Tag: Ed Balls

Ed Miliband’s speech on the deficit and economy: George Osborne’s cuts are extreme and ideological

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Ed Miliband will today (Thursday) deliver a major speech on how the next Labour government will build a strong economic foundation by dealing with the deficit and balancing the books – but never going down the Tory road to take Britain back to 1930s spending levels which existed before the NHS.

In his speech, Mr Miliband will attack the Tories for pursuing an extreme project, motivated by ideology rather than necessity, which will put vital public services at risk:

“My speech today is about the deficit. Its place in our priorities, how a Labour government would deal with it, and how we would do so consistent with our values.

“The Tory plan is to return spending on public services to a share last seen in the 1930s: a time before there was a National Health Service and when young people left school at 14. There is only one 35 per cent strategy in British politics today: the Tory plan for cutting back the state and spending on services to little more than a third of national income.

“And they have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all – but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences.

“They are doing it, not because they have to do it, but because they want to. That is not our programme, that will never be our programme, and I do not believe it is the programme the British people want.

“This is a recipe for public services that will disintegrate and for a permanent cost of living crisis because we won’t be investing in the skills and education people need for good quality jobs, and indeed for sufficient tax revenues. And we know what the result will be: the Tories might be able to deliver the cuts they have promised, but they won’t be able to cut the deficit as they promised.”

Mr Miliband will set out a tough and balanced One Nation Labour approach to dealing with the deficit based on five principles:

1.      Setting a credible and sensible goal to balance the books and get the national debt falling as soon as possible within the next Parliament.

Not having a fiscal plan which sets a target of a 35 percent state, putting public services and productive investment at risk.

2.      Recognising that Britain will only be able to deal with the deficit by tackling the cost-of-living crisis.

Not allowing welfare spending to rise and tax revenues to fall because of low wages, insecure jobs, housing shortages and social failure.

3.      Making common sense spending reductions with departmental spending falling and using money better by devolving power, breaking down old bureaucracies, and rebuilding public services around early intervention.

Not cutting spending to 35 percent of national income that will lead to disintegrating public services and a permanent cost-of-living crisis because we won’t be investing in the skills needed for good jobs and healthy revenues.

4.      Protect everyday working people by ensuring those with the broadest shoulders bear the greatest burden.

Not cutting taxes for the wealthiest while asking everyday working people to pay more.

5.      Promising new policies only when they are fully funded, like Labour’s £2.5 billion time to Care Fund for the NHS, so that they do not require any additional borrowing

Not making commitments that depend on borrowing or promising unfunded tax cuts skewed to the wealthiest that will eventually be paid for by bigger cuts to public services or increases in VAT.

Ed Miliband will say:

“Labour will make fairer choices to help protect vital services and balance the books with measures including a Mansion Tax on properties worth more than £2 million, cracking down on tax avoidance, and reversing the millionaires’ tax cut to restore the 50p rate on incomes over £150,000 a year.

“In these hard times, we are determined to do everything we can to protect everyday taxpayers from bearing an increased burden and to do all we can to protect public services. And those who have done best, under this government and indeed under the last, must pay their fair share. 

We want successful entrepreneurs and those who do well to be rewarded. But we must pull together as a society not drift apart and we cannot do that if deficit reduction is simply on the backs of ordinary people.”

He will say that Labour will only make new commitments that are credible, costed and funded without additional borrowing – unlike the Conservatives who are promising unfunded tax cuts that would put public services at risk.

“This is an essential test of credibility. There is huge uncertainty about the deficit because of economic circumstances and on the basis of recent experience. That makes it all the more important that parties do not spray around unfunded commitments they cannot keep.

“It is why we will only make commitments in our manifesto that are properly funded – not commitments that depend on borrowing. That’s why we’ve explained how we will pay for every policy that we’ve put forward: costed, credible and funded.

“In contrast, the Conservative Party has pledged to make tax cuts when they have absolutely no idea how they will fund them: tax cuts that will cost over £7 billion a year at the end of the Parliament and even more, billions more, if they happen earlier in the Parliament.

“The Tories cannot say how they would fund their tax cuts skewed to help the wealthiest. This is not responsible and it is not right: the British people should be in no doubt what the Tory promise means: they will pay the price for tax cuts in higher VAT or even bigger cuts to public services. The Tories’ priority is unfunded tax cuts, Labour’s priority is to save our National Health Service.”

Labour’s costed and evidenced key policy pledges to date.

