Ed Balls – 2013 Speech at Thomson Reuters

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, to Thomson Reuters on 3rd June 2013.

 

INTRODUCTION

Three years into this coalition government, and three weeks before the Chancellor completes his much-trailed Spending Review for 2015/16, it makes sense now to set out Labour’s approach.

In my speech today, I want to make three central arguments.

First, that this Spending Review is a sign not of strength but of weakness. It is happening because the Chancellor’s economic policies have failed catastrophically – on living standards, economic growth and on deficit reduction too. It is this economic failure that is the background to this month’s Spending Review.

Second, the Prime Minister and the Chancellor are making a terrible mistake in ploughing on with their failing plan: increasing the price the British people will pay now and in the future for this failure. Action for growth this year, next year and the years after should instead be the purpose of any spending review this summer.

And third, the next Labour government must start planning now for what will be a very difficult inheritance. We can now expect to inherit an economy with families under real financial pressure, businesses that have lost vital opportunities to invest, and public finances in poor shape, despite deep cuts to vital public services. This bleak inheritance is now more likely because of the missed opportunity of this Spending Review.

My message to David Cameron, George Osborne and the Tory-led coalition is this:

Our country should not be forced to put up with two more years of your failing plan.

Your experiment with austerity economics has failed on living standards, jobs and growth and on deficit reduction too – and the British people are paying the price for this failure.

Your doctrine of so-called ‘expansionary fiscal contraction’ – that the faster you cut public spending, the greater the boost to private investment and growth – has been exposed as intellectually bankrupt. Even the IMF now says your plans are ‘a drag on growth’.

And your fixation on unbalanced, old-style ‘trickle-down economics’ – the belief that cutting taxes only for the highest earners will lead to more investment and growth, with wage rises trickling down for everyone else – has been equally discredited.

Because while the highest earners have got their tax cut, everyone else is seeing prices rising faster than wages – which are falling in real terms.

Where the Conservatives have failed, our task is to strike the right balance for the British economy:

– between living standards, growth and deficit reduction;

– about where the burden falls between the wealthy and everyone else;

– and between short-term priorities and the vital long-term investments we must make now to safeguard future generations.

But I have an equally tough message for my Labour colleagues.

The situation we will inherit will require a very different kind of Labour government to those which have gone before.

We can expect to inherit plans for further deep cuts to departmental budgets at a time when the deficit will still be very large and the national debt rising.

At the time of the 2010 Spending Review, the Office for Budget Responsibility forecast that the deficit would fall to £18bn in 2015-16.

It is now forecast to be £96bn – that’s £78bn higher, even with the further deep cuts in public spending which the Chancellor has programmed in for 2015-16.

And this means that, because this Government’s austerity economics has failed, we will have to govern in a very different way and in circumstances very different to what we have known for many years. We will inherit a substantial deficit. We will have to govern with much less money around. We will need to show an iron discipline.

Delivering our Labour goals – supporting families and communities, tackling disadvantage, spreading educational opportunity, safeguarding our NHS, investing for the future – will be more difficult than at any time in our living memory, certainly since the post-war Labour government of 1945. But it can be done.

And it will make our economic task – to raise living standards, increase growth and wealth creation by building a reformed One Nation economy where we use, and invest in, the talents and industry of all and not just some – even more vital.

Today is the right time to start the discussion about how we should prepare for the difficult decisions we will face in 2015 – our different priorities for Britain, the plans we must make, the strength of our resolve and the trust we must win.

A FAILED ECONOMIC PLAN 

First, this summer’s Spending Review is happening now because the Chancellor’s economic plan has failed.

Following the global financial crisis, any Government would have been cutting spending and raising taxes in this Parliament. Family budgets would be under pressure, and protecting jobs would have had to come before pay rises in the public sector.

The challenge was to strike the right balance between economic growth and deficit reduction, and to do so in a fair way so that middle and lower income families did not bear the whole burden and those on higher incomes pulled their weight.

But instead the Conservative-led coalition gambled on getting the pain over quickly – early tax rises, including the VAT rise they ruled out pre-election, alongside faster and deeper spending cuts – on a political timetable to create room for pre-election giveaways.

A further round of deep spending cuts after 2015 was certainly not part of the plan.

At the last Spending Review, George Osborne attacked those who urged a more balanced plan and a greater focus on supporting economic growth, saying this alternative course:

“envisaged the Chancellor of the Exchequer standing here in 2014 and presenting a spending review that still had years of cutting public spending ahead of it.”

Which is exactly what he is now preparing to do.

In Budget 2011, he said:

“We have had to undertake difficult measures. But we have already asked the British people for what is needed, and.. we do not need to ask for more.”

Now the Chancellor says he has no choice but to come back for more – more cuts in 2015/16.

And the reason is simple – the 2010 Budget and Spending Review, which were supposed to make things better, have in fact made things much worse – choking off the recovery, crushing living standards and flatlining the economy.

At a time when confidence was fragile, living standards falling, interest rates already at record lows, banks weak and inward-looking and when our main trading partner was in crisis…

… trying, at that very time, to have the fastest fiscal tightening in our post-war history – too far, too fast – was a reckless gamble.

And George Osborne’s austerity plan has not worked.

A fortnight ago the International Monetary Fund, which once backed the Chancellor’s plan, called for a change of course – proposing “near-term support for the economy” – an immediate £10 billion boost to infrastructure investment to support growth.

They changed their mind because they concluded that the impact of tax rises and spending cuts on economic growth – the fabled ‘fiscal multipliers’ – has turned out to be a much bigger drag on growth than they, the Government or the OBR originally thought.

At the time of the 2010 Spending Review, the Government forecast that it would have grown by a healthy 6 per cent by now.

Since 2010, we have seen growth of just 1.1 per cent in Britain – the slowest UK economic recovery for 100 years – compared to 2.9 per cent in Germany and 4.9 per cent in America.

The Government tries to blame global forces – Euro zone weakness, and the impact of higher oil and food prices worldwide. But higher world prices cannot explain why over the last three years the UK has had a higher inflation rate than every other G7 country. Or why we have had the slowest growth of any G20 country other than Italy and Japan and actually lost export market share.

As the Bank of England has pointed out, higher VAT, higher tuition fees and the sharp fall in the value of sterling since 2010 have driven up inflation and reduced the living standards of British families.

It was the decision to try to accelerate fiscal tightening in 2010 that has proved, in the words of Financial Times commentator Martin Wolf, to be ‘a spectacular own goal.’

An own goal because falling living standards, low growth and higher inflation – at a very high personal cost to communities and people – has also been toxic for the public finances and thrown deficit reduction wildly off course.

The Government is now planning to borrow £245bn more than it planned up to 2015.

And this has not happened because they have failed to cut departmental spending.

This rise in borrowing has been almost entirely caused by a drastic fall in tax receipts compared to the Government’s 2010 plans, even after all the tax rises introduced in their first Budget.

The impact of the failure to get growth could not be clearer.

Tax receipts over this parliament are now set to be £274 billion lower than forecast in 2010. And while a small portion of this fall reflects discretionary policy decisions, such as cuts in corporation tax rates, the vast bulk – 95% – are non-discretionary forecast revisions.

Which in the real world reflects squeezed families and companies that are earning less, making lower profits and paying less tax as a result of flatlining growth.

The Government likes to boast that it has reduced the deficit by a third.

But that reduction happened before their economic policies choked off the recovery.

Since then, the collapse in tax revenues means that deficit reduction in this Parliament has now stalled.

As the head of the OBR said in March:

“We expect the underlying deficit to be stable at around £120 billion last year, this year and next year…”

Which means that both of the Chancellor’s fiscal rules, as set in 2010, have been broken.

In 2010 he said his first fiscal rule required the structural deficit, adjusted for the economic cycle, and excluding investment spending, to be in balance by 2015-16.

The structural deficit is now forecast to be not a surplus of 0.9 per cent of GDP but a deficit of 1.2 per cent of GDP in 2015-16 – breaking that objective by a wide margin, even with the extra spending cuts that have now been programmed in for that year.

And the second fiscal rule – to get the national debt falling by 2015 – has also been broken.

The national debt is now set to be not 67.2 per cent in 2015-16 but 85.1 per cent of GDP, and it is now expected to rise until 2016-17 when it is forecast to peak at 85.6 per cent – a full £309 billion more debt than planned in 2010.

This is the real background to this summer’s Spending Review – living standards falling, growth flatlining, a deficit reduction plan wildly off track and a coalition forced to extend cuts to public services into the next parliament.

THE ECONOMIC IMPERATIVE 

Of course, what matters now is not the bad choices that the Government has made, but what their policies promise for the future.

Which is why the most worrying finding in the IMF report is that they believe the UK economy today is still ‘a long way from a strong and sustainable recovery’ and that ‘the risks are on the downside’.

We know that the coalition is determined to stick with George Osborne’s austerity economics. We now know what the consequences are likely to be – squeezed living standards, sluggish growth and, despite all the pain, the deficit still high.

But politics aside, there is no operational need for the Chancellor to set budgets now for 2015-16.

It makes no economic sense for this Spending Review to ignore what is happening now in our economy, and focus only on departmental spending in 2015-16 – the first ‘one year only’ spending review since the mid-1990s.

If he followed the pattern of 2010, he could wait until the autumn of 2014 before he sets them.

Which takes me to my second central argument: this summer’s review of spending and the economy should be about action now to boost living standards, growth and long-term investment – this year and for future years.

We need to shift now to a balanced plan – focusing on rising living standards and growth, maintaining a commitment to reduce deficits and spending, and making sure the burden is fairly shared.

Given the Government’s failure so far, there are going to be big and painful choices on spending in 2015-16 and beyond.

But those choices in the next Parliament will be hugely shaped by what happens in this.

After nearly three years of flatlining, the Chancellor says any growth is better than no growth at all.

Of course that’s true. But slow growth is nowhere near good enough.

It won’t make up the ground we have lost over the last few years as other countries have raced ahead.

Nor will it get long-term unemployment down, boost living standards, recoup lost business investment or generate the tax revenues we need to get the deficit down.

Our analysis shows that to get the economy back to where it was forecast to be in 2015-16, the government now needs growth of 5.3 per cent a year, 1.3 per cent a quarter, over the next two years.

But over that period the OBR currently expects average growth of just 1.7 per cent a year – 0.4 per cent a quarter – which means lower living standards, less tax, less investment and many billions less deficit reduction too.

I fear, too, that if the world economy were to take another turn for the worst over the next few years – a second demand shock following the global financial crisis – this time the UK will be in a very much weakened position to deal with the consequences because of the stagnation of the last three years.

The IMF said last month that the UK economy continuing to bump along the bottom “could permanently damage medium-term growth prospects” – compounding mistakes, not correcting them.

Because the longer it takes to get the recovery moving, investment flowing and long-term unemployment down, the greater the damage to the underlying strength of the economy.

If the fiscal multipliers are indeed higher, as the IMF now believes, then a balanced plan can do now to boost growth and job creation this year, next year and the year after will have a significantly larger impact on the public finances than the OBR estimates.

But unless something is done in this spending review to get our economy growing sustainably faster this year and next, and so deliver higher tax revenues and lower spending on unemployment, then the prospects for departmental spending and public services in the next parliament will be much tougher than necessary.

WHAT THE SPENDING REVIEW SHOULD DO NOW 

That is why any spending review this summer should take immediate action to get the economy growing, invest in our long-term future and reform social security.

Over the past two years, when the economy was totally stagnant, and when our economy has needed a quick and fast-acting shot in the arm, we have advocated a temporary VAT cut – alongside infrastructure spending, action on youth unemployment and targeted tax measures for business as part of our five point plan for growth.

Today, with growth prospects still very uncertain and interest rates too low to be of use, a temporary VAT cut now is still the right prescription before extra capital spending can come on stream – although any immediate tax cut which helps middle and lower income families is better than nothing.

But over the coming year if, as we all hope, some kind of recovery does take hold, then the balance of advantage will shift from temporary tax cuts to long-term capital investment.

So we support the IMF’s call, consistent with medium-term fiscal consolidation, for the Government to act to boost capital spending over the next two years – financed by a temporary rise in borrowing as Labour has also urged – to build our way to a stronger recovery.

With thousands of construction workers out of work and interest rates at record lows, there is a growing consensus that investing now in improving our infrastructure, particularly housing, would give an immediate boost to the economy, encourage more private sector investment, and give us a long-term return as we strengthen our economy for the future.

If the entire infrastructure boost recommended by the IMF was spent on housing over the next two years, we calculate that it would allow the building of around 400,000 affordable homes across the country, and support over 600,000 new jobs in construction, including 10,000 apprenticeships…

… supporting small businesses, helping people aspiring to buy their own home, reducing waiting lists, and easing upward pressure on rents and housing benefit bills.

So to the Treasury and the Chief Secretary I say this: there is no point in vague promises about more capital spending in 2017 or 2020. We need action now. To secure the recovery and get tax revenues coming in, we need that capital spending boost brought forward – and invested this year and next year.

The spending review also needs to end the current dither and delay on industrial policy and put in place long-term reforms to build a One Nation economy for the future.

On long-term infrastructure, not only has the government invested billions less than the plans they inherited, but major projects are beset by dithering and delay.

This is why we have called for the Davies Commission on aviation to report before the General Election; and why Ed Miliband and I have asked the chair of the Olympic Delivery Authority, Sir John Armitt, to examine how our country can have a process to take long term infrastructure decisions in a better way – across Parliaments and across the Parliamentary divide. Ministers should act on Armitt’s recommendations when he reports later this year.

On energy, chronic policy uncertainty and the absence of any agreed plan across government means, as Caroline Flint has highlighted, vital investments and the opportunity to create green jobs are being lost. The government should be legislating now in the Energy Bill for a decarbonisation target for 2030 in order to give a framework for those seeking to invest in renewable, nuclear, and clean gas and coal technology.

Labour, business and environmental groups are united on the urgency of acting now. But Ministers have shown an abdication of leadership by choosing to wait until 2016 before even making a decision. We will vote on Tuesday to make this happen – and, while the Conservative leadership has now set its face against action, I call on every Liberal Democrat who supports a low carbon future to join us and vote with us to make this change happen.

On banking reform, the same pattern of fudge and delay is now characterising the government’s approach where the Chancellor is rejecting the recommendations of the Parliamentary Commission he set up. We need a back-stop power to break up the big banks if we don’t see real reform and cultural change.

And, as Shadow Business Secretary Chuka Umunna has argued, a modern industrial policy also requires a proper British Investment Bank, support for vocational education and action on Sir George Cox’s recommendations on over-coming short-termism within British business.

A Spending Review this summer also needs to make a start on long-term social security reform which rewards work.

The fact is, for all the tough and divisive rhetoric, the benefits bill it is still rising, as Liam Byrne has exposed – revised up by over £20 billion since the 2010 spending review – the direct consequence of George Osborne’s austerity economics.

The Conservative approach to welfare has simply been to slash tax credits and benefits across the board – regardless of who they hit. Millions of working people, redundant nurses desperately looking for work, disabled people in homes that Ministers have decided contain a ‘spare room’ – all hit just at the time when prices are rising faster than wages and unemployment is rising.

Labour proposes serious policy action to tackle the underlying drivers of rising working-age benefits, with:

– A compulsory jobs guarantee – a paid job for every young person out of work for 12 months or more and over 25 unemployed for over two years – which they will be obliged to take or face losing benefits;

– A fair cap on household benefits – not one that costs more than it saves, and which takes account of housing costs in different parts of the country – with an independent body, like the Low Pay Commission, advising on whether the cap should be higher in high-cost housing areas like London, but potentially lower in other parts of the country;

– And housing benefit reform which tackles high rents and addresses the shortage of affordable housing.

These are issues which Ed Miliband will return to later this week.

LABOUR’S FISCAL RULES 

These are the actions a responsible spending review should take this summer.

Because action now on growth is the best way to mitigate the scale of the cuts the Government says it has to make to public services in 2015-16 and beyond.

But, as the Chancellor’s response to the IMF report shows, we cannot rely on the coalition government to see sense and act responsibly.

Which brings me to my third argument today.

Where this government’s failure on growth and jobs has led to their failure on the deficit, the next Labour government will rise to the challenge: action to strengthen the recovery and our economy for the long-term; alongside a tough deficit reduction plan.

But with the Chancellor refusing to change course, Labour must start planning now for what will be a very tough inheritance in 2015. It will require us to govern in a very different way with much less money around. We will need an iron discipline and a relentless focus on our priorities.

We cannot write our first Budget today – two years ahead when we do not know the state of the economy and public finances that we will inherit.

Instead, Labour will set out, in our general election manifesto, tough fiscal rules that the next Labour government will have to stick to – to get our country’s current budget back to balance and national debt on a downward path.

Tough rules, which will be independently monitored by the Office for Budget Responsibility.

A clear and balanced plan to support growth, alongside a clear timetable to get the deficit and the debt down – finishing the job where this Government has failed.

That is why we have said every penny of windfall from the sale of the government’s stakes in the banks must be used to repay the national debt – not for a politically timed pre-election giveaway at the expense of taxpayers and the economy.

But given how catastrophically off track the government’s plans have gone in the last three years, it would be irresponsible to set out those fiscal rules two years in advance, banking on things turning out in line with government forecasts. We will not make promises we cannot keep.

So today I am going to have to disappoint my opponents and my colleagues.

I am going to disappoint the Tories – we will not set out our plans for 2015-16 this year, however much you want us to, in order to divert political attention from your own abject economic failure.

We all know why the Chancellor is focussing now on spending cuts in 2015-16, when he does not know the economic circumstances he will face in two years time. Once again, he is trying to turn his economic failure into some kind of short-term political advantage.

No-one should be surprised. After all, this is the Chancellor who claimed for three years that he had to stick to his plan or the UK would be downgraded by the credit rating agencies; and then when he lost the UK’s AAA rating, said this meant he had no choice but to stick to his plan.

The same Chancellor who still tries to claim that a global financial and banking crisis, which began in the USA and echoed round the world, was somehow caused by or made worse by levels of public spending here in Britain – when as Shadow Chancellor, before the crash, he had pledged to match Labour’s spending plans.

