Balls: “Cutting too far and too fast creates a vicious circle”

Ed Balls has called the government's private sector job creation policy a "total flop" - with the £1 billion 'National Insurance holiday' announced by George Osborne in his inaugural budget last June creating just 6,000 jobs.

Ed Balls has called the government’s private sector job creation policy a “total flop” – with the £1 billion ‘National Insurance holiday’ announced by George Osborne in his inaugural budget last June creating just 6,000 jobs in 3,000 firms. The chancellor had said the scheme, which aims to help new business starts-ups, would assist 400,000 new firms outside London, the south east and east England, potentially creating 800,000 new jobs.

The shadow chancellor also attacked Osborne’s deficit reduction plan for creating a “vicious circle” by “cutting too far and too fast”, and called on him to “think again”. Earlier today, Left Foot Forward reported the latest Times/Populus poll findings, which revealed more support for the Darling plan than the government’s.

By 55 per cent to 45 per cent, respondents preferred the statement “we should halve the government deficit by the time of the next election, rather than trying to deal with the problem completely by then” to “even though this means bigger spending cuts over the next four years we must get back to balance before the next election”.

Of the failure of the NI holiday scheme, Balls said today:

“George Osborne hailed this £1 billion policy as the centrepiece of his plan for growth and said it could create 800,000 private sector jobs. But it’s turned out to be a total flop with less than 1 per cent of the 400,000 businesses George Osborne said would benefit taking advantage.

“It’s no wonder the policy has failed given how complicated the scheme is, the government’s failure to promote it and the falling consumer and business confidence the government’s reckless economic policies have led to.

“All George Osborne has delivered in his first year as Chancellor is higher unemployment and an economy which has not grown over the last six months since his spending review. Cutting too far and too fast creates a vicious circle because slower growth and more people out of work claiming benefits means the government will now have to borrow £46 billion more than expected.

“George Osborne’s plan is hurting but all the signs are that it’s not working either. He needs to think again before it’s too late.”

In September, the Impact Assessment of the Regional Employer National Insurance Contributions Holiday for New Businesses (pdf) estimated “around 400,000 employers will claim the relief with regard to around 800,000 employees”, while in his June 2010 budget speech, the chancellor said:

“For the next three years anyone who sets up a new business outside London, the South East and the Eastern region will be exempt from up to £5,000 of employer national insurance payments, for each of their first 10 employees hired. We aim to have the scheme up and running by September, but any qualifying new business set up from today will also receive help.

“And the Treasury estimate that some 400,000 businesses will benefit – ensuring all parts of our country contribute to a more balanced and sustainable economic future.”

However, at the time of the announcement, the scheme was criticised by Robert Chote, who is now the head of the Office for Budget Responsibility (OBR). The then director of the Institute for Fiscal Studies (IFS) said:

“The National Insurance break for start-ups looks complicated, potentially prone to avoidance and oddly targeted.”

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25 Responses to “Balls: “Cutting too far and too fast creates a vicious circle””

  1. I'malrightjack

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  2. Chris Huang-Leaver

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  3. Alex Belardinelli

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  4. Watching You

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  5. Roy Bailey

    RT @leftfootfwd . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  6. Martin Johnston

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  7. Ahmad Noor

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  8. Hens4Freedom

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  9. BenM

    Good to see more combative language from Labour when describing the unfolding disaster of the coalitions foolish economic policy.

  10. Robert

    sadly the people also know that Balls is no Darling.

  11. chris star

    Balls: “Cutting too far and too fast creates a vicious circle”
    http://j.mp/lyXWVC
    #cuts

  12. mr. Sensible

    We’ve seen what happens when you cut too far and too fast across the continent.

  13. Cahal

    Those who advocate a smaller state should support massive investment; the subsequent boom would be a far better time to cut public spending.

  14. SlashedUK

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  15. Ed's Talking Balls

    Mr. Sensible,

    We’ve also seen across the continent what happens when governments have no credible plans to reduce unsustainable deficits.

  16. AltGovUK

    RT @leftfootfwd: . @EdBallsMP: "Cutting too far and too fast creates a vicious circle": http://bit.ly/l1IK4d reports @ShamikDas

  17. Will Straw

    Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  18. Carole Bonner

    RT @wdjstraw: Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  19. Adam Farrell

    RT @wdjstraw: Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  20. Rob Lane

    RT @wdjstraw: Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  21. lesa

    RT @wdjstraw: Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  22. Stuart King

    RT @wdjstraw: Osborne's NICS holiday is a complete flop. Just 3,000 firms took up the scheme. He predicted 400,000. http://bit.ly/mI1DLZ

  23. scandalousbill

    The UK “credible” plan results, flat lined growth despite the lowest interest rates of the past forty years

    Bravo!

  24. Cahal

    Ed’s Talking Balls,

    Labour had a credible plan. Faster =/= better.

  25. Anon E Mouse

    Mr.Sensible – WHich parts of the continent?

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