To underline Labour’s determination to deal with the deficit fairly and balance the books as soon as possible in the next parliament, Ed Balls has written to members of the Shadow Cabinet. He says:

“It’s now clear the Tories have abandoned any pretence of being in the centre-ground with an increasingly extreme and unbalanced plan. They have made an ideological choice to pencil in deeper spending cuts for the next Parliament because they are refusing to ask those with the broadest shoulders to make a greater contribution and, crucially, are ignoring the need for a plan to deliver the rising living standards and more good jobs that are vital to getting the deficit down.10001887913_f8b7888cbe_o

In contrast, Labour will take a tough but balanced approach to getting the deficit down. Our economic plan will deliver the rising living standards, more good jobs and stronger and more balanced growth which are a vital part of any fair and balanced plan to get the deficit down.

We will make different and fairer choices from the Tories, including reversing this government’s £3 billion a year tax cut for people earning over £150,000 and taking action to close tax loopholes and introducing a mansion tax on properties worth over £2 million in order to help save and transform our National Health Service.

And unlike George Osborne, we will not make any spending or tax commitments without saying where the money is coming from.”

Ed Balls intends to raise state spending rather than complying with Mr Osborne’s austerity plans of further drastic cuts, and he said his party will ring-fence more Whitehall budgets. A recent report by the Organisation for Economic Co-operation and Development (OECD) has found what most of us already knew: that income inequality actually stifles economic growth in some of the world’s wealthiest countries, whilst the redistribution of wealth via taxes and benefits encourages growth. Osborne’s economic policy is damaging the economy. Miliband has consistently put equality high on the list of Labour’s priorities, and quite rightly so.

Labour have proposed progressive taxation, they have pledged to save the NHS, safeguard benefits and repeal the Bedroom Tax, which affects the poorest people: those on low wages and those on benefits, costing them money that was calculated to meet only the basic living costs of food and fuel, originally. Benefit was calculated on the assumption that full housing costs and rates/council tax were also paid by Local Authorities. That is no longer the case. The Tory welfare cuts and rising cost of living have meant a return of absolute poverty, not seen in this country since before the establishment of the welfare state.

At the moment, health, foreign aid and schools are protected from spending cuts, but in his letter, Mr Balls told members of the shadow cabinet that “our manifesto will spell out other limited areas which will have spending protected.”

The Tories’ stated plan to continue cutting even once the deficit has been eliminated has given Labour the opening needed to point out the damaging ideological drive to shrink the state, and to dismiss austerity once and for all. Given that the Conservatives have rigidly set the terms of economic debate and have established a dominant frame of reference since taking office,  I think the response to the Autumn statement from Labour is deft, careful and the proposals are costed, fair and viable.

Reducing the deficit can only happen once we have genuine (and widely shared) economic growth.

The alternative is the Conservative’s extreme, ideological never-ending austerity – all pain with no gain whatsosever for most people. For better or worse, deficit reduction is the political reality against which Labour’s economic credibility is now being defined. Cut the deficit Labour must; but they have taken reassuring steps to do it in a genuinely more comfortable, fair and intelligent way than the Tories.

The full text and more details of Ed Miliband’s speech about the deficit can be found here.

Related 

One of the most destructive Tory ideological myths has been officially debunked

Osborne’s Autumn statement reflects the Tory ambition to reduce State provision to rubble

Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor

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Many thanks to Robert Livingstone@LivingstonePics

David Cameron promised a further £7.2 BILLION tax cuts to the rich at the expense of the poor

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I wrote an article last year – Follow the Money: Tory Ideology is all about handouts to the wealthy that are funded by the poor – which outlines Coalition policies that have widened inequalities and increased poverty by handing out public money to the wealthy that has been taken from the poorest. I pointed out that this Government have raided our tax-funded welfare provision and used it to provide handouts to the very wealthy – £107,000 EACH PER YEAR in the form of a tax break for millionaires, amongst other things.

And what does our imperturbable chancellor promise if this disgrace of a government is re-elected? True to Tory form, more of the same: austerity for the poor and public services cuts, and tax breaks for the wealthiest.

But further cuts to lifeline benefits and public services is surely untenable. Absolute poverty has risen dramatically, this past four years, heralding the return of Victorian illnesses that are associated with malnutrition. People have died as a consequence of the welfare “reforms”. Supporting the wealthy has already cost the poorest so very much, yet this callous, indifferent, morally nihilistic  government are casually discussing taking even more from those with the very least.

This isn’t anything to do with economic necessity: it’s all about Tory ideology. Under the guise of austerity, the Tory-led Coalition have stripped our welfare and public services down to the bare bones. Any further cuts will destroy what remains of our post-war settlement.

Despite facing a global recession, the Labour Government invested in our public services, and borrowed substantially less in thirteen years than the Coalition have in just three years. UK citizens were sheltered very well from the worst of the global bank-induced crash.

