“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.”
Classic Balls. The 2008 public debt was only lower as a share of GDP compared to 1997. And while Britain’s debt was lower than these countries, he has picked nations with uniquely high debt piles amassed well before the crisis. The UK’s deficit as a share of GDP in 2008 was higher than all these countries with the exception of the US.
“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 spend every pound of public money well.”’
Balls identifies a handful of mistakes made by Labour when in government.?But the first two are things that actually generated revenue for the exchequer. On the principal charge – that Labour was profligate – he offers no examples of overspending, merely observing the government didn’t spend every pound well.
Balls is obsessed with cutting taxes on consumption, that would mean even higher incentive-destroying taxes on income and capital. It was interesting that Balls said yesterday that “the issue of land taxation is one which we should actively look at” – in other words, he is moving closer to the kinds of crippling wealth taxes beloved of Vince Cable. It is strange that Balls appears to think that what the UK needs more of today is debt-financed consumption; in reality it needs to rebalance towards investment, savings and exports.
Britain doesn’t need another artificial boost to demand. It needs a genuine boost to the incentives of people and companies to work and invest, together with a credible long-term commitment to balancing the government’s books. Shame that Ed Balls can’t see this.