And you can see the new political game – to set out deep cuts to policing, defence, local government, social care or early years funding or in support for children and the disabled – all for after the General Election – and challenge Labour to make a decision now to reject his plans two years ahead.

We will not play that game – when we do not know the economic circumstances two months ahead, let alone two years.

But that also means I am going to disappoint my Labour colleagues too.

Because for the same reason, we cannot plan now on the basis that our inheritance in 2015 will be better than currently forecast.

We cannot decide now to spend money that we do not know, and do not expect, will be there.

Even if the Government were to implement Labour’s growth plan now, given the failure of the last three years it would not avoid the need for cuts in departmental spending in the next Parliament.

It will take years to sort out George Osborne’s fiscal mess

And the longer the government carries on with these failing policies, the bigger the challenge will be for the next Labour government.

Jobs and growth are vital to getting the deficit down – but they cannot magic the whole deficit away at a stroke.

Nor can we rely on tackling tax avoidance to avoid difficult decisions.

We are determined to crack down on irresponsible tax practices. Our recent multinational tax reform document sets out the way ahead. We need international action, and Britain must take the lead and act if others will not. So we will continue to say more in this area.

But this is not some easy pot of gold. Tax avoidance has to be tackled billion by billion. Given the global complexity of this problem, the suggestion that any individual government can easily find billions more in unpaid tax simply through one Budget speech or a Finance Bill clause is not realistic.

So this is the hard reality.

The last Labour government was able to plan its 1997 manifesto on the basis of rising departmental spending in the first years after the election.

The next Labour government will have to plan on the basis of falling departmental spending.

Ed Miliband and I know that, and my shadow cabinet colleagues know that too.

So my message to the country is this:

My job is to make sure that we have a plan to grow the economy and get the deficit down.

With tough decisions and by investing in the future we can do this.

And set the country in a different direction from this government.

– not giving the banks a tax cut, but putting a tax on bankers bonuses to get young people back to work;

– not attacking those who cannot find work, but making sure the long-term jobless are given a guaranteed job which they will have to take up or face losing benefits;

– not giving tax cuts to the richest, but keeping the 50p tax rate now and supporting working families by not going ahead this year with real terms cut to tax credits;

– and not wasting money fragmenting the NHS, and other services, or on vanity schools projects, but focusing on the real needs in adult social care and primary school places – and bringing public services together to save money and improve services.

But my message to my shadow cabinet colleagues is this.

To serve the country and win its trust:

We must work together to find efficiency savings and switch resources to Labour’s priorities; but you cannot prepare now on any basis other than that you will inherit very tough spending plans from this year’s Spending review. They will be our starting point.

We know these plans for current spending in 2015-16 are likely to place a very significant burden on public services.

But because of the overall financial situation we inherit, and the need to look ruthlessly at every pound we spend, the relentless focus of my Shadow Cabinet colleagues must be on how to re-prioritise money within and between budgets for current spending, rather than coming to me with proposals for any additional spending.

Any changes to spending plans for 2015/16 must be fully funded, agreed with Ed Miliband and myself, and set out in advance in our manifesto.

As far as capital spending is concerned, it certainly does make economic sense now, as the IMF has urged, to bring forward capital spending to support growth and invest in our long-term infrastructure – creating jobs now, bringing long-term returns and taking advantage of very low interest rates.

And for the future, we need to invest in the homes, transport and infrastructure Britain needs and ensure a recovery made by the many. Of course, here too we will only set our plans for investing in Britain’s future in the light of the economic circumstances at the time, and the needs of economic growth, informed by the findings of the Armitt review into Britain’s long-term infrastructure needs.

So we will match an iron discipline on spending control with a fairer approach to deficit reduction.

Which will mean asking important questions for our manifesto:

– With primary school places in short supply in many parts of the country, and parents struggling to get their children into a local school, can it really be a priority to open more free schools in 2015 and 2016 in areas with excess secondary school places?

– When we are losing thousands of police officers and police staff, how have we ended up spending more on police commissioners than the old police authorities, with more elections currently timetabled for 2016?

– With family budgets under such pressure and living standards falling, surely it makes sense to introduce a mansion tax on properties worth over £2m to pay for a lower 10p starting rate of tax?

– And when our NHS and social care system is under such pressure, can it really remain a priority to pay the Winter Fuel Allowance – a vital support for middle and low income pensioners – to the richest 5% of pensioners, those with incomes high enough to pay the higher or top rates of tax?

We believe the winter fuel allowance provides vital support for pensioners on middle and low incomes to combat fuel poverty. That’s why we introduced it in the first place. At that time, and when the pattern of pensioner incomes was different to today, we paid pay it to all pensioners.

But in tough economic times we have to make difficult choices about priorities for public spending and what the right balance is between universal and targeted support. So at a time when the public services that pensioners and others rely on are under strain, it can no longer be a priority to continue paying the winter fuel allowance to the wealthiest pensioners.

THE ZERO-BASED SPENDING REVIEW 

These are issues which we will address now as we prepare for the zero-based spending review – a root and branch review of every pound the government spends from the bottom up – which Labour will complete in our first year in office.

We in the Labour Party value the huge contribution that public services – and public service – make to the strength of our economy and the fairness and stability of our society.

We celebrate the excellence of our teachers and school support staff, the service of our police officers and non-police staff; and the quality of care that our doctors, nurses and health workers deliver – and the efficiency that our publicly funded NHS delivers compared to private health care around the world.

But it is the duty of government to make difficult choices about priorities and to get maximum value for every pound of taxpayer money it spends.

As I have said before, the last Labour government did not spend every pound of public money well. No government, including this one, can honestly say that.

That is why Rachel Reeves, the Shadow Chief Secretary to the Treasury, has already set up a public sector efficiency advisory board, with Shadow Cabinet Office Minister Jon Trickett, to ensure we are ready for the challenges we will face in 2015, covering:

– making best use of information and communication technology;

– effective public sector procurement;

– collaboration and joined-up government, including shared services; use of consultants and temporary staff;

– and how we improve organisational incentives in the civil service.

All of this work will feed into our zero-based review.

Our preparations for this review will proceed in three phases:

First, over the next year, each Labour spending team will prepare a report on Public Service Reform and Re-Design setting out how we deliver better public services with less money, involving employees, charities, and the voluntary sector in our deliberations, as well as business and public providers. We will publish a summary of these reports next spring.

On that basis, the Labour Treasury team will work with spending teams to identify savings and switches for 2015-16 to reflect Labour’s priorities and report before our manifesto.

And these detailed departmental reports will then inform our full zero-based examination of every pound we spend – in every department, including in any department whose spending we choose to ring-fence in our manifesto, and in annually managed expenditure too – which will be completed within the first year of the Labour government.

The review will be guided by the following principles:

– how can we use public money more efficiently;

– how can we use departmental budgets to support growth and job creation;

– how can we ensure fairness and consumer choice in service delivery;

– and how can we ensure preventative spending – early years spending, support for troubled families, public and mental health services, scientific research into new cures and treatments – areas where spending now saves billions in the future – is given a high priority.

The great advantage of this zero-based review is that it can ask basic questions about all aspects of government and spending, big or small.

– Does it really make sense to have separate costly management and bureaucracy for so many separate government departments, agencies, fire services and police forces – the same number as when this Government came into office – all with separate leadership structures and separate specialist teams?

– Should industries pay a greater share of the costs of their regulators?

– Do we really need four separate government agencies delivering services to motorists?

– Should we be spending millions on a separate company to deliver High Speed 2 when we already have Network Rail, which after all is responsible for rail infrastructure?

– Has the Ministry of Justice properly made the case for a major new “Titan” prison, at a time when the prison population is falling?

– Do we need more admirals than ships and more officers in our forces than our international counterparts at a time when frontline armed forces are under pressure?

– Can we improve care and save money, as Andy Burnham has proposed, by thinking of health and social care as a single service, looking after the whole person, with a single budget and joint management?

– And on infrastructure, how should we set priorities within rail spending, and between rail investment, trunk roads, expanding airport capacity, delivering super-fast broadband across the whole country, modernising our energy infrastructure and improving our flood defences?

These are some of the questions our zero-based spending review will ask.

CONCLUSION 

In conclusion, let me say this.

These are challenging times.

How Labour responds will shape not just the politics of the general election but our economic future and the cohesion of our country over the next decade.

Because in opposition or in government, the tax and spending priorities a political party chooses to set out reveal much about its values, its resolve and steel, its understanding of how the economy works.

The British people know that George Osborne’s austerity economics has failed. They are worse off, growth has stalled, investment has fallen and the deficit is not coming down.

But the last thing they want to hear from any politician is ‘we told you so’.

What they want to know from Labour is that there is a better way.

That we will put in place the polices now and for the future that can produce the investment and growth that bring sustained increases in living standards.

And that Labour will take a tough and fair approach to deficit reduction.

This is what we mean by striking the right balance for the British economy:

– Action now to raise living standards, growth and long-term investment;

– Bringing down the deficit steadily, with an iron discipline on spending control;

– Making sure ordinary people do not carry the burden of meeting fiscal targets and ensuring those with the broadest shoulders bear their fair share.

Where this government’s failure on growth and jobs has led to their failure on living standards and on the deficit, the next Labour government will get things back on track to finish the job.

Ed Balls – 2012 Speech to TUC Conference

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor of the Exchequer, to the TUC Conference on 11th September 2012.

 

Congress, it’s a great honour to speak to you today.

Thank you Paul for that introduction and for your leadership and support over recent years: fighting the BNP, campaigning for free school meals, standing up for jobs and a fair deal for working people across our country.

And in the days after the fabulous and frankly nation-changing Paralympic Games – a week in which the whole country saw first-hand not what disabled people cannot do, but the excellence they can achieve – contrast that to the thousands of disabled working people who have proved that with the right help they can work, but have now be en thrown on the scrapheap with no guarantee of a new job to go to.

So let me commend, too, the work the GMB has led to campaign against the betrayal of Remploy workers.

But Congress, what do you expect.

From a Government and a Prime Minister who think you:

– restore consumer confidence and tackle insecurity at work by allowing employers to hire and fire at will;

– end recession and kick-start the housing market simply by making it easier to get planning permission for a conservatory;

– and tackle gender discrimination by telling a 54 year old woman Cabinet minister she is too old to do the job, and then appointing a 56 year old man instead.

What a contrast to this Trade Union Congress – proudly set to anoint your first female General Secretary in 100 years.

Let us take this opportunity to congratulate your General-Secretary-Elect, Frances O’Grady.

Congress, I can think of no better person than Frances t o teach David Cameron that you don’t have to be ‘butch’ to be a strong and tough and principled leader.

And let me start by adding my congratulations and thanks to all the deserved winners of the gold awards that we have presented this morning.

Congress, we rightly celebrate the fabulous volunteers who made the Olympics such a success.

Let us also celebrate all the trade unions lay members who – day in, day out – voluntarily give their time and energy and commitment standing up for the rights of their members.

And on a personal note, I want to say – there is no one who has fought harder to defend members in tough times and make the case for a fairer, long-term future than the GMB’s President, our friend and colleague, Mary Turner.

Paul, no-one here needs me to tell them that these are tough times.

Britain is just one of two G20 countries in recession – the longest double-dip recession since the Second World War.

Living standards face the biggest squeeze since the 1920s with prices rising faster than wages.

Unemployment is high, with long-term youth unemployment rising month by month.

And the costs of this economic failure are rising with borrowing up by a quarter so far this year.

But Congress, it does not have to be this way.

There is an alternative.

And the Conservatives cannot say they were not warned.

Remember what your General Secretary, Brendan Barber, said to this conference here in Brighton two years ago.

Brendan highlighted the reckless gamble the Coalition Government was taking with our economy.

He warned that the Cameron-Osborne plan risked choking off recovery and making a difficult situation worse.

Brendan, you called it right. You and this Congress stood out against the consensus, not just on behalf of your members but on behalf of working people across the country.

And Brendan, may I say, once a gain you showed the courage and calm judgement and commitment to jobs and social justice which have characterised your tenure as TUC General Secretary over the past decade.

And I am proud to say that with Ed Miliband and my Shadow Cabinet colleagues we have stood side by side with you and argued and campaigned and marched to make the case for the economic alternative.

Just remember what the Tories promised two years ago:

That their faster tax rises and spending cuts plan would secure the recovery and make Britain a safe haven.

That their economic plan would deal with the national debt.

And that ‘we are all in this together.’

The recovery secured?

We’re in a double-dip recession and our economy has contracted by 0.6% since the Spending Review.

Deal with our debts?

Conference, the latest figures show that so far this financial year borrowing is £9bn higher than last year.

Not borrowing falling… but borrowing rising – up by a quarter.

Rising borrowing not to invest in the jobs of the future but simply to pay for the mounting costs of economic failure.

And as for ‘we’re all in this together’, we don’t hear that line anymore.

Not from a Chancellor whose Budget decisions have so far hit middle and lower income families harder than those on the highest incomes, women hit harder than men and families with children hit hardest of all.

Not from a Chancellor who tried to raise taxes on pasties, caravans, churches, charities and pensioners, while cutting the top rate of tax only for the rich – a £3 billion tax cut giving £40,000 a year to a millionaire. Millions paying more in tax to pay for a tax cut for millionaires.

No wonder trade union members up and down the country are saying – it’s the same old Tories, hitting the many to help out a privileged few.

And as Brendan said at the weekend, we now risk a lost decade of slow g rowth and high unemployment which will do long-term damage.

Over 33,000 companies already gone bust since the General Election.

Investment plans cancelled – or diverted overseas.

New ideas and new ventures being promoted in other countries.

Our economy weaker, capacity lost, and I very much fear that the result will be an economy more prone to inflationary pressures when the recovery finally comes.

And above all, long-term youth unemployment becoming entrenched – damaging young lives, and racking up costs which we will all have to pay.

Not short-term pain for long-term gain, but short-term pain causing long-term damage and a long-term price for this government’s economic failure.

And yes, at the same time, this coalition government is also using the cover of deficit reduction to mount a full-scale assault on our public services and those who work in them:

– A reckless NHS reorganisation which will waste billions and risks putting profit before patient care;

– Market-based school reforms, with Michael Gove now talking openly of profit-making schools;

– And deep cuts to policing which are already hitting front-line services.

All of which are rightly being challenged by Unison, the NUT, NASUWT, ATL, the Police Federation and many others.

So let me say to Frances and to all the General Secretaries in this hall today.

We understand that you need action now – a change of course and a plan for jobs and growth.

The fact is you and your members cannot just sit back and wait for a Labour government .

Because despite the valiant efforts of Labour councils up and down the country, the damage is being done now.

That is why we have set out five immediate steps the government can and should take right now, steps the Labour would take now if we were in power:

– repeat the bank bonus tax again this year – and use the money to build 25,000 affordable homes and guarantee a job for 100,000 young people;

– genuinely bring forward long-term investment projects – schools, roads and transport;

– reverse the damaging VAT rise now for a temporary period;

– an immediate one year cut in VAT to 5 per cent on home improvements, repairs and maintenance to help home-owners and boost construction;

– and a one year national insurance tax break for every small firm taking on extra workers to help small businesses grow and create jobs.

Families and businesses – and every one of your members – are crying out for a change of course and some hope for the future.

So Ed Miliband and I understand and share your frustration and worry and concern.

You say that strikes must always be a last resort.

And I am sure that the last thing the vast majority of trade union members want, at a time of such uncertainty, is strikes over the coming months.

It is not what we want.

It is not what the public wants either.

But when coalition ministers warn that they will have to act and legislate if we see a return to the un-rest of the 1980s, what we are really seeing is Tories itching to provoke a row about strikes so they can blame the stalling recovery on trade union members and working people.

When it should be David Cameron and George Osborne and Nick Clegg who must now admit their plan has failed and change course.

So let us say loud and clear:

We don’t want to see a return to the 1980s.

We don’t want a return to the hatred, division and confrontation of the 1980s.

We don’t want a return to the strikes and lost working days of the 1980s – seven times more days lost than under the last Labour government.

We don’t want a return to the rising child poverty, decaying school buildings and long NHS waiting lists of the 1980s.

And above all we don’t want to return – ever again – to the mass youth unemployment of the 1980s – when young people left school or college and went straight into long-term unemployment – opportunity denied, a terrible waste of talent, which scarred our country for years to come.

Congress, we know now that it will fall to the next Labour government to clear up George Osborne’s economic mess.

And it’s going to be hard.

As Ed Miliband and I have said for many months, this Government’s failure – no growth, rising borrowing, our economy permanently weakened – means the next Labour government is now set to inherit a substantial deficit that we will have to deal with.

Which is why – however difficult this is for me, for some of my colleagues and for our wider supporters – when we don’t know what we will inherit, we cannot make any commitments now that the next Labour government will be able to reverse particular tax rises or spending cuts.

Unlike Nick Clegg, we will not make promises we cannot keep.

Credibility is based on trust and trust is based on honesty.

And we must be honest with the British people that under Labour, there would have been cuts, and that – on spending, pay and pensions – there will be disappointments and difficult decisions from which we will not flinch.

Because the question the public will ask is: who can I trust?

Who will have the discipline and the strength to take tough decisions which will be needed?

George Osborne has shown there is no credibility in piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when all the evidence is pointing the other way.

But a radical plan to kick start our recovery, put jobs first and transform our economy will only be possible if we can win the trust of the British people that our plan is credible.

We can stand up for jobs, social justice, equality and fairness – but if we re out of government , we just can’t deliver.

Last Friday I met with a Morley constituent of mine, David, a construction worker and UCATT member for over 20 years with UCATT’s Yorkshire regional officer, Mark Martin.

David told me that work is hard to come by at the moment, with the housing market still flat on its back and the cancellation of Building Schools for the Future.

But he also described how employment in the construction sector has changed over his working life.

Dave currently has an agency contract, which he knows will be restarted before he hits 12 weeks, so he gets limited employment rights. He is paid above the minimum wage, but only because his £7 an hour job includes compensation for holiday pay foregone. He has no sickness pay. No pension.