Gordon Brown got it right in his championing of the G20 fiscal stimulus, agreed at the London summit of early April 2010, which was a continuation of his policies that had served to steer the UK economy out of the consequences of a global recession, and to protect citizens from the consequences of cuts to services and welfare.

Osborne’s policy of imposing austerity and budget cuts on an economy that was actually recovering was a catastrophic error. The austerity propelled the economy backwards and into depression; and, far from using public spending as a countervailing force against the cutbacks in private sector investment, the Coalition’s budget cuts served to aggravate the crisis. Many people are suffering terribly as a consequence, reduced to a struggle for survival.

And in these socio-economic circumstances, the Tories have pledged a further £7.2 BILLION tax cuts to the rich. The funding for the tax cuts will come from further catastrophic “savings” made at the expense of the poorest yet again – £25 billion more to be sliced from welfare, Local Authorities,  education, police and other vital services.

Three things are immediately clear. Firstly, without the ramping up of VAT in 2010, to 20%, Osborne would be in even more dire financial straits than he is.

Secondly, income tax has, despite allegedly rising employment, failed to increase.

Thirdly, corporation tax, targeted for cuts, year after year, has slumped. The tax system is increasingly veering toward very regressive – biased in favour of the wealthy – consumption taxes, which affects the poorest, most, and failing to deliver fairer taxes on income.

This is the result of government policy: increasing VAT but cutting corporation tax, and the engineered kind of “recovery” we have ended up with. The Office for Budgetary Responsibility (OBR) reminded us in October of the extent of the Coalition’s failure to reduce the deficit.

Public sector net borrowing in 2013-14 was originally expected to be £60 billion; the out-turn for borrowing was £108 billion (on a comparable basis). This amounts to a shortfall of nearly £50 billion, with borrowing approaching double the original predictions made when the government’s austerity policies were announced in 2010.

Much of this shortfall is accounted for by the current earnings crisis. UK workers are suffering the longest and most severe decline in real earnings since records began in Victorian times, according to an analysis published by the TUC. But Tories always lower wages, and hike up the cost of living. And whilst workers are struggling to make ends meet, private business owners/Tory donors are raking in millions of pounds. But this is exactly how Tories like to run society in a nutshell.

It’s their imposition of a feudalist schemata for social relationships. Cognitively, Tories are the equivalent of historical egocentric toddlers: they are stuck at this painful stage of arrested development.

“The deficit reduction programme takes precedence over any of the other measures in this agreement” – stated in the Coalition Agreement.

For a government whose raison d’etre is deficit reduction, the Coalition really isn’t very good at all. But austerity reflects the triumph of discriminatory Tory ideology over needs-led, evidenced-based policy making.

The OBR said the forecast from 2010 was over-optimistic because it did not take into consideration the effect of lower wages as well as a higher levels of tax-free personal allowance on the upper brackets of income tax. National Insurance contributions were also £7.4 billion below forecast.

Which brings us back to the issue of further tax cuts for the wealthy, with no mention of raising wages for the poorer work-force, and of course there is the promise of more cuts to come for those relying on lifeline benefits. I don’t think that the Coalition cares that their policies don’t balance the books, as it were, or mend the economy. Nor do they care what the consequences are for the wider public.

TUC General Secretary Frances O’Grady said:

The government’s failure to get wages growing again has not only left families far worse off than in 2010, it’s put the public finances in a mess too. The economy has become very good at creating low-paid jobs, but not the better paid work that brings in income tax. The Chancellor’s sums just don’t add up – he can’t make the tax cuts for the better off that he is promising and meet his deficit reduction target without making cuts to public services.

His cuts would be so deep that no government could deliver them without doing damage to both the economy and the fabric of our society. We can’t cut our way out of this problem any more than we can dig ourselves out of a hole. More austerity would only keep us stuck in a downward spiral. The Chancellor should use next week’s Autumn Statement to invest in growth and to put a wages recovery at the top of the agenda.

Shadow Chancellor Ed Balls said:

Nobody will be fooled by pie in the sky promises of tax cuts when David Cameron cannot tell us where the money is coming from. Even the Tories admit this is an unfunded commitment of over £7 billion, so how will they pay for it? Will they raise VAT on families and pensioners again?

Cameron has also announced the basic rate before we start paying tax would rise from £10,500 to £12,500. While a worker on £12,500 would save £500 a year, someone earning £50,000 would keep £1,900 extra.

Those earning up to £123,000 would be £484 richer. Someone on £12,500 would save £500 a year, while someone on up to £50,000 would keep £1,900 extra. And the £500 tax cut for basic rate earners will be almost wiped out by George Osborne’s raid on in-work benefits.

