut in the next Parliament, which even the Business Secretary has called a “fantasy”? Two months on, the Chancellor gave us no details at all of where he will get the money from—not a single penny. Is he planning to pay for that with a further rise in VAT? He said at the weekend that he has no plans to raise VAT. That is what he said before the last general election, and then he raised it after the election. He should stand at the Dispatch Box today and promise that he will not raise VAT again for families and pensioners.

On the national health service, we welcome the Chancellor’s belated recognition that there is a funding crisis. Everyone knows—other than the Prime Minister, it seems—that our health service is going backwards. Accident and emergency department waiting times and GP waiting times are going up, thanks to the Government’s £3 billion reckless reorganisation. The Chancellor announced £2 billion for, he said, every year into the future—paid, it seems, by an underspend every year into the future. I have never heard of a prospective forecast of an underspend being made in quite that way. Will he confirm that that is £2 billion a year for the national health service over a flat, real baseline? We need to know the answer to that one. It seems that the Chancellor has also confirmed that £700 million of the crisis cash is a re-announcement of a re-allocation from within the existing Department of Health budget.

In the Chancellor’s stamp duty reforms, he is accepting that high-value properties are under-taxed, which is welcome. But rather than taxing them only on sale, why does he not have the courage of his conviction? The average person pays 390 times more in annual council tax as a percentage of their property than the billionaire buyer of a £140 million penthouse in Hyde park. Why will the Chancellor not have an annual charge on the highest value properties and use that for a £2.5 billion a year investment in the NHS so that we can have 20,000 nurses and 8,000 GPs every year? Why will he not match that commitment? Our national health service deserves a proper funded long-term plan, not just more short-term sticking plaster.

We then heard the Chancellor’s diversionary stunt. He had to admit today that he has failed to balance the books in this Parliament. He is now trying to divert attention with a vote on balancing the books in the next Parliament. At the time of the Budget, he talked up a vote on the overall budget surplus, but I understand from reports in the Financial Times that he has done a U-turn and retreated to a vote on a current budget surplus in the next Parliament. Will he explain what is going on with that vote and the nature of the problem that he is dealing with? We want to get the current budget back into surplus as soon as possible in the next Parliament, and get the national debt falling, but the lesson of this autumn statement is that a plan to balance the books will work only if it puts good jobs, rising living standards and stronger growth at its heart.

The Chancellor’s diversionary tactics will not work. Since he sat down, I have received the Office for Budget Responsibility’s forecasts. Table 1.2 on page 15 sets out in detail how the latest forecast compares with the forecast at the time of the Budget. It gives us the numbers that the Chancellor failed to tell us in his autumn statement. I will give the country and the House those numbers. Compared with his Budget target—it is here on page 15 in table 1.2—borrowing this year has not gone down. It has been revised up by £4.9 billion. Next year it is revised up by £7.6 billion. Over two years the Chancellor has revised borrowing up by £12.5 billion.

The answer to my other question, which I did not have when I started, is that those figures mean that in this Parliament the Chancellor will have borrowed £219 billion more than he planned in 2010—£219 billion. It is all here in black and white—hard evidence from the Office for Budget Responsibility. The Chancellor’s borrowing targets are all in tatters. We all know that he has changed the way he styles his hair, but he cannot brush away the facts. People are worse off and he has failed to balance the books in this Parliament. For all his strutting, all his preening and all his claims to have fixed the economy—he promised to make people better off—working people are worse off. He promised that we were all in this together, then he cut taxes for millionaires. He promised to balance the books in this Parliament, and that commitment is now in tatters—every target missed, every test failed, every promise broken.

We need a recovery for the many, not just a few. We need to balance the books fairly. We need a long-term plan to save our NHS. That is the autumn statement that we needed. It will take a Labour Government to deliver it.

[Mr Osborne]

With that performance, we see why the right hon. Gentleman is totally unfit to be put in charge of the nation’s finances in six months’ time. We have had an object lesson in how not to plan an autumn statement reply before hearing the autumn statement. That was what he expected to hear, as we know because he went round the TV studios over the past few weeks predicting it. He said that the deficit would go up this year. He said it last month, he said it last week, he said it on Sunday. I have his words. He said that the Chancellor is going to have to make an autumn statement where he is

“going to have to say that the economy is weakening, the deficit is getting larger”.

I have just quoted independent forecasts which show that the economy is stronger, the deficit is falling and the debt is lower in every future year. The shadow Chancellor got it completely wrong.

It is hardly surprising that his party has such low economic credibility when the shadow Chancellor repeatedly makes predictions about the British economy that turn out to be completely wrong. No more boom and bust, he said—wrong. A double-dip recession, he predicted—completely wrong. He has spent the past three months betting the entire credibility of the Labour party’s response to the autumn statement on the prediction of a massive deterioration in the public finances and the deficit going up, and he got that completely wrong. People say there is a split in the leadership of the Labour party. They are right. It is between people who get the deficit figures completely wrong and people who forget about the deficit altogether.

The Opposition have no economic credibility and they have policies that show that they are not up to the job. The shadow Chancellor mentioned his homes tax. We still do not know what the Labour party’s view is of the stamp duty reforms. I guess we will find out in the next few days. We do not have a clue what its views are on the postgraduate changes or the infrastructure investments that we have announced. The right hon. Gentleman spoke about his homes tax. This is what the Labour party thinks about his homes tax. The Chair of the Public Accounts Committee says:

“I don’t think it’s the world’s most sensible idea.”

The former Housing Minister, the right hon. Member for Greenwich and Woolwich (Mr Raynsford), says that it hits the “cash poor”. The right hon. Member for Tottenham (Mr Lammy) says it is “a tax on London”, and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) says:

“Let’s stop calling it a ‘mansion tax’…these are family homes”.

One of Labour’s council group leaders summed it up best when they said it was “completely bonkers”. That is the housing policy—to put taxes on housing.

The shadow Chancellor asked about our tax cut on apprentices. His jobs tax policy is to increase national insurance. He talks about pensions. His pensions policy is to tax pensions. He asked me a couple of questions about savings in the public finances. I was hoping that he was going to give me some suggestions for savings that we can make in the public finances. I have had to do a bit of research myself about what his party’s policy is.

The Opposition have conducted what is called a zero-based review for the past year and identified two surplus assets that the Government should sell. The first is the Queen Elizabeth II conference centre. The shadow Chancellor first proposed selling that in 2001 and seems to have forgotten that it is the only bit of Government that pays us an income. The other thing they found to pay down the national debt—it is in the Labour party document—is a restaurant in St James’s park, estimated to be worth £6.7 million. That is 0.005% of the national debt, so their national economic policy is literally out to lunch.

That is the problem that we have seen in the right hon. Gentleman’s reply. He has absolutely no answers to the economic challenges that Britain faces. He has no credibility and no workable policies because Labour has no workable plan. We are five months away from a general election in which people will have to choose their Government. The most serious responsibility incumbent on anyone seeking office is to show that they can provide economic stability to the nation and protect the families who live here. The Opposition do not have a clue how to do that. They do not have a plan. Their whole response today shows that they would take Britain back to square one. Britain has pulled itself out of the economic crisis that the shadow Chancellor created, and we are not going to let him take us back there.