And he told me he was still better off on the books of his agency than those of his work colleagues who have been forced into bogus self-employment. And much better off than if he was unemployed.

What my constituents, like David, want to know is that we have a credible plan that will work:

– action now to kick-start the recovery ;

– and reforms so that we can change the way our economy works and make his life better for the future. And that is why, in tough fiscal times, as Ed Miliband and I said last week, we must begin to set out long-term reforms we need to unlock long-term investment, tackle insecurity and invest in skills which is the only route to long-term prosperity.

– a modern industrial policy to support long-term wealth creation, with strategic support for our manufacturing and service industries.

– stronger corporate governance to make sure decisions are taken in the long-term interests of wealth creation and jobs.

It’s why we are examining the case for a proper British Investment Bank and why we want to see an international financial transactions tax too.

And let’s make sure that government procurement is not done in a way that disadvantages UK-based manufacturing production.

And that is why, too, on the issue of bogus self-employment, in the construction sector and more widely, I am determined that we look at this issue again.

There is a careful balance to be struck. I do not want in any way to undermine genuine self-employment.

But nor should contractual arrangements be distorted and misrepresented to avoid tax and undermine terms and conditions.

It’s not fair to taxpayers.

And it’s not fair to your members either.

So I have asked the Shadow Chief Secretary, Rachel Reeves, to look again at the Treasury’s 2009 proposals for reform – abandoned by this government – and to consult employers, UCATT and the wider TUC to see if there is a better and fairer way forward.

Construction is one of our most important industries.

Let’s work together to make it stronger, safer and fairer for the future.

And yes, we do need radical reform in our banking system, reform which this Government is now watering down.

We were right to reject the absurd Tory claim that the global financial crisis was caused by too much public spending in Britain.

We can’t say this often enough: it wasn’t too many teachers, and nurses and police officers here in Britain which made Lehman Brothers investment bank in New York go bankrupt.

But nor was the global financial crisis caused by the hundreds of thousands of working people, earning ordinary salaries, who work hard every day behind the counter on every high street.

People employed in financial services – in Leeds, Edinburgh, Manchester, Birmingham and Bristol as well as London – who were as shocked and dismayed as everyone else at the gross irresponsibility of a few millionaire bankers at the top who caused such damage and gave their industry a bad name.

People who want tough regulation, w ho want banks to work for the long-term interests of our economy – and who do not deserve to be pilloried for their hard work and service.

So let us work together to make our economy stronger for the long-term and improve the working conditions for trade union members and working people.

I stand here proud to have served in the last Labour Government.

Where we got things right – even where at times we disagreed – I won’t be shy in saying it.

But when TUC members made calls which we did not hear – and which in hindsight we should have – I hold up my hands.

It was TUC members who were telling us to address the housing shortage – and we were too slow to unlock the door to councils investing in new housing.

And it was TUC members who first told us to implement the Temporary and Agency Workers Directive and strengthen enforcement of the minimum wage.

But over those thirteen years, working together, based on common values, we did make real progress for working people.

From tax credits and a national minimum wage to guaranteed holidays and our campaigning to promote the living wage.

From the right to join a trade union and be represented to new rights for parents and carers in the workplace.

From the windfall tax and the New Deal, to the action we took, supported by the Fair Tax campaign, to tackle tax avoidance.

And we must keep working together on these vital issues for the future.

In my time at education, our work together on school standards, discipline, anti-bullying and free school meals showed how Labour, working with unions, can get things right.

And because fair pay and progression is just as important to teaching assistants, caretakers, cleaners, cooks and lunchtime supervisors as for teachers, nurses, doctors and the police, I was proud to work with colleagues in Unison, GMB and Unite to establish the school support staff negotiating body.

Michael Gove has now abolished that body.

And just as this is a profound mistake, so the Government is mistaken to undermine the independent pay reviews and pursue an agenda for wholesale regional and local pay bargaining – which will set hospital against hospital, school against school and be both unfair and cost us more.

Frances, Brendan, we are not always going to agree on every issue.

But I sincerely hope that, whatever disagreements we may have along the way, that you and your members will never stop giving me and the rest of the Shadow Cabinet plenty of tough and straight advice.

Because we in the Labour Party value the commitment to a strong economy and a fair society that is this Congress at its best.

Congress, we know the Government has failed.

But this is no time for complacency for Labour.

Yes, we are ahead in the polls.

And yes, David Cameron does look increasingly trapped:

– with an economic plan which isn’t working;

– a Conservative Party deeply divided;

– and a Chancellor he cannot sack, even though he knows George Osborne is the problem and not the solution.

But Labour cannot just sit back and wait for Tory failure to hand us victory.

That is the complacent road to failure.

We have to make the case – a credible case – for how a Labour government will kick-start recovery and transform our economy if we are to win the support of working people in the ballot box when the General Election finally comes.

Because we know, as you know better than anyone:

– when living standards are squeezed, we know who pays the price;

– when public services are scaled back, we know which communities lose out;

– when unemployment becomes entrenched, we know which areas suffer most;

– when only some children succeed, we know which children will be left behind;

So rest assured, Ed Miliband and I and the whole of the shadow cabinet are determined to take the fight to the coalition and show – for the sake of millions of workers across our country – that there is a better way.

Congress, there is an alternative.

Let us win the argument together.

Ed Balls – 2012 Speech to the Fabian Society

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Below is the text of the speech made by Ed Balls to the Fabian Society in 2012.

 

Thank you Suresh and Andrew – and to all of you for coming along today and giving up your Saturday.

And let me start by saying – after over 20 years of attending the Fabian annual January conference – what a great honour it is to be invited to give the opening speech.

I first spoke at this conference in January 1993 – when I was a junior leader writer at the Financial Times.

It was a very different conference then – not the huge event it has become – with perhaps 100 or so people gathered at Ruskin College, Oxford, including among them the leader of the Labour Party, John Smith.

That conference was held the January after Labour’s election defeat in 1992 – an election in which the Labour opposition had failed to pass either of the two necessary political economy tests for electoral success:

– neither having a real alternative to the straitjacket of the Exchange Rate Mechanism, which could meet the aspirations of anxious voters on growth and jobs;

– nor a credible approach to tax and spending which could win public trust.

Ten months on from that defeat, as we met in Oxford, sterling had recently crashed out of a troubled ERM, the idea of the single currency as the solution for Europe was gaining momentum in Brussels, and here in Britain Labour’s ‘modernisers’ were trying to persuade John Smith that ‘safety first’ would not be enough.

And my contribution at that Conference?

To speak about my Fabian pamphlet, published a week or so before, which argued:

–     that Labour could only win the argument for a radical alternative on growth and jobs if we had economic credibility;

–     that neither the ERM nor the single currency could provide that credibility;

–    and that the right approach for Labour and Britain was to make the Bank of England independent – a pretty controversial idea at the time.

I remember showing the pamphlet draft to my FT colleagues Martin Wolf and John Plender, who both said: right approach, very brave – but the Labour Party will never forgive you.

THE GLOBAL ECONOMIC SHADOW

That 1993 Fabian Conference was held in the shadow of seminal events:

– German unification in Europe;

– Black Wednesday in Britain;

– a fourth election defeat for Labour.

And today’s conference – again to debate The Economic Alternative – is, without doubt, being held in the shadow of much greater and more defining events:

–      political deadlock and an abject failure of economic leadership in the Euro area, Britain and the US Congress;

–      following on from the biggest global financial crisis of the last century.

A toxic combination of grossly irresponsible bank lending, poor governance and weak regulation round the world which in its aftermath poses – as I have argued consistently over the last eighteen months – a threat to the world economy as grave as that which we faced in the depression of the 1930s.

So this is my starting point for today’s Conference.

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 prosperity;

and,

The Reform Challenge – long-term reform to make sure such a financial crisis on this scale can never 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.

LABOUR’S POLITICAL SHADOW

But of course, there is another shadow which casts itself across this Conference today – a political shadow which presents a particular challenge to Labour.

I believe we are right to resist the ideological and a historical Tory analysis which tries to pin the blame for a global financial crisis on Labour’s approach to public spending – when it is clear that the global financial crisis bankrupted banks and pushed up deficits in high spending and low spending countries alike.

But it is a fact that this financial crisis did happen on Labour’s watch – and that Labour lost the subsequent General Election.

We have never denied that a plan is needed to get the deficit down, and that it would mean tough decisions on tax and public spending.

Before the election, I set out £1 billion of cuts to education.

But 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 – even as George Osborne’s plans deliver unemployment rising, growth stagnating and long-term reform stalling – that Labour can be trusted again.

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

And it is not enough to set out a clear alternative – on growth, as we have with our five point plan for jobs; or on long-term reform of our economy, as Ed Miliband did this week and Chuka, Rachel and John Denham have too.

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

‘KEYNESIAN OTHODOXY’

I referred to that January 1993 Fabian Conference.

Eighteen months later, in September 1994, just a few weeks after Tony Blair was elected Labour leader, and against the backdrop of stubbornly high youth unemployment, rising inflation and squeezed living standards, the Labour Party held a conference at the National Film Theatre on the new economy and Labour’s alternative.

As it happens, that conference was the occasion of the infamous ‘post neo-classical endogenous growth theory’ moment – which, for those who don’t know what it means, says that the rules of the game that the government sets on taxes, spending and regulation are not irrelevant to growth but can have a profound impact – for good or bad – on how the economy works.

Of course, those were very different times, and the policy debates of that time emphatically do not offer a blueprint based on the past when today we face such different economic and political challenges.

But the unspoken purpose of that 1994 conference – and its emphasis on Bank of England reform and fiscal discipline – was to address Labour’s economic credibility deficit, and dispel the idea that the party was addicted to the short-term, quick fix, vested-interest-appeasing solution to every problem.

I went back this week to look at the reporting of that conference – and in particular a preview piece in the Independent on Sunday with an anonymous briefing from ‘a senior party insider’.

The article started by saying Tony Blair and Gordon Brown will “ceremoniously ditch Labour’s traditional ‘tax, spend and borrow’ image this week, in a fundamental re-positioning of his party’s economic strategy.”

All under the headline… Labour Ditches Keynes.

As someone who had only recently studied ‘New Keynesian’ economics at Harvard, with Democrat Keynesians like Larry Summers and Republican Keynesians like Greg Mankiw, I must admit I was pretty appalled to see the greatest economist of the twentieth century traduced like that.

But the fact was that in the Monetarists versus Keynesians economic debates of the 1970s and 80s, the label ‘Keynesian’ had become – certainly in Conservative circles – a dirty word: profligate, irresponsible, statist, inflation-loving, not to be trusted.

A caricature that clearly could not be allowed to be a Labour caricature if we were to go on and win the 1997 election.

And what has been so striking to me over the past year listening to right-of-centre politicians and commentators – in Britain, America and Europe too – is how much the austerity debate has been used to try to reprise those old ideological divides.

Warn about the risks of deflationary fiscal policy – and that makes you a ‘deficit denier’.

Worry about the dangers of all countries trying to cut their deficits at once – and you are a ‘deluded Keynesian’.

Counsel that the world needs a plan for growth as well as deficit reduction – and you are ‘an irresponsible deluded Keynesian deficit denier’.

Keynes himself must be turning in his grave.

For, as has been fully documented in Lord Skidelsky’s biography, the real Keynes was no profligate tax-and-spender. He would have had no time for some of his disciples.

His seminal 1930 Treatise on Money was as hawkish on inflation as Milton Friedman decades later.

His attitude to irresponsible wage bargaining in the 1920s was as unforgiving as Margaret Thatcher in the 1980s.

Central bank independence? I think Keynes would have backed it – though not if his contemporary Montagu Norman was the Governor.

And as for the irresponsible and inflationary profligacy of the 1970s

Tory Barber boom? He would have abhorred it.

KEYNES AND THE GROWTH CHALLENGE

But – and this was his great insight – Keynes also knew that economies could occasionally get stuck in a deflationary rut.

Although he called his famous book in 1936 ‘The General Theory’, it actually was not a general theory at all.

It was a description of what can happen in the unusual and special circumstances after a big financial crash – for him 1929, for us 2008 –  when the ‘animal spirits’ of companies and consumers are so depressed that private spending stagnates.

When interest rates are so low that they can’t be cut any further.

When governments crudely cutting spending risks making deficits worse.

Of course, there will be naïve ‘Keynesians’ who will think it is always a special case – time to let rip and just ‘tax, spend and borrow’ in the hope that will deliver full employment – people who think we are always in 1930s-style depression and more borrowing is always the solution to unemployment. And that is what gave Keynesianism a bad name in the 1970s.

It is why Labour leader Jim Callaghan was right to tell the Labour Party Conference in 1976 that that you can’t just spend your way to full employment.

But, as I argued well over a year ago now in my Bloomberg speech, the reason why the real Keynes is so relevant today is that the global economy has been sliding into that rare and dangerous ‘special case’ that Keynes identified in the 1930s and Japan suffered in the 1990s.

You either learn the lessons of history or repeat the mistakes of history.

With growth stagnating around the world, every country pressing ahead with deep cuts risks being a catastrophic mistake.

Which is why Ed Miliband and I have argued for a global plan for growth, with clear medium-term plans to get deficits down, but stimulus now to avoid a global slump too.

Rejecting the complacent isolationism of the 1930s and instead following Keynes’ lead by setting out a global solution to global problems – an economic alternative based on growth, job creation and balanced deficit reduction, which is the only sane way forward for Britain – and the only way back to credibility in the Euro area too.

Let us be honest: the Eurozone crisis is a catastrophe building week by week. And the pre-Christmas summit was a disaster for Europe and the Euro and for Britain too.

Europe’s leaders failed to back decisive action by the European Central Bank; they did not address the issue of the current fiscal straitjacket; and they still have no plan for jobs and growth – hence the downgrades of the past 24 hours.

And did our Prime Minister bang the table and demand action?

No, he walked out and undermined our national interests as he did so.

Given the huge risks that the Eurozone crisis poses for Britain, we desperately need a Prime Minister and Chancellor who can lead in Europe.

But they can’t – and not just because their party won’t let them.

Because to do so means also admitting that they have got things wrong here in Britain too.

George Osborne and David Cameron took it as read that deep and immediate spending cuts and tax rises would at least serve the goal of deficit reduction – no matter how much Labour warned that going too far, too fast would be bad for borrowing as well as for jobs and growth.

The Chancellor claimed that public retrenchment would boost private sector confidence, investment and job creation. He called it ‘expansionary fiscal contraction’.

But this has turned out to be a false prospectus – a repeat of the discredited ‘Treasury View’ of the 1920s. Fragile consumer and business confidence has been crushed by the inflationary hike in VAT, the threatened withdrawal of public sector demand, the reality of falling incomes and the fear of rising unemployment.

And now the Government claim growth is stagnating because of the chilling effect of the Eurozone crisis – when our exports have actually been over performing compared with expectations, and it is weak domestic demand that has driven growth in the UK down, borrowing up and depressed long-term interest rates on government bonds.

Conservative ministers scoff at our five point plan for jobs and growth, saying ‘Labour’s proposal is to borrow even more’. But it is Chancellor George Osborne who is being forced to borrow billions more – £158 billion more than he planned.

Not borrowing to support the economy through difficult times and help get people back to work, but wasteful extra borrowing to pay for failure – the price of slow growth, rising unemployment and a bigger benefits bill.

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

Even the IMF has said that if our economy undershoots expectations and risks a period of stagnation, then the UK should slow down the pace of spending cuts and tax rises to get the economy growing again.

Just think: last autumn, many 16 year olds who would otherwise have stayed on at school have lost their Education Maintenance Allowances, and – following the abandonment of the Future Jobs Fund – many have gone straight onto the dole, adding to the more than 1 million young people now unemployed in our country.

On the surface of things, cutting EMAs and the Future Jobs Fund saved money and reduced borrowing.

But at what 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.

Action now for growth, jobs and reform which does not conflict with the need for a credible medium term plan on the deficit, but which reinforces it.

KEYNES AND THE REFORM CHALLENGE

But changing times also demand new and long-term reforms to re-shape our economy for the future.

As Ed Miliband argued earlier this week, we will need long-term reforms of our economy to boost growth and deliver social justice in straitened times.

And here again, the words of Keynes writing in The General Theory in 1936 are instructive:

“Speculators may do no harm as bubbles on a steady stream of enterprise” he wrote. “But the position is serious when enterprise becomes the bubble on a whirl-pool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

Keynes was right then and now – we cannot simply let markets, in which speculators spend their time chasing one another’s tails, dictate important investment decisions and set the benchmark for what is fair and unfair.

Unregulated capitalism is not only unstable; it is inherently short-termist too.

So just as the current coalition are wrong to reject the insight of Keynes based on his experience of the 1930s, we must, as Ed Miliband has said, learn the lessons of the past three decades and meet the Reform Challenge:

–    tougher financial regulation and new capital standards with financial stability at the heart of economic policymaking and banking reform to make sure that the needs of small businesses are addressed, including examining the case for a National Investment Bank;

–    stronger corporate governance to make sure decisions are taken in the long-term interests of wealth creation and jobs, not the short-term interests of traders, speculators and their chums;

–    government action to back business and ensure markets work for the long-term, including tougher competition rules, tax incentives for long-term investment, research and development and skills;

–    and a youth jobs guarantee with tough rights and responsibilities – and an expectation that every young person would take up work or training.

GROWTH, REFORM AND DEFICIT REDUCTION

This is the Economic Alternative:

– to meet the Growth Challenge: short term action now to support jobs, growth and get deficits down;

– to meet the Reform Challenge: long-term reform to tackle short-termism and instability and support long-term investment, growth and fairness.

But to make that alternative work and be credible, it must be underpinned by a clear commitment to balanced but tough spending and budget discipline now and into the medium-term.

The question for Labour has never been about ‘whether’ to get the deficit down but ‘how’ and ‘when’, who carries the greatest burden, and what kind of country we leave behind for our children.

And while we would not have started from here – a fairer and more balanced approach to deficit reduction would not have choked off recovery and thrown borrowing plans off track – we are where we are.

As Ed Miliband and I have said for months this government’s failure means the next Labour government will inherit a substantial deficit that we will have to deal with.

