Balls throws down the gauntlet: “We are going to have to keep all these cuts”

Ed Balls seized the initiative on the economy last night by announcing Labour, if elected, couldn’t commit to reversing the coalition’s cuts, reports Shamik Das.

 

Ed Balls seized the initiative on the economy last night by announcing that Labour, if elected, couldn’t commit to reversing the coalition’s cuts and would maintain the public sector pay freeze, saying the party “cannot duck that reality and won’t”.

The bold move, in an interview in The Guardian and column on LabourList, comes ahead of his keynote speech on the “economic alternative” to the Fabian Society in central London this morning.


In a move that will wrong-foot the Right and enrage sections of the Left, the shadow chancellor asserts:

“My starting point is, I am afraid, we are going to have keep all these cuts. There is a big squeeze happening on budgets across the piece. The squeeze on defence spending, for instance, is £15bn by 2015. We are going to have to start from that being the baseline.

“At this stage, we can make no commitments to reverse any of that, on spending or on tax. So I am being absolutely clear about that.”

While on the need for pay restraint, Balls adds:

“It is now inevitable that public sector pay restraint will have to continue through this parliament. Labour cannot duck that reality and won’t. There is no way we should be arguing for higher pay when the choice is between higher pay and bringing unemployment down.

“I know there will be some people in the trade union movement and the Labour party who will think, of course, Labour has got to oppose that pay restraint in 2014 and 2015. That’s something we cannot do, should not do and will not do.

“It is true to say public and private sector workers are paying the price for the mistakes of the past 18 months, but we cannot promise higher wages for public sector workers when public spending is tight. When the cost of rising unemployment is pushing up borrowing, we had to make a tough choice.”

Balls says it is as a result of George Osborne’s failure to bring down the deficit and deliver growth that Labour has to accept the restraint of what Ed Miliband called the “new reality” of “difficult times when there is not much money around” in his speech to London Citizens on Tuesday.

He explains:

“Even if Osborne took our advice to kickstart the recovery, there are still going to be difficult choices to make. Jobs have to come before higher pay and that is why that restraint on spending and on pay is important for Labour.”

Adding of the need for Labour to demonstrate credibility:

“I admit that we have a big task ahead for the future to show that we are the people to take the tough decisions… If we are seen as the people that are short-term, soft touch, give into vested interests, throw money at every problem of course we are never going to succeed.”

Patrick Wintour, who interviewed Balls, reveals:

Balls is determined to show everything about his pedigree, and current strategic thinking shows he gets the political challenges facing the party on trust, credibility and the economy… Balls says he has had shadow cabinet members asking for permission to promise to reverse a specific cut, and that they have all been spurned.

With the FT’s Jim Pickard noting (£):

An aide to Mr Balls said that it had not been easy for him to commit to spending reductions, given that “as a constituency MP, he has seen the damage done to communities” by the ruling coalition’s cuts. Yet given the tough times, Labour will have “no choice” other than to make difficult decisions, the shadow chancellor will say…

Mr Balls has faced frustration from some Blairite MPs within his party about an apparent reluctance to flesh out how Labour would tackle the national deficit. Yet he will insist that the coalition’s “public retrenchment” has worsened Britain’s vulnerable economic situation.

Meanwhile on LabourList, Balls, insisting jobs “must be our priority”, goes into more detail about his pledge to maintain the coalition’s pay freeze:

“Public as well as private sector workers are paying the price for David Cameron and George Osborne’s mistakes. But Ed Miliband and I cannot just promise public sector workers higher wages when public spending is so tight and the costs of rising unemployment are pushing up borrowing projections so massively.

“The fact is that in 2012 – apart from those at the very top – everyone in work, in the public and private sector, is going to experience a real incomes crisis: the combination of higher inflation and the rising cost of living, wage freezes, cuts in tax credits, overtime and bonuses withdrawn, some full-timers being asked to work part time and for thousands losing their jobs entirely.

“It was always going to be hard, but it is much tougher because of George Osborne’s mistakes. And we cannot reverse all that damage.

“Even if George Osborne acts now, as he should, to kick start the recovery and get unemployment falling, as we and the IMF have advised, Labour will have to make difficult choices, as Ed Miliband set out in his speech earlier this week. And jobs must be our priority before higher pay.”

Concluding:

“Pay restraint in the public sector in this parliament would have been necessary whoever was in government. But George Osborne’s economic mistakes mean more difficult decisions on tax, spending and pay. It is now inevitable that public sector pay restraint will have to continue for longer. Labour cannot duck that reality. And we won’t.”