Paul Johnson of the Institute for Fiscal Studies think tank says it was:

very difficult to see how the £7billion tax giveaway could be paid for.

We’re looking at promises of £7billion of tax giveaways in the context of an overall plan to get the deficit down but even without tax giveaways that requires pretty extraordinary levels of spending cuts such that most government departments will see their spending cut by a third by 2020.

How are you going to afford this? Even more dramatic spending cuts?

At the Tory Conference, Cameron promised to expand the National Citizen Service youth project for every teenager in the country, have the lowest rate of corporation tax of any major economy.

There was also a pledge to abolish youth unemployment by the end of the decade. But the Tory faithful gave the loudest applause for his pledge to scrap the Human Rights Act.

This is a truly terrifying pledge, because human rights were originally formulated as an international response to the atrocities of the 2nd World war, and to ensure that citizens are protected from abuses of their government.

A Labour Party analysis found the proposed tax break would hand David Cameron and other Cabinet ministers an extra £132 a year. But a family with two children with one earner on £25,000 a year would lose £495 by 2017-17 due to the benefits freeze announced by Mr Osborne.

The Tory plan is based solely on spending cuts, mainly directed at the working age poor. And the Conservative plan to raise the higher rate threshold to £50,000 means that  working-age poor people are to fund a tax cut that is four times greater for higher rate tax payers than for basic rate taxpayers.

Ed Balls said in response:

David Cameron’s speech showed no recognition that working people are £1,600 a year worse off under the Tories nor that the NHS is going backwards on their watch. The only concrete pledge we’ve had from the Tories this week is a promise to cut tax credits by hundreds of pounds for millions of hard working people while keeping a £3 billion tax cut for the richest one per cent.

TUC general Secretary Frances O’Grady added:

No amount of dressing up can hide the fact that the policies in this speech pass by those who need the most help to reward richer voters.

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

What was missing in the PM’s speech was any recognition that independent projections show that child poverty rates are set to soar. We know that raising the personal tax allowance is an ineffective way of supporting low paid families.Independent analysis shows that just 15% of the £12 billion required to raise the PTA to £12,500 would go to working families in the lowest-income half of the population.

Many simply don’t earn enough to benefit from this policy, and those that do just see their benefits and tax credits withdrawn as their incomes rise.

The Institute for Fiscal Studies showed in their Green Budget publication this year that just 15% of the gains from increasing the personal allowance would benefit the poorest half of Britons, concluding:

There are better ways to help the low paid via the tax and benefit system.

Ex-Treasury official James Meadway,  now a senior economist at the New Economics Foundation, said Cameron’s changes were:

irresponsible, expensive gimmicks that scarcely affect the poorest workers.

They imply swingeing public sector cuts and mean handing over more cash to the already rich.

Ed Miliband will respond tomorrow (Monday), declaring that the Tories’ failure to tackle the cost-of-living crisis has helped cost the Exchequer £116.5 billion – leading to higher borrowing and broken promises on the deficit. The price tag, equivalent to almost £4,000 for every taxpayer, is based on new research from the House of Commons Library being published by the Labour Party.

This shows that low pay and stagnant salaries, combined with soaring housing costs and the failure to tackle root causes of increased welfare bills, means that over the course of this Parliament:

  • Income tax receipts have fallen short of forecasts by more than £66 billion.
  • National Insurance Contributions are £25.5 billion lower than expected.
  • Spending on social security is £25 billion higher than planned [despite brutal cuts to lifeline benefits]

Mr Miliband is expected to say the test for George Osborne in this week’s Autumn Statement will be to set out a plan to build a recovery for working people – one which recognises the link between the living standards and Britain’s ability get the deficit down.

He is expected to say:

For a very long time, our country has worked well for a few people, but not for everyday people. “We live in a country where opportunities are too skewed to those at the top, where too many people work hard for little reward, where too many young people can’t find a job or apprenticeship worthy of their talents, and where families can’t afford to buy a home of their own.

For all the Government’s boasts about a belated economic recovery, there are millions of families still caught in the most prolonged cost-of-living crisis for a century.  For them this is a joy-less and pay-less recovery.

My priority as Prime Minister will be tackling that cost-of-living crisis so that hard work is properly rewarded again, so that our children can dream of a better future, so that our public services including the NHS are safe.

Building a recovery that works for everyday people is the real test of the Autumn Statement.

But that isn’t a different priority to tackling the deficit. Building a recovery that works for most people is an essential part of balancing the books.