After just 18 months, the government’s autumn statement admitted that it will not balance the books by 2015 – the promise that was the cornerstone of the coalition.

And George Osborne has had to admit that he will now have to borrow more than the plan Alistair Darling set out before the election – because of the slow growth and higher unemployment his reckless plan has delivered.

This represents a big challenge for Labour, as Ed Miliband made clear earlier this week. As I said at Labour’s annual conference, we will set out before the next election tough fiscal rules that the next Labour government will have to stick to – to get our country’s current budget back to balance and national debt on a downward path.

In our manifesto we will commit to do the responsible thing and use any windfall gain from the sale of the government’s stakes in RBS and Lloyds to repay the national debt – not for a giveaway.

And, 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.

Because we don’t know how bad things will be on jobs, growth and the deficit. But we do know that the next Labour government will have to sort out the deficit where this government failed and deliver social justice in tougher times.

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.

In education, as I have said, £1 billion of cuts – but not the biggest cuts to schools since the 1950s. In policing, 12 per cent cuts to budgets – but not 20 per cent cuts which will hit the frontline hard and see 16,000 officers lost. In defence, £5 billion of cuts – but not a strategic defence review that raises more questions than answers.

And because as progressives we believe in the role of the state and public services to do good, it is vital that we are even tougher on waste than our political opponents – whether that is the £2 billion being wasted on a reckless reorganisation of the NHS, billions being lost in tax avoidance or the waste of mass unemployment.

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

Let me give you one example.

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 in this parliament.

Labour cannot duck that reality. And we won’t. Jobs must be our priority before higher pay.

That said, there are important issues on incomes, pay and pensions that George Osborne must get right.

We will continue to press for fair pay and fair pensions reform while defending the vital role the national pay review bodies play in delivering discipline, reform and fairness.

We believe the 3p in the pound rise in pension contributions should never have been imposed without negotiation.

And it is wrong and unfair to penalize those on low and middle incomes by cutting tax credits, hitting women harder than men and families with children hardest of all.

But pay discipline in the public and private sector needs to be accompanied by fairness.

That is why the government should also ask the pay review bodies to deliver the 1 per cent average settlement cap in a fair way – being tougher to those at the top in order to offer more protection to those at the bottom.

Pay also needs to be fair in the private sector, where there have also been tough decisions – with real pay in the private sector falling around 3% in the last year. But for those at the top boardroom salaries in FTSE 100 companies have increased by 50% in the past 12 months.

That is why Ed Miliband has rightly called for reforms to ensure that rewards at the top better reflect the success people achieve and the contribution they have make to our economy. David Cameron has now started to talk the talk on this issue, but he now needs to take the action we have been calling for.

THE POLITICAL CHALLENGE FOR LABOUR

Let me finish by returning to the politics.

Because it would be naïve for anybody to think that the government’s deepening economic failure will automatically translate over the coming months into success for Labour.

And the question the public will of course ask is: who can we trust?

Credibility is based on trust and trust is based on honesty.

And let’s be clear: the Tories won’t own up either to the scale of the challenge or the failure of their plans.

They claim Britain is a safe haven… when our low long-term interest rates are not a sign of enhanced credibility but a reflection of stagnant growth in our economy, as it was in Japan in the 1990s.

And they claim we’re all in it together… when middle and lower income families, women and young people are hardest hit, and the pain is only now beginning.

So with determination and vigour – loud and direct – we must expose day by day the huge gulf between what Coalition ministers say and the truth.

But we must be honest with the British people that under Labour there will have to be cuts, and that – on spending, pay and pensions – there will be disappointments and difficult decisions from which we will not flinch.

But honesty does not mean going along with a failed Conservative plan because it is easier in the short-term. We tried that when Labour supported the disastrous decision to join the ERM and stuck with a failing policy right up until September 1992.

I have heard much advice over the past year from people who admit that combining stimulus now to get the economy moving with a tough but balanced medium-term deficit plan may be good economics – but who argue that it is bad politics because it is ‘out of tune’ with the public mood.

But that is not honest politics either.

Now is not the time to stand aside, bite our collective lip while this government and Euro area governments make historic and terrible mistakes.

I do believe that we have both a duty to make the right argument on growth and jobs – even if this has put us outside the consensus for a time.

And I do believe this is an argument we can win.

Now is the time to hold our nerve.

To make the case for The Economic Alternative.

To speak up for the people we seek to represent and the values that we stand for.

And to do so in a typically Fabian way – steady, step by step, determined, credible and radical in our vision for a better and fairer future for Britain.

Thank you.

Ed Balls – 2012 Speech to British Chambers of Commerce

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, to the 2012 British Chambers of Commerce annual conference on 15th March 2012.

 

John, thank you for inviting me here today to Westminster Central Hall to address your annual conference this afternoon.

And Iet me start by sympathising with you all – as I am now the third politician you have heard from today – and with two more to come, I am sure you are all flagging a little.

But I know, from my own direct experience, the passion of your members and their commitment to their businesses and their communities.

Over the last decade and more I have had the opportunity to work closely with the BCC and my local chambers in Wakefield and Leeds on many important issues from regional funding and apprenticeships through to enterprise education in schools.

In fact, I was speaking only last Friday night in Wigan at a local gala dinner organised with the excellent local Chamber.

And we talked about many issues which I am sure have come up today already

From the local – delays in planning decisions, problems at the Valuation Office in assessing business rate valuation appeals when business rates are rising by over 5%, worries that the LEPs don’t have the resources and powers to do the job; through to national and global issues – rising youth unemployment, the Eurozone and why the Brazilian economy is now bigger than the UK.

And what that dinner again drove home to me is this: while the CBI, FSB and IoD also play a very important role on the national and regional stage, if you want to know the views of local small and medium sized businesses up and down the country then it is local Chambers of Commerce that you turn.

John – you truly represent the authentic voice of UK business and it is good to be here today.

And let me say on behalf of Ed Miliband, the Labour Party under his leadership will always be a good but honest friend to business – challenging when we must be – but determined to work with you to build an economy for the future that works not just for financial institutions, but for businesses large and small and the people who work for them – in an economy that is both dynamic and fair to all who work hard and play their part.

But let us be honest – these have been a difficult few months for business in Britain.

I refer, of course, to the way that the depressed consumer and business confidence here in Britain has had a direct effect on to your profits and performance alongside the Euro zone crisis.

But also the way in which issues of bonuses and executive pay have hit the headlines.

And I know how frustrating politics can be when it looks as though politicians are continually moving the goal posts.

I don’t think anyone can be in any doubt that after the financial crisis, reform is needed in financial regulation and corporate governance more widely.

But I know too that the most important things businesses need are stability and predictability – government decisions made and then stuck to so that you can plan ahead:

That it is the clear view of business that, where possible, we politicians should seek consensus where we can in the national interest;

I want to come back in a moment to where I believe we can all agree on the big strategic objectives facing our country.

But I have to say I have been dismayed over the past year by the way in which government policy and its attitude towards business has at times seemed driven more by newspaper headlines, and change for change’s sake, than what makes for good business policy.

What signal did the Government send to international investors in renewable energy when it abruptly, arbitrarily and without consultation slashed the support for feed-in tariffs and undermined the solar industry at stroke?

What signal did it send to the Chinese investors in the new Longbridge MG line that the very organisation which brokered the deal – the RDA Advantage West Midlands – has now been abolished?

What signal was sent to multinational companies about the abrupt change in North Sea oil taxation in last year’s Budget?

Or to globally mobile construction companies with the out-of-the blue and immediate cancellation of Building Schools for the Future, cancelling nearly 800 schools where millions of pounds of private sector investment had already been made and contracts drawn up and negotiated?

And the way business decisions are announced matters too.

Whatever the case for minimum alcohol pricing – and we will study the evidence carefully – is it really sensible for the Prime Minister to announce his intention to proceed the day after Boxing Day without any proper consultation with the beer, cider or pub industries, which will be heavily affected by policy in this area?

And what signal did it send that the Prime Minister – having rejected our calls for greater transparency in City bonuses and a repeat of the bank bonus tax to fund a youth jobs programme – ended up telephoning individual chief executives from Brussels to order them to give up their bonuses?

And whatever you think of the culpability or otherwise of Fred Goodwin – and I don’t think there are many who would defend his behaviour over his pension payments after he resigned, or some of his decisions which took RBS to the brink –what signal did it send to businesses round the world that the decision to remove his knighthood was first announced by the Prime Minister to the Daily Mail, with the decision of the supposedly independent committee then announced just in time for the 6 o’clock news?

The right decision – but handled, in my view, in a dreadful manner.

For a country like Britain, the signals we send around the world about Britain as a place to do business really do matter.

And starting with next week’s Budget, this Government needs to do a better job of it.

I know you will be expecting me to highlight my differences today with Coalition politicians. And I will.

But, in the spirit of consensus, I also want to set out where, on each of the three big questions of our time..

– deficit reduction;

– the long-term prospects for jobs and growth in the UK

– banking and regulatory reform

– the Chancellor George Osborne and I agree on the strategic goals even if we disagree on how to get there.

The first thing that George Osborne and I agree on is that, after the global financial crisis, we do need a credible plan for deficit reduction.

For a country like the UK, open to trade and commerce, dependent on the support of international investors, a credible deficit reduction plan is now vital – just as a credible independent monetary policy was one of the most important reforms I was involved in delivering in the last Labour government, alongside keeping Britain out of the Euro.

But we need a plan which will work, and which pulls all the levers required to deliver deficit reduction.

Of course, we need spending cuts and tax rises as part of that package.

But we also need jobs and growth to get the deficit down.

In office, our plan was based on restoring strong, sustainable growth, getting people back into work, and then beginning the difficult task of cutting spending and raising taxes where necessary.

But nearly two years ago, when the Coalition was formed, they took a radically different path.

First, they decided that the speed of deficit reduction had to be substantially increased.

Second, the emphasis of their plan took a sharp turn from increasing jobs and growth to immediate and steep spending cuts and the VAT rise.

But since the Chancellor’s spending review we have grown by just 0.2%, while America has now more than recovered all the output lost in the global recession.

Our recovery was choked off in the autumn of 2010, well before the recent euro zone crisis.

Unemployment continues to rise and over the last year the number of jobs created in the private sector has been outweighed by the huge loss of jobs in the public sector.

And the result is that the Government is having to borrow £158 billion more than they planned, to pay for the cost of this economic failure.

If the economy isn’t growing and so fewer people are in work paying taxes – and more people claim benefits instead – it makes it harder to get the deficit down, and harder to maintain confidence – of businesses and the markets too.

Don’t forget it was the impact of slow growth on deficit reduction here in the UK which prompted the Moody’s credit rating agency to put the UK on ‘negative outlook’ last month, followed yesterday by Fitch. As another agency, Standard and Poor’s said this year, ‘austerity alone risks becoming self-defeating’.

Many of you will remember the 1980s. Of course, action was needed then to get inflation down from its 13 per cent peak. But who now doubts that the depth of the resulting recession did permanent damage?

Manufacturing jobs and companies lost – never to return. Small businesses bankrupted – losing skills, ideas and potential. Infrastructure plans first postponed, eventually dropped and never resurrected. Adults and young people out of work for years, leaving a permanent scarring effect on their skills, their health, and their ability ever to work again.

That is why, alongside tough decisions on tax, spending and pay, I believe we do need urgent action in next week’s Budget to kick-start the recovery.

A Budget for jobs and growth including a temporary cut in VAT and genuinely bringing forward infrastructure investment to strengthen our economy for the long term.

And let’s use the almost £1 billion of unspent money in the Treasury’s failed national insurance holiday for new firms and extend it to give a tax break to all small firms taking on extra workers.

Because without action now to support growth and jobs, I fear we are in for a lost decade of slow growth and high unemployment which will leave a permanent dent in our nation’s prosperity.

But reducing the deficit is not by itself a guarantor of economic success.

So the second thing George Osborne and I agree on is that a credible deficit reduction plan is a necessary condition but it is not by itself a credible plan for jobs and growth.

The question is what form that plan for growth and jobs should take.

And whether it is backtracking on planning for large- scale infrastructure projects, the abolition of the RDAs or the scrapping of skills programmes, I fear that the current Treasury view that the only thing government needs to do for business is just to get out of the way risks undermining your efforts, not backing them.

As the Business Secretary himself wrote a few weeks ago in his famous leaked letter, the Government lacks “a compelling vision of where the country is heading beyond sorting out the fiscal mess”

He is right – and – on transport, planning, skills, strategic industrial support – government has a vital role to play and cannot just walk away.

With China currently producing more graduates a year than the whole population of Scotland; and adults in Brazil already twice as likely to be running their own business as Britons – I believe here in Britain we do need a long-term plan for growth to support and back your leadership and innovation and risk-taking.

That is why Ed Miliband, Chuka and I are clear that a modern industrial and business policy needs:

– government action to back business and ensure markets work for the long-term, including tougher competition rules, tax incentives for long-term investment, research and development and skills;

– stronger corporate governance and transparency in executive pay to make sure decisions are taken in the long-term interests of wealth creation and jobs;

– and tougher financial regulation and banking reform to make sure that the needs of small businesses are addressed, including examining the case for a British Investment Bank.

Which takes me to the third thing that George Osborne and I agree on – – the need for banking reform.

The global financial crisis started with the reckless lending practices of American financial institutions, but it exposed risky behaviour by banks and inadequate regulation in every major country of the world, including in Britain.

This must never happen again.

And while it was the irresponsible actions of banks which caused the crisis, it was also the fault of governments and central banks – including Britain’s – who did not see the financial crisis coming and should have been tougher in regulating the banks.

Every government in the world got that wrong. We did here in Britain. And while it is not good enough simply to be wise after the event, life is also about admitting when you get things wrong and learning from your mistakes and that is what we must all do.

For the longer-term, I do believe that the report from the Vickers Commission on banking reforms is the right way forward – though the devil will be in the implementation detail.

But I know too from my own constituents the huge frustrations that many small and medium sized businesses currently feel about the ways the banks are now behaving.

Since the widely criticised Project Merlin deal between the Government and the banks, net lending to businesses has fallen by £10 billion over the last year.

And despite all the promises that credit easing would be a short term solution to this problem, in the six months since it was announced not a single businesses has yet been helped, indeed the details of the National Loan Guarantee scheme have yet to be announced.

Vickers is right to argue that to protect customers and taxpayers we need much tougher accountability and transparency and clear, workable and robust firewalls – as well as stronger competition, especially in business lending, where the Government is taking much too long to make progress.

But on regulation, we must take a careful and balanced approach

Too soft: and we risk again leaving taxpayers and businesses exposed.

Too heavy-handed: and we risk throwing the baby out with the bath water and ignoring the needs of businesses small and large.

The easiest way to avoid any financial risks at all would be to have no transactions at all. But a lurch to regulatory risk aversion would be disastrous for the UK economy.

That is why in Parliament we are arguing that the proposed permanent Financial Policy Committee of the Bank of England should have a clear objective, alongside financial stability and consumer protection, to promote economic growth – a proposal which has been supported by many business organisations.

In my view, we need to have in our minds the US response to the WorldCom and Enron accounting scandals a decade ago.

The US Congress reacted with a heavy-handed piece of rules-based legislation – Sarbanes-Oxley. But it didn’t work.

It did not stop the financial crisis which started in the US.

And its complexity drove jobs and tax revenues out of the US year by year.

This audience doesn’t need telling that rigid rules-based regulation is often not the answer, and that small and medium-sized businesses desperate for much needed risk capital and fair terms are likely to be the losers if regulation is too heavy-handed.

Let me be clear – I know many of your members worry about the burden of regulation.

It is always important to keep Government under pressure on that issue as on spending too where wasteful public investment can never be justified.

As my colleague the Shadow Business Secretary Chuka Umunna said in his speech earlier this week, a good industrial policy:

“is as much about knowing when not to intervene, to let business and competition thrive in healthy markets, as it is about knowing when to intervene to address market failure where needed. Active, intelligent government understands its limits.”

But that does not mean the only thing government needs to do is cut regulation and spending and then leave business alone to get on with it.

I am not going to claim to you that Labour got everything right in government – let alone that you all agreed with what we did.

But many of our most successful economic policies:

– record investment in rail and roads,

– an expansion of higher education and science,

– a renaissance in apprenticeships,

– CGT for entrepreneurs cut to 10%

– faster business planning decisions,

– the car scrappage scheme,

were successful because we had moved beyond the old-style British debate – public bad, private good? private bad, public good? – and recognised that partnership between business and Government is vital if we are to rise to the competitive challenge.

Peter Mandelson was right when he said:

“ministers and markets can and should mix.”

And at a time like this, when we need to rebuild our economy for the future, that partnership is needed more than ever.

I said at the beginning of my speech it is the clear view of business that you need stability and predictability and, where possible, we politicians should seek consensus where we can in the national interest.

In all sectors, but especially in manufacturing, aviation or energy, that is the only way to ensure businesses can invest.

Consensus is not always a good thing. But nor is headline-grabbing change for the sake of it.

That is why – issue by issue – whether we agree or disagree – I am committed to working with you and listening to you on all issues which affect your businesses and our economic future.

It is the only way forward for Britain.

Ed Balls – 2011 Speech to Labour Party Conference

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor, to the Labour Party conference on 26th September 2011.

 

Conference –

It’s a great honour to make my first conference speech as Shadow Chancellor – the first ever Labour and Co-operative Shadow Chancellor – here at our first annual conference in this great city of Liverpool since 1925.

Thank you to Norma for that introduction – and to all the members of our Policy Commission for their hard work this year.

And I want to say a special thank-you to my co-Chair, Cath Speight, for all her advice and leadership as a member of the NEC for the past 11 years.

Cath – you are a great servant to your union and to our party and we all thank you.

And Conference, I also want to pay tribute to our leader – my friend – Ed Miliband.

On Libya, on phone hacking and on the riots – he has shown calm, resolute and courageous leadership:

– not afraid to take on vested interests;

– passionate that we have responsibility in our society from top to bottom;

– determined that the promise of Britain – that the next generation will do better than the last – can be fulfilled.