In his speech to the Fabians today, Balls will flesh out in more detail where he stands, forensically taking apart the government’s failings and outlining the challenges ahead.

On the big challenges, he will say:

“If Britain and the world are to avoid repeating the mistakes of that 1930s ‘lost decade’ and the 2008 global crisis, then we badly needs political leadership in Britain, Europe and the world to meet two great challenges.

The Growth Challenge – to stop the aftermath of the financial crisis turning into years of slow growth, high unemployment and rising debts – leaving a permanent dent in our nation’s prosperity; and

The Reform Challenge – long-term reform to make sure such a financial crisis on this scale cannot happen again and to build a stronger and fairer economic model for the future – what Ed Miliband has called a more responsible capitalism – which can, even in tougher times, meet our aspirations for social justice and strong public services.”

On the government’s failures, he will say:

“Every time George Osborne revises down his growth forecast, he has to revise down tax revenues and increase the benefits bill.

“And what is the long-term cost? How much more will it cost our society and our economy to leave those young people long-term unemployed and unproductive; they and their children receiving benefits rather than paying taxes and contributing to the national wealth?

“If we do not invest now in jobs and growth, if we let a year of economic flat-lining become a decade of stagnation, what price will our country pay in the long-term?

“That is why to meet the Growth Challenge and get the deficit down we are right, as we have set out in the five point plan for jobs, to call for temporary tax cuts and investment in jobs and growth – to stop a decade of slow growth and higher debts becoming a self-fulfilling prophecy.

“In short, action now for growth, jobs and reform does not conflict with the need for a credible medium term plan on the deficit, it reinforces it.”

On the need for discipline, he will say:

“However difficult this is for me, for some of my colleagues and for our wider supporters, we cannot make any commitments now that the next Labour government will reverse tax rises or spending cuts. And we will not.

“But we now know the next Labour government will have to sort out the deficit where this government failed and deliver social justice with less money.

“And as we make the argument that cutting spending and raising taxes too far and too fast risks making the economy and the deficit worse not better, it is right that we set out where we do support cuts and where we would be making the tough but necessary decisions…

“Times will be tough – we will have no choice but to make difficult choices.”

And on the political challenge for Labour, the shadow chancellor will say:

“As a party and a leadership, I said then and I still believe now, that Labour should have been clearer before the election that if we had been re-elected there would have been spending cuts as well as tax rises.

“And I have no illusions that there is a big task to turn round Labour’s economic credibility and show that – even as unemployment rises, growth stagnates and long-term reform stalls – Labour can be trusted again.

“It is not enough simply to be right in our diagnosis of the Coalition’s failures and unfairness…

“The challenge we face is both to set out a radical and credible alternative; and to win public trust for that alternative vision.”

As Anthony Painter, author of ‘In the black Labour’, says, this could well be “a potential game-changer”; Balls’s “tough but sensible messages”, as Peter Watt calls them, will have the effect of blunting the Tories’ biggest line of attack, save for some short-term discomfort, and, in time, may lead to an upturn in Labour’s poll ratings on the economy, and the public’s willingness to trust Balls and Miliband as much as they do Osborne and Cameron – the ‘credibility deficit’.

This is not the position Labour will have wanted to be in – they’ve been proved right on the dangers of cutting too far and too fast, but cut far and fast the coalition have, this is the reality of where we are and where we’ll be in 2015. Only by looking to the future can Labour hope to win that election, and by accepting the reality of how that future will look, Ed Miliband and Ed Balls have made that eventuality look that little bit more likely.

See also:

How can we have fairer capitalism?Sara Ibrahim, January 13th 2012

Politics vs Economics: setting the scene for the Fabian’s Next Economy conferenceMarcus Roberts, January 13th 2012

Inequality must be ended to prevent another financial crisisStewart Lansley, January 11th 2012

“Delivering fairness in difficult times”: Miliband outlines the “new reality”Shamik Das, January 10th 2012

Growth revision shows economic recovery is off trackTony Dolphin, January 9th 2012

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50 Responses to “Balls throws down the gauntlet: “We are going to have to keep all these cuts””

  1. Skipton & Ripon CLP

    Ed Balls throws down the proverbial gauntlet: “We are going to have keep all these cuts”: http://t.co/Qb3mNYN8

  2. Patron Press - #P2

    #UK : Balls throws down the gauntlet: “We are going to have keep all these cuts” http://t.co/bY63s5KD

  3. #OWS - 99% Amplified

    #UK : Balls throws down the gauntlet: “We are going to have keep all these cuts” http://t.co/bY63s5KD