The Government’s failure to build a recovery that works for every-day people and tackle the cost-of-living crisis isn’t just bad for every person affected, it also hampers our ability to pay down the deficit.

Britain’s public finances have been weakened by a Tory-led Government overseeing stagnant wages which keep tax revenues low.

Britain’s public finances have been weakened by Tory policies which focus on low paid, low skilled, insecure jobs – often part-time or temporary – because they do not raise as much revenue as the high skill, high wage opportunities we need to be creating.

And our public finances have been weakened by higher social security bills to subsidise low paid jobs and the chronic shortage of homes.   

The result has been David Cameron and George Osborne missing every single target they set themselves on clearing the deficit and balancing the books by the end of this parliament.

Their broken promises, their abject failure, are not an accident. They are the direct result of an outdated ideology which says all a Government has to do is look after a privileged few at the top and everyone else will follow.

That is why this Government has done a great job of squeezing the middle, but a bad job of squeezing the deficit.

The test this week for David Cameron and George Osborne is whether they recognise that Britain will only succeed and prosper for the long term by tackling the cost-of-living crisis and building a recovery which works for the many, not just for a few.

Or whether they will just offer more of the same old ideas that have failed them, failed everyday working people, and failed Britain over the past four years.

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Thanks to Robert Livingstone for the brilliant memes

Labour calls for £1 billion of banking scandal fines to be invested in the NHS

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Labour is today calling for funds raised from banks found guilty of manipulating the foreign exchange market to be invested in the National Health Service.

In a speech in Ipswich today, Ed Balls will say that in next month’s Autumn Statement the Chancellor should allocate £1 billion from the fines for an immediate boost to health and care.

Some of the remaining funds from the fines should go to boosting the work of the Serious Fraud Office so that it has the resources it needs to pursue individuals involved in this scandal and for future investigations.

Labour’s call follows the plans set out by Ed Miliband to raise an extra £2.5 billion a year – on top of Conservative spending plans – for an NHS Time to Care Fund.

As part of our plan to save and transform the NHS, this would deliver 20,000 more nurses, 3,000 more midwives, 8,000 more GPs and 5,000 extra home care workers by the end of the next Parliament.

In a speech to the Labour Party’s East of England regional conference today ahead of the Autumn Statement, Ed Balls will say:

“This latest banking scandal shows why we still need big reform and cultural change in our banks. But the fines levied on banks for foreign exchange manipulation should now be used for a wider good.

“And I believe an immediate boost to our National Health Service, which is going backwards under the Tories, must be a priority.

“Because under David Cameron it’s getting harder to see a GP, A&E is in crisis and waiting lists are going up again. £3 billion has been wasted on a top-down re-organisation while nurses and frontline staff have been lost. And cancer treatment targets have now been missed for three quarters in a row.

“So in next month’s Autumn Statement George Osborne should use £1 billion of the fines from the banks for an immediate boost to our health service.

“The Chancellor should act, but we all know only a Labour government can rescue our NHS from the Tories and transform it for the future.

“After the election, Labour will act quickly to raise an extra £2.5 billion a year, on top of Tory spending plans, for our NHS Time to Care Fund.

“This will allow us to deliver 20,000 more nurses and 8,000 more GPs. We will guarantee that people will not have to wait more than a week for a cancer test or 48 hours for a GP appointment. And we will repeal David Cameron’s NHS changes that put private profit before patient care.

“Over the last four years David Cameron’s record shows you can never trust the Tories with the NHS. Labour rescued the NHS after years of Tory neglect before and we’ll do it again.”

He will also say:

“Ministers complacently claim the economy is fixed, but most people are not feeling the recovery.

“This Tory plan isn’t working for working people. The latest figures show wages falling in the last year and working people are over £1600 a year worse off under the Tories. Under this government house building is it at its lowest level since the 1920s, business investment is lagging behind our competitors and exports are way off target.

“So Labour’s economic plan will deliver a recovery for the many, not just a few at the top. Our plan will tackle the cost-of-living crisis, earn our way to higher living standards for all and save our NHS.

“We will raise the minimum wage, boost apprenticeships, get 200,000 new homes built a year and expand free childcare for working parents. And we will balance the books in the next Parliament, but do so in a fairer way – starting by reversing David Cameron’s tax cut for millionaires.”

The Financial Conduct Authority has levied £1.1 billion in fines from five banks as a result of their failings in their foreign exchange trading operations.

At Labour’s Annual Conference in September Ed Miliband set out how the next Labour government will raise revenues for a £2.5 billion a year NHS Time to Care Fund by introducing a tax on the highest-value properties over £2 million, closing tax loopholes and a new levy on tobacco companies.