In Ed Miliband, conference, we have a leader who is genuine, principled, honest and fair…

… a leader who speaks his mind and tells the truth…

… a leader in whom I believe we can ask the British public to put their trust.

A BETTER WAY?

And nowhere is it more important that we win the public’s trust for an alternative future – a better way forward – than on the economy.

Speaking to one delegate this morning, she said to me:

“people are really worried about jobs and the cost of everything going up – and they’re all saying, ‘surely there’s a better way?’”

Here in Liverpool, and as a result of the Coalition’s policies, unemployment is now rising again as this city faces the deepest cuts to local services in a generation.

But – a far cry from the scuttling taxis carrying redundancy notices in the 1980s – it is a Labour Council here in Liverpool which is working night and day to make savings and cut bureaucracy so they can protect jobs and keep services for the most vulnerable.

And I say to Liverpool’s Labour leader Joe Anderson – to all our leaders in local government facing difficult times across the UK – and to First Minister Carwyn Jones in Wales – we pay tribute to your leadership and responsibility and determination that there can be a better way:

– yes – a credible plan to get our deficit down;

– but action now – a plan for growth and jobs;

– and long-term reforms to build a stronger, fairer economy;

A Labour plan to get Britain working again.

GLOBAL LEADERSHIP

Conference, let’s face the facts.

These are the darkest, most dangerous times for the global economy in my lifetime.

Our country – the whole of the world – is facing a threat that most of us have only ever read about in the history books – a lost decade of economic stagnation:

– The aftermath of a worldwide financial and banking crash;

– Families and businesses fearful about the future, cutting back on spending and investment;

– Governments all around the world trying to cut spending at the same time;

– Demand sucked out of the economy;

– Stock markets tumbling, banks in trouble, economies stalling, unemployment rising – a vicious circle as slow growth makes it harder to get deficits down;

– Not a crisis of any one country or continent – but a spiralling global crisis – from which no economy can be safe…

… threatening the jobs, pensions and living standards of families here in Britain and across the world.

Conference –

This is not – as the Conservatives claim – simply a crisis of public debt which can be solved – country by country – by austerity, cuts and retrenchment – but truly a global growth crisis which is deepening and becoming more dangerous by the day.

And the world must remember the lesson of the 1930s: that there is no credibility in piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when all the evidence is pointing the other way.

I said to you a year ago – you either learn the lessons of history – or you repeat the mistakes of history – that is the choice the world faces today.

But at a time when the world desperately needs a global plan for growth – when it needs wise and strong leadership – where will it come from?

Not so far from the Euro zone – unable to stand together and do what it takes to restore confidence and growth.

Not so far from America – deadlocked by the reckless games of the Republican right.

And Conference, what about our Prime Minister and Chancellor?

Do they urge a change of course in the Euro zone?

No – they applaud austerity, and urge even deeper cuts.

Do they urge sanity in America?

No – George Osborne boasts that his Republican friends in Congress are following his advice.

Do they urge a global growth plan in the G7, the G20 or the IMF?

No.

Confronted with the biggest most urgent global challenge of our age, all they can do is urge other countries to pile austerity on austerity too… ignoring the lessons of history and the evidence here in Britain, and across the world, that austerity just isn’t working.

That is not just a failure of leadership – it is a complete abdication of responsibility too.

A SAFE HAVEN?

But Conference…

It’s not right to blame David Cameron and George Osborne for everything that’s wrong with our economy.

They didn’t cause the global financial crisis.

That crisis was a body blow to our economy and our public finances – we went into recession, lost tax revenues, a big deficit opened up.

Whoever won the last election faced a difficult task to secure economic recovery and reduce that deficit over time.

And that task has been made harder by the economic problems in the Euro-zone, America and Japan.

But the simple question that the government has to answer – the issue on which they can and must be held to account – is this: have their decisions over the past year and a half made things better or have they made things worse?

A year ago, I warned that, with our economy still fragile and a global hurricane brewing, it was not the time to tear out the foundations of the house.

But David Cameron and George Osborne thought they knew better:

– They said a VAT rise and cutting faster than any other major country would boost economic confidence and growth;

– That if they cut public sector jobs, the private sector would more than fill the gap;

– That their plan would make Britain immune from the global storm – and any other course of action would cause stock market turmoil…

And to be fair, some respected people agreed with them.

But we in this Party argued for a steadier, more balanced approach – halving the deficit over four years.

We said that going too far, too fast would choke off the recovery and put jobs at risk;

We warned that cutting spending and raising taxes too fast would create a vicious circle here in Britain too – and make it harder to get the deficit down.

And look what’s happened – even before the global instability of the past three months.

Confidence has slumped.

Our economy has flat-lined now for nine months.

Slower growth in Britain than any other G7 country except Japan.

Unemployment now rising again.

That is why the deficit is already set to be £46 billion higher than the government planned.

Because if you choke off the recovery and put tens of thousands of people on the dole – not paying taxes, claiming benefits instead – then, of course, borrowing goes up.

In the 1980s, the Tories told us – shockingly – that because their economic objective was to reduce inflation, rising unemployment was a price worth paying.

This generation of Tories need to realise if your economic objective is to reduce the deficit, then rising unemployment is one thing you just can’t afford.

NO ALTERNATIVE?

So Conference…

.. the global economic crisis is deepening, our economy is badly exposed…

And what do we hear from ministers?

However bad things get… even when we can all see it’s not working:

‘We are sticking to the plan,’ they say

‘We are not for turning.’

‘There is no alternative.’

‘There is no better way.’

They claim that any change of course would lead to a market crisis and higher interest rates.

But our interest rates are at record lows because our economy has stagnated.

Markets are losing confidence in governments all around the world because there is no growth.

And there is a growing chorus of voices calling for a change of course…

Even the IMF now says:

“growth is necessary for fiscal credibility”, and…

“slamming on the brakes too quickly will hurt the recovery and worsen job prospects.”

Yes – a credible economic policy does needs a plan to get the deficit down.

Yes – a credible economic policy needs political agreement to implement that plan.

But an economic policy can only be credible if it works.

And George Osborne’s economic plan is hurting… but Conference… it’s just not working.

ALL LABOUR’S FAULT?

But you all heard the chorus from the Lib Dems last week…

You all know what we will hear next week from the Tories…

The only line in the script they’ve got left:

‘It’s all Labour’s fault – we’re just clearing up the mess’.

Conference, we could spend all of our time defending our record… and there is much to be proud of.

But for families today – struggling to pay the bills, worrying about their jobs – being told about the great things Labour did in government isn’t much comfort… it doesn’t pay the bills, help get a job or secure the pension.

Some commentators say the opposite: accept the Tory critique that Labour spending caused the economic crisis; back Tory policy on the deficit; neutralise the issue and move on.

And when they say we made mistakes in government, they’re right… we must admit them and show we’ve learned from them.

The 75p pension rise – that was a mistake.

So was abolishing the 10p tax rate.

We didn’t do enough to get all employers to train.

We should have adopted tougher controls on migration from Eastern Europe.

We didn’t spend every pound of public money well.

And yes – we didn’t regulate the banks toughly enough and stop their gross irresponsibility – here in Britain and all around the world.

But don’t let anyone tell you that Labour in government was profligate with public money – when we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan.

And don’t let anyone say it was public spending on public services here in Britain which caused the global financial crisis.

It wasn’t too many police officers or nurses or teachers here in Britain that bankrupted Lehman Brothers in New York.

Conference.

We didn’t get everything right.

We made mistakes.

But abolishing the Future Jobs Fund and cutting 100,000 jobs for young people out of work… that wasn’t Labour’s mistake.

Scrapping the Regional Development Agencies, ending EMAs, cutting childcare tax credits for working parents… those aren’t Labour’s mistakes.

Wasting £2bn on a reckless NHS reorganisation…

Wasting £100m on elected police commissioners…

Wasting 1bn on a tax cut for the banks…

Wasting billions of pounds on the bills of rising unemployment…

Ripping up our balanced plan, trying to cut the deficit faster any other country and choking off the recovery as a result…

Conference… these aren’t Labour’s mistakes…

They are David Cameron’s mistakes…

And George Osborne’s mistakes…

And Nick Clegg’s mistakes…

Reckless. Ideological. Unfair.

Tory mistakes every one of them.

A BETTER WAY

I think of a family I know in my constituency: self-employed – a husband and wife team – times are hard at the moment – but things are still just about ok – they can pay the mortgage – they managed a holiday with the kids this year.

But they are worried…

Worried about gas bills, petrol, food all going up…

Worried about losing their tax credits and the child benefit..

Worried when they see other local businesses closing down…

And worried too about the future – can they keep up their pension payments, can they afford it when their son goes to college.

Better off under Labour – but it was their hard work which did it.

Deeply aspirational for their kids – but now very worried about their futures too.

Believe me – they don’t want to hear about all the things Labour got right.

And believe me – they certainly do want to know we’ve learned from our mistakes.

But most important…

They want to know that there’s a reason to be hopeful…

That their hard work will be rewarded and their kids will do well…

That there is a better way.

Conference…

Trying to cut the deficit too far, too fast isn’t working.

The government must adopt a steadier, more balanced plan to get our deficit down and take immediate action now to support the economy and create jobs here in Britain.

So here are five immediate steps the government can and should take right now:

Step one – repeat the bank bonus tax again this year – and use the money to build 25,000 affordable homes and guarantee a job for 100,000 young people – it can’t be right to be cutting taxes on the banks when almost 1 in 5 young people are now out of work.

Step two – genuinely bring forward long-term investment projects – schools, roads and transport – to get people back to work and strengthen our economy for the future.

Step three – reverse January’s damaging VAT rise now for a temporary period – a £450 boost for a family with two kids – immediate help for our high streets and for struggling families and pensioners too.

Step four – announce an immediate one year cut in VAT to 5% on home improvements, repairs and maintenance – to help homeowners and the many small businesses that are so dependent on the state of the housing market.

Step five – a one year national insurance tax break for every small firm which takes on extra workers, using the money left over from the government’s failed national insurance rebate for new businesses – helping small businesses to grow and create jobs.

Conference… a plan to help struggling families and small businesses, get our economy growing and create jobs which are the key to getting our deficit down.

Action on jobs;

Investment brought forward;

Support for families;

Support for homeowners;

Support for small businesses.

Five immediate steps the government could take tomorrow – and if they do so, we will back them.

Call it Plan A plus

Call it Plan B

Call it Plan C

I don’t care what they call it.

Britain just needs a plan that works.

TOUGH DECISIONS

But I have to level with you all – and the country… a plan for growth now will help get the economy moving again and stop the vicious circle on the deficit – but by itself it won’t secure our economic future or magic the deficit away.

A steadier, more balanced, medium-term plan to get the deficit down will still mean difficult decisions and tough choices in the years ahead that any government will face.

Tough choices on tax and spending – like the cuts to welfare, education and Home Office budgets that we set out before the election.

Discipline in public and private sector pay.

And no matter how much we dislike particular Tory spending cuts or tax rises, we cannot make promises now to reverse them.

I won’t do that and neither will any of my Shadow Cabinet colleagues.

And while we know that the Government’s approach to pensions has been confrontational and unfair…

That there is nothing George Osborne would like better than a strike this autumn to divert attention from his failing economic plan…

… we know too that there are difficult decisions on pensions which we cannot duck and that under Labour contributions and the retirement age would be rising too.

Conference – it will not be enough to expose that David Cameron and George Osborne have got the economy badly wrong.

We still know today what we recognised seventeen years ago: we will never have credibility unless we have the discipline and the strength to take tough decisions.

When I left the Financial Times to work for Labour in 1994, it was because I knew that a reputation for credibility and a platform of stability were the essential pre-conditions for achieving our wider goals, and I wanted to play my part.

And Conference…

– Bank of England independence;

– not joining the Euro;

– levelling with the public that saving the NHS needed a tax rise;

– using all the £22bn windfall from the 3G mobile phone auction to repay the national debt – despite Tory demands to spend it at the time;

… the same iron discipline that guided those decisions must guide a future Labour government too.

And let me say these two things today.

First, before the next election – and based on the circumstances we face – we will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to – to get out country’s current budget back to balance and national debt on a downward path.

And these fiscal rules will be independently monitored by the Office for Budget Responsibility.

And second we know that, even as bank shares are falling again, David Cameron and Nick Clegg are still betting on a windfall gain from privatising RBS and Lloyds to pay for a pre-election giveaway.

We could also pledge to spend that windfall.

But – just as with the 3G mobile phone auction – we will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt.

Conference that will be Labour’s choice – fiscal responsibility in the national interest.

SECURING OUR LONG-TERM ECONOMIC FUTURE

And on that platform of fiscal responsibility and action now for jobs and growth, we must also build the long-term future of the British economy.

And that means government must act to ensure markets work in the public interest and tackle unfair concentrations of power.

Many of us have had enough experience of government to know that the public sector can fail too:

– that Whitehall doesn’t always know best;

– that well-meaning business regulations designed by public servants can sometimes do more harm than good in the real world;

– that central directions shouted ever more loudly are no substitute for proper public service reforms that get incentives right, tackle market failure and put power in the hands of users.

But we know too that government just walking away is not the answer…

That government has a vital role to play, working closely with business, in making our economy stronger and more balanced for the long-term.

John Denham, Liam Byrne, Angela Eagle and I are working on our new financial, industrial and employment policies.

We can’t claim we have all the answers at this stage.

But we know we can’t tackle our skills deficit unless both government and employers do more.

We can’t have a modern industrial policy without government action:

– to support new manufacturing technologies, including green manufacturing;

– to make the planning system work to support investment and jobs;

– and yes, to ensure a genuinely level playing field for procurement too.

And we can’t tackle the debilitating short-termism which still plagues the relationship between finance and industry in Britain without radical reforms… reforms that must go beyond the tough regulation of the banks that the Vickers Commission has proposed.

That is why Ed Miliband, John Denham and I are determined that Labour will lead a debate on how to tackle short-termism in our economy… including tackling market failures in small business lending… and that means we must now examine proposals for a National Investment Bank for small business.

CONCLUSION

Conference, these are vital reforms.

Reforms upon which the future of our country depends.

But they are reforms which this Government just cannot deliver.

Because to back these reforms means to reject the debilitating ideology – private always good, public always bad, rising inequality inevitable – which grips this Tory-led Government.

The same view that says government is always the problem, and getting government out of the way the solution and that rewards at the top will eventually trickle down.

It is the same ideology that says private companies running the health service will always be better for patients.

That says cutting police officers, youth services and family intervention projects will somehow make our communities safer.

That claims ‘we’re all in this together’… but then delivers Budgets that hit families with children, hit women more than men and hit people with disabilities hardest of all

It is the same ideology that believes the global financial crisis was caused by too much public spending – and that because they are cutting public spending faster than ever in our history, Britain has become a safe haven.

A safe haven…?

When unemployment is rising, when our economy is flat-lining – how on earth can our Prime Minister and Chancellor say that Britain is a safe-haven?

It may be a safe haven for those who don’t need to work, for those with independent means, and those for whom £9,000 a year tuition fees is small change…

It may be a safe haven for David Cameron and George Osborne and Boris Johnson and their friends…

But for the 16,000 companies that have gone out of business in the last year, Tory Britain is not a safe haven:

– for the young people losing their EMA this term;

– for the women seeing their pensions cut;

– for the families about to see their child benefit taken away;

– for the million young people now out of work…

…Tory Britain is no safe haven.

And for the millions of families struggling with higher bills, worried about their jobs and what their children’s future holds…

…Tory Britain is no safe haven at all.

Conference…

True to our values…

Willing to make the tough decisions…

For the sake of our economy, for al the British people…

Labour must win the argument.

We must show there is a reason to hope.

We must show that there can be a better future.

There is a better way.

Ed Balls – 2011 Speech to GMB Conference

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Below is the text of the speech made by Ed Balls, the Shadow Chancellor of the Exchequer, to the 2011 GMB Conference.

 

It’s a great honour to be invited today to address your annual conference here in Brighton.

A year ago, I spoke at your conference in Southport as shadow education secretary.

And that day I told this Conference that I came with bad news – that the Conservative Education Secretary Michael Gove had put an immediate stop to the extension of free school meals that this union campaigned for and delivered, through Labour’s National Policy Forum.

Back then, we could only guess at the scale of what this Conservative-led government intended to unleash.

The reckless gamble they were willing to take with our economy, jobs and living standards.

Their determination to force through the deepest cuts to public services for over sixty years – faster than any other country.

And the biggest hit to the living standards of your members in a generation:

VAT up to 20% costing families with children £450 a year and pushing up petrol prices too;

Pensions and benefits uprated by the CPI not RPI on a permanent basis;

Women already in their fifties having to work another one or two years to draw their pension;

Cuts to childcare support;

The youth jobs fund abolished;

Workplace rights scaled back for parents;

Tuition fees to be trebled;

And Educational Maintenance Allowances – support that helped the children of thousands of low paid workers stay on in education – now removed.

And we also had no idea of quite how unable or unwilling Nick Clegg, Vince Cable and their Liberal Democrat colleagues would be to do anything about it.

But we can’t be in any doubt any more.

We know that the global financial crisis was a crisis that happened in every country – it was not a recession made in Britain.

We know that the crisis was caused by the irresponsible actions of banks round the world – but I say this to you in all humility – Labour should have been tougher on them.

And we know we need to get the deficit down and that means tough decisions – tax rises and spending cuts.

But the evidence is all around us – George Osborne’s plan is not working as he expected. And however much he and the IMF now hope this is just a temporary blip, the fact is his spending cuts are going too far and too fast and have seen our economy flat-line in the last six months, as the confidence has slumped and the recovery has stalled.

And by cutting too far and too fast, he is creating a vicious circle in our economy: more people out of work and on benefits will make it harder to get the deficit down. In fact the Government is now set to borrow £46bn more than they had planned.

So today I want to set out why this rash plan is not working – and why the Government should follow Labour’s alternative and balanced deficit plan which puts jobs first.

I want to explain why this week the shadow work secretary Liam Byrne and I will launch a new campaign for a £2 billion tax on bankers’ bonuses which should be used to create 100,000 more jobs for young people, build more affordable homes and support Small Businesses.