  4. #OWS International

    #UK : Balls throws down the gauntlet: “We are going to have keep all these cuts” http://t.co/bY63s5KD

  5. Political Planet

    Balls throws down the gauntlet: “We are going to have keep all these cuts”: Ed Balls seized the initiative on th… http://t.co/Vo9YwrXL

  6. Ben Dover

    #UK : Balls throws down the gauntlet: “We are going to have keep all these cuts” http://t.co/bY63s5KD

  7. Daniel Arlt

    Balls throws down the gauntlet: “We are going to have keep all these cuts”: “The fact is that in 2012 – apart fr… http://t.co/gMT9lWZZ

  8. leftlinks

    Left Foot Forward – Balls throws down the gauntlet: “We are going to have keep all these cuts” http://t.co/3g0jTyl8

  9. Anonymous

    Then basically your saying the Tories are right labour was wrong vote for us because we caused the problems but the Tories have the right policies but you can still vote for us because we are copying the Tories, and have no idea what so ever what to do except to do something we did not do when we were in power, make private sector jobs.

    Thank god for the Tories then…..

    Miliband where is he again, gone off to cry after accepting Labour s got no idea what so ever.

  10. Ray_North

    I find this depressing and uninspiring from the Labour Leadership – the way forward now, surely, is for the economic orthodoxy of creating growth and wealth at all costs to be replaced by the concept of putting social policy and welfare first.
    I expand on this: http://www.allthatsleft.co.uk/2012/01/is-it-time-to-put-social-policy-before-economic-policy/

  11. Nick Leaton

    What cuts?

    Annual current public spending is now £52 billion a year more than in the last Labour year, an increase of 8.7% in cash terms.(Red Book 2011 p 93, Autumn Statement 2011 p 77)

  12. Michael

    Balls throws down the gauntlet: “We are going to have keep all these cuts” – http://t.co/WeVhovtr

  13. Pulp Ark

    Balls throws down the gauntlet: “We are going to have… http://t.co/cp0jzZNg #Sustainable_Economy #economy #Ed_Balls #muslim #tcot #sioa

  14. Ed's Talking Balls

    ‘a move that will wrong-foot the Right’

    Wishful thinking, Shamik. This simply enables Osborne to say that Balls is a flip-flopper who has only belatedly joined the reality-based community.

    In any case, I believe the dye is cast where Ed Balls is concerned. The association with Gordon Brown is too strong. He’s deeply unpopular and not trusted as economically competent. I think this perception will remain.

  15. Ebony Dawn Marsh

    Balls throws down the gauntlet: “We are going to have keep all these cuts” – http://t.co/WeVhovtr

  16. Anonymous

    He made a complete arse of himself on TV this morning. Not sure how you define that as “seizing the initiative”.

  17. Anonymous

    yes but the world has changed since labour last year in power the Euro has crashed today all labour did was accept that things went wrong within labour and agreeing with the cuts and accepting that we will stuff the poorest.

    Nobody has said a world about directors wages going up by 49% not a single bloody word.

    But god help you if you lost your legs in a war

  18. Luke Bozier

    Wrong approach. RT @leftfootfwd .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/Tof4Zl9n

  19. Robert McRuer

    .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  20. Juli C

    .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  21. Political Planet

    Balls throws down the gauntlet: “We are going to have to keep all these cuts”: Ed Balls seized the initiative on… http://t.co/srPBAuUv

  22. Patron Press - #P2

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  23. Robert CP

    .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  24. Shamik Das

    .@EdBallsMP throws down the gauntlet: “We are going to have to keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  25. Matthew Houlihan

    .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  26. leftlinks

    Left Foot Forward – Balls throws down the gauntlet: “We are going to have to keep all these… http://t.co/pmlBgM4J

  27. Alex Marsh

    Should read "totally capitulates", surely? > MT @leftfootfwd: .@EdBallsMP throws down the gauntlet: http://t.co/f1QDTv1Y #Fab12

  28. syrieyes

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  29. Miles Weaver

    “RT @leftfootfwd .@EdBallsMP throws down the gauntlet: “We are going to have keep all these cuts”: http://t.co/s2iLIHUQ” Fuck Labour.

  30. #OWS - 99% Amplified

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  31. #OWS International

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  32. Fr. Anon

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  33. Ben Dover

    #UK : Balls throws down the gauntlet: “We are going to have to keep all these cuts” http://t.co/wuB9OVwd

  34. Nick Leaton

    There are no cuts. Spending us up.

    What does that mean?

    Some areas have been cut, other areas must have been booming, or spending wouldn’t have risen.