But before I do – let me say this…

When Coalition Ministers come to this Conference and warn that they will have to act and legislate if we see a return to the un-rest of the 1980s…

Do not fall for this transparent game…

This attempt by Government Ministers to provoke a row about strikes and blame the stalling recovery on trade union members and working people.

Do not fall for David Cameron and George Osborne and Vince Cable’s desperate attempt to take this country back to the confrontation of the past.

Instead… let us say loud and clear:

We don’t want to see a return to the 1980s.

We don’t want a return to the division and confrontation of the 1980s.

We don’t want a return to the strikes and lost working days of the 1980s – seven times more days lost than under the last Labour Government.

We don’t want a return to the mass unemployment of the 1980s.

We don’t want a return to the rising child poverty of the 1980s.

We don’t want a return to the decaying school buildings, and long NHS waiting lists of the 1980s.

And above all we don’t want to return – ever again – the mass youth unemployment of the 1980s – to a time when young people left school or college and went straight into long-term unemployment – opportunity denied, a terrible waste of talent, which scarred our country for years to come.

That is why we now need a proper debate about an alternative economic policy – a proper Plan B for jobs and growth, which – with sensible cuts and fair tax ris es – is the best way to get the deficit down.

A proper debate which does not falsely claim that the recession and the deficit and now the stalling recovery are all caused by the national minimum wage or better maternity and paternity pay or record spending on the schools and NHS.

You cannot blame this global financial crisis on GMB members, trade unions members, teachers, nurses, carers, lunch-time supervisors – Mums and Dads and Grandparents too.

That would be a travesty – and we must not let David Cameron, George Osborne and Vince Cable get away with it.

Let me say first how much we in the Labour Party value the commitment to a fairer society that embodies this union at its best.

We appreciate the strong and challenging leadership of your general secretary, Paul Kenny.

We appreciate the work your members do up and down the country to improve the working conditions for those in vital industries across our country – whether in our utilities, our public services or in the private sector.

A mature relationship with the Labour Party and the trade union movement working together will be a vital part of any future for a strong and prosperous Britain.

I stand here proud to have served in the last Labour Government.

Where we got things right – even where at times we disagreed – I won’t be shy in saying it.

But when this union made calls which we did not hear – and which in hindsight we should have – I hold my hands up.

Your union led by Paul was at the forefront of bringing key issues to the top of the political agenda.

Paul was the one of the first to make the case that we were too slow to recognise the impact of the unrestricted movement of labour within the rapidly expanding EU.

He was the one saying that we cannot fight racism effectively if we ignore people’s worries about immigration

We were too slow on the temporary and agency workers directive and we should have done more to manage the influx of labour from the EU.

And your members were telling us we were late in addressing the housing shortage – and we were too slow to unlock the door to councils investing in new housing.

But in thirteen years there were times when a mature relationship, based on common values, reaped real rewards for working people.

From tax credits and a national minimum wage to make work pay to guaranteed holidays;

From the right to join a trade union and be represented to new rights for part-time, temporary and agency workers;

And new rights for parents and carers in the workplace.

Our free school meals campaign shows how Labour, working with unions such as yours, can get things right.

And with Brian Strutton and our colleagues in Unison we established the School Support Staff Negotiating Body.

Fair pay and progression is just as important to teaching assistants, caretake rs, cleaners, cooks and lunchtime supervisors as for teachers, nurses, doctors and the police.

The Government is making a profound mistake by abolishing that body.

As I said at the outset, these are difficult times for the Labour Party, the Trade Union movement and above all the people we are here to represent.

Well over twelve months on from the last general election, it is a matter of real regret that I am addressing your conference as the Shadow Chancellor, of an opposition Labour Party rather than as part of a Labour Government.

I remember meeting a group of trade union activists in Manchester last July during the leadership election and one of them saying to me:

“It’s all very well you coming along with your diagnoses of what went wrong and your vision for the next decade – but our members are losing their jobs now. What are you going to do about it?”

It is both public sector and private sector workers who are being hit ha rd by the deepest and fastest cuts of any other major economy in the world

It is GMB members whose jobs are on the line because of the Southern Cross scandal – as well as vulnerable people in their care. And with thanks to the work of your union we know the true impact of the massive frontloaded cuts to local government – hitting jobs and services and hitting the poorest areas hardest.

We should remember that when the government claims that we are all in this together.

GMB members – especially those working part time or in low paid jobs, or women and parents bringing up children – know the truth of that claim.

Because while David Cameron promised to lead the most family-friendly Government ever, the reality is that he is giving the banks a tax cut this year, while his changes to tax and benefits are hitting women harder than men and hitting families with children the hardest of all.

And GMB members know that his real agenda includes seein g the door opened wide to a two tier workforce in our public services as TUPE and other rights are reviewed – and protection against unfair dismissal scaled back.

So when anyone tells us that – after 13 years in Government – Labour needs a period in opposition, I think they need their head examining.

People say to me: Ed, you’re good at opposition.

I reply: I hate being in opposition.

Because however effective we are in holding this Tory-led Government to account.

If we’re out of power, we can’t turn people’s aspirations into realities.

If we’re out of power, we can’t protect the vulnerable and help those most in need.

If we’re out of power, we can’t get every child the support they need to succeed.

We can stand up for jobs, social justice, equality and fairness – but if we’re out of power, we can’t deliver.

And yet having spent the last year travelling around the UK as a candidate for the lea dership of our party, then shadow home secretary and now as Shadow Chancellor, I know that – despite the general election result – the Labour Party and trade union members I have met are not down or despondent but energised and united and determined to do what it takes to see Labour back in Government.

And I was proud, along with many of you – and with mums and dads and Grandparents and teachers and nurses and small business owners too –to be part of the TUC rally on 26 March – a massive and peaceful march that said no to the Conservative–led Coalition’s too deep and too fast cuts.

Because we know the very future of our public services, our welfare state, our economy are now in peril because of the reckless and deeply ideological Tory direction this Coalition Government has taken.

And don’t let anyone tell you the lie that this Government has no alternative because Labour spent too much on schools, hospitals and police.

It wasn’t because we built too many new hospitals or repaired too many leaking roofs in our schools here in Britain that Lehman Brothers, an Investment Bank in New York collapsed.

Yes we did increase public spending – because for 18 years the Tories had starved our public services and I make no apologies for building new hospitals – for building new schools.

And we did so by increasing some fairer taxes such as the national insurance rise in 2003 to increase health spending.

And we were able to do so also because we got many of the big calls on the economy right;

Independence for the Bank of England – which the Tories opposed – delivered stable growth and low interest rates;

We kept out of the Euro, a decision which looks even more sensible when we see the trouble Ireland, Greece and Portugal are facing;

And before the global financial crisis we had the second lowest level of debt of any G7 country – lower than the US, France, Germany, Italy and Japan.

And when we left office a year ago, and after some really tough times, we were turning a corner – unemployment starting to fall month by month, lower inflation and the economy starting to grow strongly.

There was still a long way to go, but we were getting back on the right track.

And because more people were in work, paying taxes and not receiving benefits, borrowing ended up over £20 billion lower last year than forecast.

But now George Osborne has ripped up our plan to halve the deficit and decided he will cut the deficit faster than any other major economy in the world – putting up VAT, cutting deep into frontline services, scrapping public and private sector jobs.

And look at what’s happening now:

Our economy – w hich was growing – has now ground to a halt.

Prices are rising for everyone – threatening a rise in mortgage rates.

Unemployment – which was falling month on month – is now forecast to be higher – up to 200,000 higher.

The Treasury borrowed more this April than in any other April – ever.

That’s because there’s a vicious circle.

If the economy isn’t growing and hundreds of thousands of people are losing their jobs, then fewer people pay tax and more people claim benefits making it harder to get the deficit down.

So when George Osborne, Nick Clegg, David Cameron say there is no alternative to deep and fast cuts now.

Let us remember:

That is what Margaret Thatcher said in 1980 – and we saw the devastation to our communities, to manufacturing and youth jobs as unemployment rose year by year for half a decade.

And the previous Prime Minister to say ‘there is no alternative,’ was a Labour Prime Minister , Ramsay MacDonald, in 1931, two years after the 1929 Wall Street Crash – the second biggest financial crisis of the last hundred years.

There is no alternative, MacDonald said, but to cut spending and unemployment benefits to get the deficit down and keep the financial markets happy.

But the Labour party said no – and so did Lloyd George and the Liberals.

And MacDonald had to form a Coalition with the Conservatives to make his cuts.

And what happened?

The Great Depression of the 1930s, mass unemployment and – yes – the deficit got worse.

Conference, you either learn the lessons of history or you repeat the mistakes of history – and that’s what they are doing.

The truth is George Osborne is going too far and too fast – and we’re paying the price in lost jobs and slower growth.

He has replaced Labour’s balanced plan to halve the deficit over four years with his plan to wipe it out – with £40 billion more cuts and tax rises.

And he abolished the youth jobs fund which was helping thousands of young people back to work.

We need to act now to stop another lost generation of young people – like in the 1980s when youth unemployment rose for four years after the recession was over.

Because putting young people on the dole is not just a waste of talent but a waste of money too.

Our plan for a £2 billion tax on bankers’ bonuses to create 100,000 more jobs for young people and build more affordable homes will be put to a vote in parliament – and we’re asking MPs from other parties to back it.

It’s the best way to get the deficit down – and stop Britain’s talent going to waste.

That’s the right and fair thing to do, but George Osborne isn’t listening.

He just doesn’t seem to get it.

He doesn’t get how hard people are being hit by higher vat and cuts in local services.

And he doesn’t get what it means to face the fear or reality of unemployment and the damage this will do to our young people.

For the sake of our country’s future, he needs to think again and start putting jobs and growth first – and he needs to do it now.

Conference, members of this union knows better than anyone

When living standards are squeezed, you know who pays the price.

When public services are scaled back, you know which communities lose out.

When unemployment becomes entrenched, you know which areas suffer most.

When only some children succeed, you know which children will be left behind.

And the reason why our movement campaigned so hard in 1945 and 1964 and 1997 was because we had seen the reality of what Tory Governments do.

Our predecessors saw their communities ravaged by the mass unemployment of the ‘30s.

They saw millions of young people excluded from the chance of a university place in the ‘50s.

And then many of us lived the rough the 18 years of Thatcher and Major Governments and saw:

Child poverty doubling;

Youth unemployment soaring;

Public services slashed to the bone.

So in the coming months let us carry on the hard work of winning back the trust of the British people – because there is so much at stake that is worth winning for.

3,500 children’s centres – that’s what’s at stake;

Health and safety at the workplace – that’s what’s at stake;

A young generation – at risk of mass unemployment again – that’s what’s at stake;

Over 2 million children still living in poverty – that’s what’s at stake;

Our National Health Service – that’s what’s at stake;

The future of our country – that’s what’s at stake.

So Ed Miliband and I and the whole of the Shadow Cabinet will take the fight to the Coalition and show there is a better way.

There is an alternative.

Ed Balls – 2010 Labour Party Conference Speech

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Below is the text of the speech made by the then Shadow Education Secretary, Ed Balls, at the 2010 Labour Party Conference.

 

Conference.

Today – all across our country – millions of children are going to school no longer putting up with leaking roofs or peeling walls…

…but instead going to one of the 4,000 brand new or fully refurbished schools built in the last thirteen years by our Labour government.

So when people tell you that politics doesn’t make a difference – that ‘you’re all the same’ – let us be proud of what we all achieved together in government.

The best generation of teachers we have ever had.

Over 120,000 more teaching assistants.

3,500 Sure Start children’s centres.

More young people getting an apprenticeship or going to university than e ver before.

The best exam results ever.

And standards rising fastest in the poorest areas.

That is a record of which we can all be proud.

So Conference please join me today in thanking my predecessors:

David Blunkett, Estelle Morris, Charles Clarke, Ruth Kelly, Alan Johnson – and the brilliant team of ministers who worked with me over the past three years – for the enormous contribution they have made to our country.

And I want to pay tribute in particular to David Miliband who – as schools minister – made the inspired decision to launch the Building Schools for the Future programme…

Conference, David has made a massive contribution already – and we all know he has a huge contribution to make in the future too.

But we know too – every one of us in this hall:

It’s the teachers and teaching assistants, the heads and caretakers, the social workers and nursery staff, the cooks and lunchtime supervisors whose publ ic service every day transforms the life chances of children in our country.

They are the real heroes and we thank them all.

Building Schools for the Future

Conference, Vernon Coaker and headteacher Neil Wilson have shown us the difference our Labour government has made for the young people attending Newall Green High School here in Manchester.

I am proud that we transformed hundreds of schools across the country – and today we have not one in two schools below our National Challenge standard as in 1997, but just one in 20 – schools Michael Gove has shown he will now abandon.

But because of Michael Gove’s short-sighted and arbitrary and unfair decision to scrap the Building Schools for the Future programme, over 700,000 children in 700 schools up and down our country will now not be getting the new school building they were promised.

And Michael Gove could not even publish a list of cancelled school buildings without getting it wrong – not just once but five times.

We have heard from Councillor Elaine Costigan from Sandwell about the deep hurt and pain that the mistakes in the lists and the cancelled buildings have caused for children and parents in her ward.

Elaine Costigan.

Four weeks ago a Tory Councillor.

Today proud to be a Labour Councillor fighting for fairness for all local children.

Michael Gove.

The man they told us was a genius – the Tories’ rising star.

They don’t say that any more.

In opposition he might have been able to write good jokes for the House of Commons.

But it’s no joke for all the children whose school buildings have been cancelled and whose hopes have been dashed.

And when I hear Michael Gove say that new buildings don’t make a difference.

I remember last year opening a new school in Knowsley, in a deprived ward on Merseyside, and walking round the magnificent new school build ing with a group of the students.

And asking them what’s the best thing about your new school?

And expecting – as usual – them to mention the Astroturf or the new canteen or the IT suite.

And you know what a girl in Year 9 said to me?

‘We never thought anyone would ever think we were worth a place like this’.

And when I mentioned her remark to the headteacher, he said to me ‘you’ve got to understand, all these millions of pounds, there has not been a building built like this in this community for decades – and my job is to use this chance to raise aspirations and to say to all the students – and their parents too – look, work hard, take the opportunity, show them you’re really worth it.’

And that is why it is such a tragedy that in Sandwell, and Liverpool, and Nottingham and Brent and Wakefield and in 80 local authorities round the country Michael Gove has now told hundreds of thousands of children – sorry, but you are not worth it.

And that is why I was proud to stand this summer with the NASUWT and the NUT and ATL and Unison and GMB and Unite and UCATT and parents, governors and teachers from around the country at the Save Our Schools rally to say to Michael Gove:

Think again.

Change your mind.

Our children are worth it.

Curriculum and free schools

But Michael Gove is not just cancelling new school buildings, he is also narrowing the curriculum and his education reforms will entrench division and inequality.

A few weeks ago I went to see a new BSF building for Mossley Hollins High School in Tameside – set to open next February.

It is an ‘outstanding’ school and the headteacher and the school council took me on a building site tour to see the science labs and the library and the dance studio.

Yes, the new dance studio.

Michel Gove says he wants schools now to focus only on ‘academic’ subjects, to drop our new Diplomas and to shun what he sneeringly calls ‘soft’ subjects like design and technology, construction, music, sports or dance.

Conference, I really don’t think he’s got a clue.

I’ve been to so many schools over the last three years where head teachers have taken me to see a lesson in GCSE dance and said to me: ‘look at that class, it’s not just that we have a great dance teacher in this school but the boost to aspiration and the belief and motivation of the students in this studio from this course will translate directly into their GCSE maths and English results as well’. That is great teaching and great leadership – and we should celebrate our pupils’ achievements and not keep running them down.

But what really upsets me is that as Michael Gove is dashing the hopes of children in state schools around our country, he a nd David Cameron are also travelling round promising new school buildings to a few parents but only if they are willing to opt out of the state system and any relationship with the elected local authority and set up one of their go-it-alone DIY ‘free market’ schools.

A policy which we know from Sweden delivered lower standards and greater inequality.

A policy which even the Liberal Democrat conference agrees is divisive, costly and unfair.

A policy which will divide communities and disadvantage children with special educational needs.

Conference, this is the most socially divisive education experiment for 60 years.

In government, our Children’s Plan was driven by a moral cause:

– that every child has talent and potential

– that some children do face greater challenges because of their disability, their special need or where they live

– but that no barrier is too great to overcome if the community works together to make sure every child can succeed

And our academies programme gave more help and support to underperforming schools in the most disadvantaged communities.

Michael Gove’s academies programme gives extra resources to outstanding schools in more advantaged communities.

And he has cancelled many of the radical reforms of our Children’s Plan:

– guaranteed 1 to 1 tuition for all children – cancelled

– free school lunches for half a million primary school children – ditched

– breakfast clubs for disadvantaged children – mocked

– social work reform – shelved

– the new pay negotiating body for support staff – abolished

– hundreds of new play areas – scrapped

What a shameful record after just five months in Government.

Stammering

And Conference, our Children’s Plan was important because it said no child should be held back through the lack of proper support, whatever their extra need.

That’s why Alan Johnson and I asked John Bercow to review and improve speech and language support.

And this is a personal thing for me.

I have had a stammer all of my life.

That’s why in the past I’ve often had to speak without notes.

I only started to talk openly about this recently – since being in the Cabinet – because it’s only by talking about it, and being open about the challenge, that I’ve been able to deal with it.

I was lucky. I am pretty tough.

I have had help and support, including from Yvette and friends.

But the lesson for me is clear.

There are hundreds of thousands of children struggle with their speech, or communication or their reading or their learning or a disability which so often holds them back.

Struggling on alone without support – and the understanding of those around you – will never get you through.

But if you can help a child deal with something like that – and help them to beli eve in themselves too – then you put their future back into their own hands.

That is why I am in politics.

That is why all of us are in politics.

To get every child the support they need to succeed.

That is our moral cause.

Opposition

So when anyone tells me that – after 13 years in government – Labour needs a period in opposition, I think they need their head examining.

People say to me: Ed, you’re good at opposition.

I reply: I hate being in opposition.

Because however effective we are in holding this Coalition to account.

If we’re out of power, we can’t turn people’s aspirations into realities.

If we’re out of power, we can’t protect the vulnerable and help those most in need.

If we’re out of power, we can’t get every child the support they need to succeed.

We can stand up for jobs, social justice, equality and fairness – but if we’re out of power, we can’t deliver.

Liberal Democrats and Conservatives

And yet having spent the last four months travelling around the UK as a candidate for the leadership of our party, I know that – despite the General Election result – the Labour Party, Co-operative Party and trade union members I have met are not down or despondent but energised and united and determined to do what it takes to see Labour back in government.

And let me tell you one reason why our party is so determined and our membership is surging.

Two words:

Nick Clegg.

Don’t forget last year at this Conference, when The Sun newspaper came out for David Cameron, he was on track for an 80 seat majority.

But David Cameron failed to convince the country his party had changed and that he could be trusted.

It was not The Sun what won it for the Tories this time. It was not the Sun that put them into power.

It was Nick Clegg:

– the man whose own el ection leaflets said ’Vote Liberal Democrat or you’ll get a Tory government,’

–  who said ‘stop the Tory VAT bombshell,’

– who said spending cuts now would be ‘reckless’ and put jobs and the recovery at risk.

It was Nick Clegg who has given us:

– a Tory Prime Minister

– a Tory Chancellor

– a massive and unfair hike in VAT

– and a Budget which even George Osborne’s new head of Budget responsibility says will hit the poorest hardest.

I say to Liberal Democrats MPs:

It is one thing to want to be in power.

It is quite another thing to sacrifice your Manifesto and – yes – your principles for power.

But to do so on the backs of the young and the poor and the pensioner and the vulnerable is a disgrace.

But Conference.

While we are shocked to see Liberal Democrat MPs propping up this Coalition government – and if we’re shocked, just think what all the people who voted for them feel like…

… there is a second and more important reason why our party is determined.

Because we know that this is a Conservative government – and it is the Tories we’ve got to beat to win the next election.

Nick Clegg may look like David Cameron and increasingly sounds like David Cameron, but it’s David Cameron who is in charge.

And however much David Cameron and George Osborne use the Liberal Democrats as their human shields, we must not let the Tories off the hook.

Because we know the very future of our public services, our welfare state, our economy are now in peril because of the reckless and deeply ideological Tory direction this Coalition government has taken.

There is an alternative 

Take the decision to cancel Building School for the Future.

It is not just educationally short-sighted and unfair.

It is also putting hundreds of thousands of private construction jobs at risk just at the time when the priv ate sector is holding back from investing in new houses or private buildings.

And when the Tories and the Liberal Democrats say we have to cancel our school building programme because getting the deficit down as fast as possible is the number one priority – when they say that there is no alternative to these cuts now, Let us remember:

That is what Margaret Thatcher said in 1980 – and we saw the devastation to our communities, to manufacturing and youth jobs as unemployment rose year by year for half a decade.

And the previous Prime Minister to say ‘there is no alternative,’ was a Labour Prime Minister, Ramsay MacDonald, in 1931, two years after the 1929 Wall Street crash – the second biggest financial crisis of the last hundred years.

There is no alternative, MacDonald said, but to cut spending and unemployment benefits to get the deficit down and keep the financial markets happy.

But this party said No – and so did Lloyd George and the Liberals.

And MacDonald had to form a Coalition with the Conservatives to make his cuts.

And what happened?

The Great Depression of the 1930s, mass unemployment and – yes – the deficit got worse.

Conference

You either learn the lessons of history or you repeat the mistakes of history – and that’s what they are doing.

Just think if Clement Attlee in 1945 – when after the war when our national debt was over twice its current level – had said that the first priority was to get the deficit down…there would have been no NHS, no new homes for heroes and no welfare state.

But we don’t need to go back to the history books to see the warning signs over George Osborne’s economic policy – we only need to look across the Irish Sea.

Two years ago, the Irish Government convinced itself they had to slash public services and cut child benefits to get their deficit down as fast as possible and reassure the money markets.

The IMF praised the Irish government for its “sense of urgency”.

And what has happened since?

Recession turned to slump, unemployment at a 16-year high, 19 consecutive months of deflation, consumer spending and tax revenues plummeting, and the deficit worse now than when they started.

The Irish Economist David McWilliams said this week:

“It is like watching a slow car crash. The more they cut, the more the economy will continue to stagnate.”

George Osborne used to say that Ireland has so much to teach us, if only we were willing to learn.

Now he’s the one ignoring the lessons.

Just imagine if Alistair Darling and Gordon Brown had listened to David Cameron and George Osborne in 2008 – and not nationalised the banks, not cut VAT, not invested in a new jobs programme – recession would have turned to depression and unemployment would be much higher today.

And Conference, let me say – I was proud to s erve in Gordon Brown’s Cabinet – we did not get everything right – but he was the right Prime Minister for a world financial crisis and history will give him the credit he deserves.

Of course we need tough decisions to get the deficit down.

But Alistair Darling and Gordon Brown were also right to say: don’t start to cut the deficit until the recovery is secure.

Conference, there is an alternative – a Labour alternative.

We must win the argument – as Alistair said on Monday – that the speed and severity of the Coalition’s ‘ideological’ cuts are both unfair and unnecessary and will put the recovery at risk.

So we must make the case, as Ed Miliband did yesterday, that the credible way to reduce the deficit and get the economic moving again is not to sacrifice jobs and growth – but to put jobs and growth first.

George Osborne

Too many people have worked too hard over the last three years to get us through thi s economic storm to let George Osborne throw it away.

So let this Conference send out a message to George Osborne and David Cameron:

Whenever you put at risk the jobs that we protected.

Whenever your policies threaten the homes that we saved from repossession.

Whenever you put another child and another pensioner back into poverty.

The Labour Party will be there…and we will fight you every inch of the way.

The Leadership

But Conference, there is a final reason – perhaps the most important – why I believe our party is ready for the fight ahead.

Because I believe our Labour leadership contest has shown we have learned the lessons of Labour history – from the 1950s and the 1980s and from more recent times – that to divide is fatal, to look inwards and blame the voters spells disaster.

I have been proud to be a candidate in this leadership election, the first every Co-operative MP to do so, and I want to thank my colleagues who backed me, the CWU, all the party members and councillors and trade unionists round the country who helped me, my brilliant camp aign team –  and Yvette for her immense tolerance.

David, Andy, Diane were great candidates and a credit to our party and we have conducted this election in a truly comradely way.

But for the four of us who finished behind Ed Miliband, there is no shame in losing to someone who has inspired and energised our party – and who brought this hall to its feet yesterday.

And working with him for 16 years in opposition, in the Treasury and in Parliament, I always knew that – for Ed – fairness, opportunity and social justice weren’t just slogans, they were his reason for coming to work in the morning – they were his defining purpose.

Ed, I’ve been proud for 16 years to call you a colleague and a friend.

And now I’m proud to call you our leader.

And it will be my mission to back our new leader, to take the fight to the Coalition and to return us to government in the shortest possible time.

Conference.

Let that be the mission of us all.

United, disciplined, determined.

Winning the argument for a credible and radical Labour programme.

There is an alternative.

Together we can make sure Labour wins again.

Ed Balls – 2009 Speech to Labour Party Conference

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Below is the text of the speech made by Ed Balls, the then Secretary of State of Children, Schools and Families, to the 2009 Labour Party conference.

 

Conference, there are over 79,000 social workers in our country today.

Doing a job which can be tough and sometimes dangerous – but which saves lives and makes a huge difference to thousands of families.

And unlike teachers or nurses, fire fighters and police officers where we can celebrate a life saved, a crime solved or a schools  exam results, we rarely get the chance to celebrate the quiet successes of our social workers.

It is the toughest job.

And it has been a really difficult year.

The tragic death of Baby Peter in Haringey shocked the nation.

People were appalled by what happened – by the cruelty he suffered, but also by the collective failure of services in Haringey to keep him safe.

And I had to take tough action – to restore public confidence and to strengthen frontline practice.

Faced with the same circumstances, I would take the same decisions again.

But I know too that there is no more important job in our country than the job our social workers do day in day out:

Keeping children safe.

Looking after children in care.

Supporting the most vulnerable in our society.

That’s why I am determined to do whatever it takes to get social workers the training, the IT, the support they need to do their job.

And it is also why I am asking you today:

– to stand up for social workers;

– to back our Help Give Them a Voice campaign;

– and to join me in saying – for their dedication and their professionalism – thank you to the social workers of our country.

And Conference, what is it that brings people into social work?

What inspires Kevin and Colin, Sharon, Pauline and Colleen – the brilliant public servants we have applauded this afternoon?

We know the answer.

We have just seen it on this stage.

It is the moral cause of public service.

And Conference, this is our moral cause too.

It is this commitment to social justice which brought many of us here today into politics:

– that every child should have the right to be safe and happy and the opportunity to make the most of their talents;

– and that there should be no barrier too great to overcome – not where they live, their parents’ income, their special need or disability,

No barrier too great to overcome if through our collective endeavour we can break down those barriers and give every child the opportunities they deserve.

That is the vision of our Children’s Plan.

That is what we mean by social justice.

And we can be proud of our work together to turn our moral purpose into direct action.

Think of it – in 1997 – no Children’s Centres at all – or free nursery care.

But as Yvette and I know – as many of you know all too well – it is hard to balance work and family life and we all want our children to have the best start in life:

– that is why Mums and Dads can now get the financial support they need to stay at home with their children after they are born;

– a free nursery place for all 3 and 4 year olds, now being extended to 250,000 2 year olds;

– thousands of families with a disabled child now getting the short breaks they desperately need – and parents whose relationships are under pressure, getting help too;

and by March next year, 3,500 Sure Start Children’s Centres – one in every community.

A new and universal pillar of our welfare state delivered by this Labour government.

And in 1997 our country had one of the lowest rates of staying on at 16.

But because we are determined to give all young people the chance to succeed we now have 225,000 young people starting apprenticeships this year.

We’re guaranteeing a place in sixth form, college or training for every school leaver this September.

And we have also legislated so that for the first time in our country’s history, education will be a right for every young person until the age of 18.

For our Labour, trade union and co-operative movement a dream for 100 years and more – now delivered in this century by this Labour government.

And Conference, remember what we campaigned to change twelve years ago:

– leaking roofs and freezing classrooms;

– photocopied textbooks;

– a teaching profession demoralised;

– over half of schools not making the grade.

That was Tory education policy.

And where are we now?

4,000 new or refurbished schools – the biggest school building programme since the Victorian era;

funding per pupil more than doubled;

42,000 more teachers – the best paid in our history – and 183,000 teaching assistants too;

and not half of schools but less than 1 in 10 secondary schools now below our National Challenge standard.

That is the difference made by a Labour government – our moral purpose in action.

Of course, not everyone agrees.

Michael Gove says our state schools are failing.

He wrongly claims that grades are rising because exams are getting easier.

Michael: stop running down the real achievements of our young people and the hard work of teachers in schools round the country.

And conference, unlike the Tories, we will not break our promises on pay and conditions to teachers and head teachers.

We will put teaching on the same professional footing as doctors and lawyers, introduce an entitlement to continuous professional development and reduce workload so teachers can get on and teach.

And we can only do this by protecting the vital role our teaching assistants play every day – and our caretakers, cooks and cleaners too.

That is why I am backing our support staff negotiating body today with new funding so that we can raise the training and recognition of support staff across our country.

And I want to pay particular tribute to the hard work of our school catering staff – it because of their efforts and the campaigning of the National Policy Forum, the GMB, Unison and Party members that this month we started our pilots in Newham and County Durham – free school meals for all their primary school children.

And Conference, we know too that our teachers play a hugely important and trusted role in our communities and with our children.

I say there is no place in a civilised society for bullying of any kind whether because of race, or disability or sexual orientation.

And I say too there is no place for racism of any kind in our schools.

That is why I am today asking the former Chief Inspector of Schools, Maurice Smith, to examine the evidence and make recommendations.

I want us to be confident that we have all the powers we need to keep racism and BNP activity out of all our schools.

Conference.

I want to say thank you to Cath Speight and the Policy Commission for their debates and advice.

And to our brilliant ministerial team, Dawn and Vernon, Kevin, Diana, Delyth and Iain.

We all know we still have much more to do to break down every barrier so that every child can succeed.

That is why we are uncompromising about raising standards in every school – with schools working together in National Challenge Trusts, Co-op trusts, and our Academies programme to break the historic link between poverty and attainment.

And when children fall behind they need extra help to get back on track – so we will guarantee one to one tuition in primary and secondary schools with extra help and support for children with special educational needs

And because parents do want to know how their children and local schools are doing – we will keep tests at the end of Year 6, but we will introduce a new Report Card so that schools are, for the first time, fairly judged on all they do and parents get all the information they need.

But parents also want their children to go to an orderly school with a strong head teacher who won’t tolerate bullying or disruptive behaviour in the classroom – like Blatchington Mill School in Hove which I visited this morning with the Prime Minister.

So the Schools Minister Vernon Coaker and I are today announcing our new Behaviour Challenge so that every school has good discipline.

And we will back head teachers, and expect all parents to back teachers too, so they have the confidence to use their powers to the full so teachers can teach and all children can learn.

But Conference we will have to meet our goals in tougher times.

It’s been a turbulent twelve months – the worst global financial crisis for a very long time.

Who can now doubt that the swift and decisive leadership of Gordon Brown and Alistair Darling saved Britain – and the world – from sliding into depression?

And we will not shirk the tough decisions to deliver the recovery we need and to get the deficit down.

On tax, those with the broadest shoulders are carrying a heavier burden.

And on spending too, we will make efficiency savings and ensure value for money.

That is the only fair way to protect our frontline priorities.

So let us say loud and clear today:

We are not going to cut back Sure Start or tax credits or threaten child benefit.

That’s David Cameron’s plan.

And we will not deny school leavers the college and apprenticeship places they need or cut our school building programme to pay for an unfair and unfunded free market education experiment.

That’s Michael Gove’s plan.

But you know what shocked me most this summer?

It wasn’t Michael Gove agreeing with George Osborne to cut schools and Sure Start budgets.

It wasn’t Michael Gove running down the achievements of our young people.

It wasn’t his refusal to back our free school meals pilots.

None of that surprised me.

After all, he is a Tory.

But when he said we should exclude all vocational qualifications and Diplomas from league table comparisons of school performance, you start to get the real measure of his plans.

Time after time I’ve visited schools where heads have proudly shown me design or construction, sport or dance lessons and told me those subjects have inspired young people to get good grades,  including in maths and English too.

But Michael Gove says that these are soft subjects which should not count.

What schools does he visit?

How can he say all the pupils in our state schools learning these vocational subjects are second class?

Instead of ending the damaging old divide between first class academic qualifications for some and vocational learning for the rest, he wants turn to back the clock and entrench that divide.

Conference – this is the choice.

Between a Conservative Party determined to preserve excellence for those who have it and a Labour government committed to open up excellence and opportunity for all.

So I tell you:

– we are not going to cut investment in schools and Sure Start;

– we are not going to mandate cuts to frontline services that mean fewer teachers and teaching assistants;

– we are not going to pay for an inheritance tax cut for the wealthy few by cutting investment in our children’s future;

That is the Tory way – and we will fight it from now until election day.

Conference, we know the truth.

When public services are scaled back, we know which communities lose out.

When unemployment becomes entrenched, we know which constituencies suffer most.

When only some children succeed, we know which children will be left behind.

And the reason why our Party campaigned so hard to be elected in 1945 and 1964 and 1997 was because we had seen the reality of Tory government.

Our predecessors saw their communities ravaged by the mass unemployment of the ‘30s.

They saw millions of young people excluded from the chance of a university place in the ‘50s.

And then many of us lived through the 18 years of Thatcher and Major governments and saw:

– child poverty doubling;

– youth unemployment soaring;

– public services slashed to the bone.

I say to anyone who doubts whether this is a fight worth fighting,

Let us not learn that lesson the hard way again.

We don’t need to go back to Opposition to remind us why we need a Labour government.

There is only one party that can get us through this downturn and that’s our Party – the Labour party

There is only one party that will prioritise investment in education for all and that’s our party – the Labour party.

There is only movement whose commitment to social justice is so deep in its core that – even in difficult times – we will still invest in our NHS and to support our pensioners and to tackle child poverty.

It is going to be a hard fight. Yes…we are the underdogs.

But in the coming months as we make the phone calls, deliver the leaflets and knock on doors, remember what’s at stake:

– 3,500 Children’s Centres – that’s what’s at stake.

– over 2 million children still living in poverty – that’s what’s at stake.

– our plan to rebuild or refurbish every secondary school – that’s what at stake.

– education to 18 a right for every young person – the future of our country – that’s what’s at stake.

This is the most important election for a generation.

We must rise to the challenge.

It will be the fight of our lives – let us go and win it.

Ed Balls – 2008 Speech on National Curriculum Tests

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Made on the 14th October by the Secretary of State for the Department of Children, Schools and Families in the House of Commons.

 

Mr Speaker, with your permission, I would like to make a statement on National Curriculum tests – and the next steps we will now take to strengthen school accountability.

The far-reaching reforms I am announcing today will:

– strengthen the role of Key Stage 2 national tests for 11 year olds;

– radically reform the current Key Stage 3 testing regime in secondary schools;

– and introduce a new, simpler and more comprehensive way of reporting to parents on primary and secondary school performance.

Mr Speaker, when I made my statement to the House on 22 July, the Qualifications and Curriculum Authority (QCA) was engaged in commercially sensitive contractual negotiations with ETS Europe.

On 15 August, the QCA terminated its five year contract with ETS Europe and recovered payments amounting to £24.1 million – two thirds of the monies due to ETS Europe for the first year of the contract repaid to the taxpayer.

I also announced that the QCA would tender for a single year contract for the delivery of the 2009 tests.