    52 bn a year at 65 quid a week doesn’t explain it.

  35. Lanie Ingram

    .@EdBallsMP throws down the gauntlet: “We are going to have to keep all these cuts”: http://t.co/ufPmxtNQ reports @ShamikDas #Fab12

  36. Nick Leaton

    You haven’t mentioned the 10% tax rise.

    So if their wages go up 49%, the government is going to get 50% of that to pay for things.

    Ah yes – you don’t do thank yous do you.

  37. Anonymous

    The public sector who are mainly low paid and not labours middle class could end up getting no wages rises for ten years if you believe in another three years labour will get into power, the sick and the disabled will all have got better and moved off benefits, if not labour will move them and this from a party which builds no more social housing does not mind flogging off the NHs and has the nerve to tell us it’s socialist.

  38. Henry GH Evans

    Is it just me, or is it hard to fathom exactly how Balls "seized the initiative on the economy?" – http://t.co/Uu71io8q

  39. Newsbot9

    Gauntlet? That’s called CAPITULATION

    *spits*

    It’s called accepting MURDER. When are you going to do your jail time for the poor and disabled you’re killing?

  40. Newsbot9

    The CUTS. The MASSIVE CUTS. The savage cuts which are devastating the social infrastructure of the country. The ones you refuse to believe in because you’re a denialist, a fantasist and a psychopath.

    Simply because spending is up because of the necessary far greater emergency funding which the cuts entail, and the pork-barrel projects you cheer on doesn’t mean that there are not literally murderous cuts going on.

    Trying to escape the blood on your hands doesn’t mean they’re not dripping with it.

  41. Newsbot9

    Of course, there can’t be cuts in one area and increases in others. Unpossible!

    Sigh, explaining reality is a waste of time sometimes.

  42. Anonymous

    Now Miliband has come on TV and shown us he can shout at Andrew Marr who had to smile at Miliband playing politics by saying “No No let me tell you” the fact who is he talking to for god sake, it’s not the people at the bottom the people who have been told no pay rises maybe for five or six years, these are not well paid public servants these are the people who we speak to at the job centre the Tax office the DWP.

    The managers will have contracts which stipulate how much bonus or pay increases they get labour does nothing about these people.

    The real sick or disabled we do have them I know Miliband met one we are told while out knocking on doors, can you really see the leader of labour knocking on doors no nor can I, but OK he knocked on a door a chap comes to the door and Miliband knew he could do something, of course the chap could have six months left to live with cancer or HIV but our dearly beloved leader knew he could do something, I suspect he would be saying the same about labour four MP’s who went to jail and who will now all get golden plated pensions.

    Who are the Labour party, who are they in power for, and who do they expect will be voting for them, because for one it will not be me and I spent 46 wasted years in the party.

    New labour to labour back to New labour

  43. Leveller

    “Leftfoot forward” and you print an article like this? hailing a complete sell out to the tories?? This is a joke. Is there anything in this country that is genuinly of the “Left” anymore? Utterly disgraceful, go write for the Spectator.

  44. What Labour needs to say about debt | Left Foot Forward

    […] also: • Balls throws down the gauntlet: “We are going to have to keep all these cuts” – Shamik Das, January 14th […]

  45. Awake!

    ‘In a move that will wrong-foot the Right and enrage sections of the Left’
    I must not understand what wrong-foot means…

  46. Memo to Osborne: Jobs and growth will cut the deficit. Please listen | Left Foot Forward

    […] also: • Balls throws down the gauntlet: “We are going to have to keep all these cuts” – Shamik Das, January 14th […]

  47. No turning back: Balls stays firm on cuts, pay, and the deficit | Left Foot Forward

    […] Balls throws down the gauntlet: “We are going to have to keep all these cuts” – Shamik Das, January 14th […]

  48. Ed's Talking Balls

    Calm down dear.

  49. Look Left – The human cost of the government’s inhumane welfare reforms | Left Foot Forward

    […] got more on Ed Balls’s repositioning of Labour’s policy on cuts and the deficit, here and here, and check out our deficit calculator, where you can enter your prediction for growth in 2012, and […]

  50. Anonymous

    For someone whose name is Balls, this is a pretty pathetic capitulation. Here’s a bit of advice to the whole neoliberal Labour lot which Ed Balls seems so eager to get into: tax bankers bonuses by 75%, scrap the House of Lords completely, cut Ministerial and MPs’ salaries in half (not to mention the royal family’s), and scrap Trident, and bring back not just the 50% top tax rate, but also the 60% one. Better yet, do what Hollande is doing. Tax 75% of the income of millionaires.

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