This new procurement is underway and has been informed by advice from Lord Sutherland – whose independent inquiry into the procurement and management of the contract for the delivery of this year’s tests will set out important lessons for all future contracts of this kind.

Lord Sutherland expects to complete his final report before the end of the year.

In my statement in July, I also made it clear that the current testing and assessment regime is not set in stone.

I know that some honourable members were disappointed that – at that time – I was not able to go further. But it was important that we evaluated the case for change before making decisions.

Over the summer, we have been able to study the Select Committee’s report on testing and assessment, which was debated in this House last week.

We have studied more detailed evidence from our Making Good Progress pilots.

And I have heard from a range of experts and partners – including Ofsted, head teachers, teachers and parents.

Mr Speaker, I fully agree with the Select Committee that the principle of national testing is sound.

But I do take seriously concerns raised by the Select Committee, teachers and parents.

Testing, assessment and accountability must encourage and reward the best teaching – so that that it properly supports pupils in their learning and development, and schools are judged fairly on how they support the progress and well-being of every child.

I believe that there are three key principles that must guide our approach.

Our system of testing and assessment should:

– First, give parents the information they need to compare different schools, choose the right school for their child and then track their child’s progress;

– Second, enable head teachers and teachers to secure the progress of every child and their school as a whole, without unnecessary burdens or bureaucracy;

– Third, allow the public to hold national and local government and governing bodies to account for the performance of schools.

Over the summer, and guided by these principles, the Schools Minister and I have looked carefully at our system of national testing and accountability across Key Stages 1, 2 and 3.

Mr Speaker, over more than a decade, testing and assessment has played a vital role in driving up standards in primary schools.

This year, 107,000 more pupils left primary school secure in English and maths than in 1997.

These are the basics that every parent knows their child needs if they are to succeed at secondary school.

And the National Curriculum tests at the end of Key Stage 2 are the only objective measure of attainment in primary schools for parents, head teachers and the public.

The current format of Key Stage tests at age 7 and 11 is not set in stone.

At Key Stage 1, we have rightly replaced externally marked tests with teacher assessment, and introduced new catch-up teaching for children at risk of falling behind.

We will now examine whether the current system of requiring teachers to use nationally set tasks as part of moderated teacher assessment is working effectively.

We are also currently piloting ‘stage not age’ single level tests at Key Stage 2.

While the emerging evidence from these continuing pilots is encouraging, it is too early to decide to proceed nationally.

But I am convinced that externally marked Key Stage 2 National Curriculum Tests are essential to giving parents, teachers and the public the information they need about the progress of each primary age child and of every primary school.

To abolish these tests, as some argue, would be the wrong thing to do.

Mr Speaker, the testing and assessment system has also supported rising standards in our secondary schools – 68,000 thousand more pupils gained five or more good GCSEs including English and maths in 2007 than in 1997.

But having looked hard at the current testing regime, we do not believe that the three principles I have set out justify the Key Stage 3 testing arrangements in their current form.

Parents want to be able to choose the right secondary school for their child and see how their school is performing – but it is usual for them to look at a school’s GCSE results to do so.

Parents also want to be able to track the progress of their children – but the measures we have already announced to improve real-time reporting of progress will mean that parents get much more regular information than just the results of a single national test.

And head teachers have repeatedly told me that a more flexible system of assessment throughout Key Stage 3 would allow schools to focus their efforts more effectively on personalised teaching and learning using the flexibility of the new secondary curriculum.

I have considered a shift to ‘stage not age’ tests in secondary schools, which we have also been piloting at Key Stage 3 over the past year.

But the emerging evidence shows that single level tests at Key Stage 3 are not working effectively – so on the advice of the National Assessment Agency, we will now bring the Key Stage 3 piloting of single level tests to an end.

Mr Speaker, I am today announcing that – as part of a wider overhaul of Key Stage 3 assessment – children will no longer be required to sit national tests at age 14.

Instead:

– We will ensure every parent receives regular reports on their child’s progress in years 7, 8 and 9 – and that teachers have the training and support to help every child make good progress;

– We will continue to provide Key Stage 3 test papers to any schools that want to use them internally;

– We will ensure that schools properly focus in years 7 and 8 on the progress of those children who did not reach the expected standard at Key Stage 2, with effective one-to-one tuition and catch-up learning;

– And we will introduce an externally marked test, with a sample of pupils to measure national performance, so that the public can hold government to account.

Mr Speaker, some parents find it difficult to judge how well their local schools are doing from national tests or Ofsted reports alone.

So I also want to go further on school accountability.

With the support of Ofsted, and following discussions with social partners, it is our intention to introduce a new School Report Card for all primary and secondary schools.

The School Report Card will help parents to better understand how well schools are:

– raising standards and improving, compared to other schools in their area;

– supporting the progress of every pupil;

– and playing their role in supporting the wider development and wellbeing of children.

It will draw upon the successful model being used in New York City and elsewhere – but be designed to suit our schools.

We will set out detailed proposals for consultation before the end of the year – with a White Paper to follow in the Spring.

Mr Speaker, these are far-reaching reforms and it is vital that we get the details right.

We will draw upon the analysis and findings of the Select Committee report and we will work closely with our social partners to take them forward without un-necessarily adding to teacher workload.

And to advise us on the development of this new system, I am also today appointing a new Expert Group – and placing copies of its detailed terms of reference in the libraries of both Houses.

Mr Speaker, today’s reforms require changes to the procurement of national tests for 2009.

Consistent with our plans for future years:

– we will continue to require pupils to take the national curriculum tests at Key Stage 2;

– but we will not require pupils to take Key Stage 3 tests in 2009.

The QCA is now extending its procurement deadline accordingly.

Mr Speaker, the package of reforms I am announcing today will:

– give parents better, more regular and more comprehensive information about their child’s progress and their school;

– support head teachers and teachers to ensure that every child can succeed;

– and strengthen our ability to hold all schools to account, as well as the public’s ability to hold government to account.

And I commend this statement to the House.

Ed Balls – 2007 Speech on Ending Child Poverty

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Below is the text of the speech made by Ed Balls, the then Secretary of State for Children, Schools and Families, on ending child poverty made on 10th December 2007.

 

I’m delighted to be speaking here today. And it is timely for me to be here because – as many of you know – tomorrow we are publishing our Children’s Plan.

Over the past six months, we have been listening to parents, teachers, professionals, and children and young people themselves.

We have heard that while there are more opportunities for young people today than ever before, parents want more support in managing the new pressures they face such as balancing work and family life, dealing with the internet and modern commercialism, and letting their children play and learn whilst staying safe.

We heard that while children are doing better than ever in school, we need to do more to ensure that every child gets a world class education.

And we heard that while fewer children now live in poverty, too many children’s education is still being held back by poverty and disadvantage.

If we are going to make this the best place in the world for children and young people to grow up.

If we are going to help all children and young people to fulfil their potential, we need to eradicate child poverty.

This morning, Beverley Hughes and I visited Cardwell Primary School in Woolwich. Cardwell Primary School is located in an area of high deprivation, with over half of the children eligible for free school. But those children’s education is not held back by poverty and disadvantage.

They are not held back because of the commitment of the head teacher – Carol Smith – and her team to look at the needs of the ‘whole child’ – tackling all the barriers to learning faced by their pupils.

And they are able to do so effectively because their school is co-located with a children’s centre that offers a wide range of different services for the local community.

Eradicating child poverty is something I care passionately about. It was something I was deeply committed to when I worked at the Treasury and I have worked with many of you over the past few years.

It shouldn’t surprise any of you that I have carried this commitment with me to my new role as the first ever Secretary of State for Children, Schools and Families.

Back in 1999, this Government set one of the most ambitious economic and social policy objectives set by any government in the developed world – to eradicate child poverty within a generation.

At that time, we had inherited an intolerable situation. Between 1979 and the mid 1990s, the number of children living in poor households had more than doubled.

By the time this Government came to power in 1997, the UK had the worst rate for child poverty in Europe – indeed, it was one of the worst of any industrialised nation.

Since then, we have managed to stem the long-term trend of rising child poverty by galvanising our efforts around our goal.

Partly through our investment in support for children and families since 1997:

– The reforms to the tax and benefit system that mean that the poorest families will be an average of £4,000 better off in real terms by April 2009;

– The 1,500 Sure Start Children’s Centres that are offering services to over a million young children and their parents;

– And the national minimum wage underpinning all of our support for low-income families.

As a result, there are 600,000 fewer children living in relative poverty now than there were in 1998/99 – the biggest fall of any EU country over this period.

But work has also been central to our ambitions – over 2.7 million more people now in work, including 335,000 more lone parents – bringing the total of lone parents now in work to more than a million.

A child of a lone parent that works is three times less likely to be living in poverty than a child of a lone parent that doesn’t. We know work – for those who can – provides the best, most sustainable, route out of poverty. Better off now, but even better off in the future.

As Michael said, and as you all know and we have discussed in recent months, we still have a long way to go. The Joseph Rowntree Foundation and many of you are questioning whether we can sustain our level of progress.

And I share your disappointment that last year’s figures – for the first time since 1999 – showed an increase in the number of children living in poverty.

In every typical class of 30 children in our schools, 6 or 7 of those children are still living in relative low income poverty. In areas such as London, this figure rises to nearly half.

So meeting the 2010 goal to half child poverty and our 2020 goal to eradicate it altogether is not going to be easy. But I want to be clear that we’re not going to abandon these goals just because the going has got tough. This is when we need to redouble our efforts and when we need to try even harder.

The measures we recently announced in the Budget and in the PBR will take an estimated further 300,000 more children out of poverty. I know some of you are disappointed we have not done more. But our commitment is genuine and real.

Rightly, you will always be campaigning for more immediate help to lift children out of poverty. And when I joined the Chancellor of the Exchequer at No 11 Downing Street last month to meet the End Child Poverty rally, we all agreed that we wanted to see more resources to support families living in poverty.

But I know you will also agree with me that, if we want to eradicate child poverty altogether over the next decade, we will need to have a much broader, all-encompassing approach. It is vital that we prevent children who are in primary school today from becoming tomorrow’s impoverished parents if we are to meet our 2020 goal of eradicating child poverty.

Because this is not a problem we can simply buy our way out of – it’s as much about what we do in children’s centres, in our schools and in the health services we provide for families. It’s as much about how we are preparing our children and young people for work as how much we are investing.

This is why we have taken a series of broader decisions over the last few months. And I believe there are reasons for us to be optimistic about our potential to meet that goal because we now have:

– A new department

– A new joint child poverty unit

– New, simpler but tougher PSAs to drive more action on child poverty locally

– A Children’s Plan being published tomorrow.

I would like to say something about each of these in turn.

NEW DEPARTMENT

Let me start with the new department. For the first time, we have a government department – the Department for Children, Schools and Families – that exists to champion the needs of children and young people.

For the first time, all policy for schools, children’s services, youth services and the Respect agenda have been brought together in one department.

And my department shares responsibility for youth justice with the Ministry of Justice – and I am actively working with Jack Straw on how we tackle the causes of youth crime because our approach must be based on prevention.

For child health with the Department of Health.

For children’s sport and play with the Department for Culture, Media and Sport.

For alcohol and drugs with the Home Office.

And of course, with the Department for Work and Pensions and the Treasury for child poverty.

Understandably, many of you will be wondering what this will mean in practice – is it simply a superficial rebranding exercise or is it a more meaningful change that signals that we are going to do things differently?

I am committed to making sure it is the latter by focussing on all the barriers to learning faced by all today’s children and young people. As the Department for Children, Schools and Families, we can make sure that – at a national level – we are focusing every policy that relates to children and families on tackling child poverty. And we will be able to drive local leaders – from lead members and directors of children’s services to children’s centre managers – to see the work as part of our shared challenge to tackle poverty.

But collaboration at the centre of government needs to be matched – or even exceeded – at a local level.

That’s why we are supporting the LGA’s Narrowing the Gap project, led by Christine Davies.

And that’s why we will champion all the good examples of integrated working between Children’s Information Services, Children’s Centres, Extended Schools and Job Centre Plus.

We need this to become the norm, not the exception, if we are to provide the best support to all parents and families.

Central to this is the provision of affordable, accessible and reliable child care, so that parents can go to work – and fulfil their own ambitions – safe in the knowledge that their children are being well looked after.

CHILD POVERTY UNIT

Second, our new joint Child Poverty Unit. This is the working expression of how we will do things differently. Sitting in my department, it brings together expertise from DWP and my Department under one banner – and will enable us to co-ordinate our efforts to tackle child poverty more effectively, engaging both local leaders as well as strengthening action across central government, working with the devolved administrations. I am looking at what we need to do to meet our 2020 goal with Alistair Darling and Peter Hain.

One of the most important things about the new unit is that it will be outward facing – it will actively seek and incorporate your views and expertise.

I am very grateful to Martin and to Barnardo’s for allowing Neera Sharma to be seconded to the new Unit.

And I am delighted to announce that we have now appointed a new Head for the Child Poverty Unit – Caroline Kelham, who joins us from the Prime Minister’s Strategy Unit, where she has recently been leading work on the Government’s Good Childhood Enquiry.

Under Caroline’s leadership and with your support, the Unit will address all policy relating to child poverty – employment, education, health, housing, family and child wellbeing. Its first major task will be to map across government all that we’re doing to tackle child poverty and moving in the right direction.

NEW PUBLIC SERVICE AGREEMENTS

Third, the new PSA announced in October reaffirmed our commitment to half child poverty by 2010.

But in addition, we have a whole set of simpler and also tougher targets that will, in the long term, lay the foundations for us to eradicate child poverty.

It’s important that, for the first time ever, we have a target not only on raising the achievement of all children, but on narrowing the achievement gap and making sure all young people are on the path to success. We see that as vital if we are to break intergenerational cycles of poverty, not just lift children in the current cycle out of poverty.

We will share responsibility for the Child Poverty PSA with the Treasury and with DWP. A board of senior policy experts will oversee delivery of the target. They will report jointly to Alistair Darling, Peter Hain and me, so the emphasis is firmly on joint working. But again, I want to be clear about this. It doesn’t just mean that, once a year, we’ll listen to a progress update on whether we’re going to meet our target or not. Alistair, Peter and I all see this as something we need to drive forward on a day-to-day basis if necessary – if that’s what it takes to meet the 2020 goal.

CHILDREN’S PLAN

Finally, tomorrow we are publishing the first ever Children’s Plan, to put the needs of families, children and young people at the centre of everything we do.

Building on a decade of reform and results, and responding directly to what we heard from parents, teachers, professionals, and children and young people themselves, it will reinforce our commitment to eradicating child poverty and ensuring that all children and young people are happy, healthy and grow up to be successful.

It will consider what more we can do across all of the services we provide to help poorer families in areas such as childcare and children’s play.

It will also set out what more we can do to help narrow the attainment gap between disadvantaged children and their peers.

There are early signs that the attainment gap is narrowing – the latest figures show that the gap in GCSE average point scores between pupils receiving free school meals and those not narrowed by 6.2 points from 2004 – 2006.

But we know we need to do more. That is why we have allocated more money for children’s centres, money to support disadvantaged children to access enriching activities through extended schools and one-to-one tuition for those who are falling behind.

And the Children’s Plan we will set out what we can do to get excellent individual services – Sure Start centres and mid-wives, schools and GPs, youth centres and youth offending teams – working together with parents and services co-located in schools to spot problems early, tackle barriers to learning and then act effectively. That is our vision for schools in the 21st century and 21st century children’s services to make England the best place to be a child.

You will no doubt already have heard that we are committing an additional £18 million to provide home safety equipment for families living in the most deprived circumstances. Because we know that children under five from the most disadvantaged backgrounds are much more likely to die or be injured as a result of household accidents.

We also know that disabled children are much more likely to be living in poverty than non-disabled children.

Today, and on top of the £280m to fund short breaks that we allocated in Aiming High for Disabled Children, I can announce that I am allocating £90million over the next three years to invest in facilities to help disabled young people go on short breaks with their peers.

As you will know, since 1973, we have been investing in the Family Fund to support severely disabled children and their families on low incomes. We will now also provide £8.4 million over the next three years to allow us to raise the age threshold of Family Fund support to include young people aged from 16 to 18. That means 16,000 more grants over the next three years for the families that need it most.

RAISING AWARENESS

There’s one particular point I’d like to raise with you again today and I know that you have been discussing this morning – what we can do to gain more public support for our efforts to reduce child poverty.

We agree we need an ambitious campaign which creates the space and provides the impetus for real progress:

– forging new alliances and empowering new groups to join the campaign

– winning the backing of the voluntary sector and faith groups

– building a broad-based, cross-party consensus in our country around tackling and ending child poverty is the only way to meet our goal.

Over the past few years, you have made real progress.

You’ve almost trebled in size, bringing in members from new areas and sectors to build much broader support around the shared goal of ending child poverty.

And you’ve always maintained a constructive dialogue with Government, focussing on the long-term prize.

Yet we know that we still sometimes have a hard enough job convincing local leaders and practitioners that they have to take child poverty seriously and do what needs to be done.

And emerging findings from research undertaken by my colleagues at the Department for Work and Pensions mirror your own concerns – that there are significant public misconceptions about child poverty, and that many people don’t think child poverty exists in Britain – or fail to see the connection between children living in poverty and poor health or poor achievement in schools.

We need to work with you to ensure more and broader support. And we will do so.

CONCLUSION

I’d like to end by thanking you for your ceaseless energy – keeping the focus inside and outside government where it needs to be. Your work is invaluable in helping us turn this ambitious – but vital – goal into a reality.

And as we begin to look in detail at how best to achieve our target of eradicating child poverty by 2020, it is important to recognise that many of the parents and young adults of 2020 are children and young people today.

It should no longer be acceptable for poverty to be something that’s inherited by successive generations.

It shouldn’t be an automatic marker for poor health or underachievement.

Breaking that cycle is an important part of what our Children’s Plan sets out to do.

In 2005, when the global economy was in a downturn – when the going got tough – we redoubled our efforts and we rose to the challenge of tackling child poverty.

I and my colleagues in Government are determined to do so again. But we need your support and we need you to continue to work with us to help us to achieve our goal.

Thank you.