Murnaghan 8.12.13 Interview with Ed Balls, Shadow Chancellor

ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well now, whilst Conservative MPs rallied round George Osborne, the Chancellor, after this week’s Autumn Statement, the same cannot be said for Labour and Ed Balls. A Labour source told Sky News the party had a strong economic argument to make but it was not well made by the Shadow Chancellor. Another used a four letter word to describe the performance. So has the man who once imagined himself as a future leader of the party now become a liability? Well I’m glad to say we are now joined by the Shadow Chancellor, Ed Balls, very good to see you, smiling through that introduction but let me read you that quotation in full …

ED BALLS: Who made the quote?

DM: Well you know the way it works, it’s an unnamed Labour source but it is well sourced from Sophie Ridge, our political correspondent, got it, “Labour has a very strong economic argument to make”, quote unquote, “unfortunately it was not made well in the Chamber today.” Would you go along with that assessment?

ED BALLS: Look, it’s a really strong economic argument and that is why 300 Tory MPs were going to shout really loudly from the very beginning. In a split second you’ve got a decision – do you decide to ask the Speaker for help, try and get quiet, or do you think I’m not going to be shouted down by Tory MPs who are so out of touch, they don’t know about a cost of living crisis and I decided to take the argument back to them and not be deflected and say no, there is not a recovery, for most working people living standards are falling. What happened the next day? From the Institute of Fiscal Studies, they effectively confirmed the Chancellor is out of touch thinking living standards are going up because for most people they are going down. I think we are winning the argument.

DM: Well we can concede that, the IFS and all sorts of things about the extra borrowing, your analysis there but it is not just about the analysis as you well know. Have you watched any of this performance back? This is how you kicked off, we’re just going to show it now. [Excerpt of Ed Balls speaking in Commons]

DM: It must be said your leader didn’t look over-impressed there, did Ed Miliband say afterwards ‘Well done’?

ED BALLS: He did, he did. He said to me a number of times, keep going. But my question is, what was George Osborne laughing at? I’m there saying living standards are falling for millions of people, George Osborne and David Cameron, the two people that Nadine Dorries said were two posh boys who don’t know the price of milk, though that was funny. I don't think it was funny. I’ve had more people in the last 48 hours coming up to me and saying ‘Keep up the fight because we need a Labour government, because we’re getting worse off and these people, these Conservatives, don’t understand our lives.’

DM: You know about parliamentary tactics and the sort of bullying that goes on there but you used that phrase ‘in denial’ and that was instantly thrown back at you because the charge is, and it comes from some on your own side, that you are still in denial about the past. You can’t move on economically until you accept that the Labour party made mistakes in the past but you’re the one that’s in denial.

ED BALLS: The interesting thing is when the opinion polls came out the next day and they were asked the question, who was right in the arguments and who was in denial and far more people said George Osborne was in denial about the cost of living crisis rather than believing his idea that the economy is getting better when for most people it’s not. I’ve been saying to you for three years that we …

DM: You’ve been saying for three years that we should stimulate the economy, do you still think that?

ED BALLS: Absolutely and if we’d done that in the last three years we’d have had more growth and the deficit would have come down.

DM: But this is the point, Shadow Chancellor, what is the message now? Does it want that stimulus now or is that all gone?

ED BALLS: No, look, personally I think that stimulating the economy as George Osborne is doing by boosting housing demand through Help To Buy, without building the homes to make the affordable, is a big mistake. I would step in now, raise the bank levy and have help for families struggling with childcare, an energy price freeze, endow the Business Investment Bank, build the homes we need. We have got policy that actually addresses the cost of living crisis and the long-term growth crisis in our economy. George Osborne on Thursday had nothing to say other than him trying to say my policy is working and most people in the country are saying no, it is not, Chancellor.

DM: So you have come here to rectify what you didn’t say or what you didn’t get to say in the House of Commons and this is a crucial point, coming from your own side and you well know, this is from John Mann on the Treasury Select Committee, quote unquote, “We should be saying – Labour – we should be saying that George Osborne is repeating the mistakes of the past”, you’ve just made that point but the crucial bit is this, “we were wrong in allowing credit to build up and we should say so.” They are repeating your mistakes, do you accept that, Shadow Chancellor?

ED BALLS: I have been on your programme many times and said we didn’t regulate the banks in a tough enough way and therefore there were big failures, and they were …

DM: And that’s it?

ED BALLS: … but we were responsible for that. At the time, the independent Bank of England didn’t take the view in 2005, 6 and 7, they needed to raise interest rates because they weren’t worrying about a personal credit boom. What actually happened was, I think by 2007 there were parts, particularly in London, of the housing market which were going out of control. Generally in our economy, inflation was still low, there was then a global financial crisis that had a massive impact here in to Britain. I put my hands up and take responsibility for that, as we all need to do but …

DM: But on the credit side of things, I mean the truth is Mr Balls, isn’t it, you are secretly proud of the record, you think there is nothing you should apologise about, the things that you and Gordon Brown and others achieved.

ED BALLS: I just did apologise.

DM: But you apologised about failing to regulate the banks.

ED BALLS: Very, very important.

DM: But what about the consumer boom?

ED BALLS: We made the Bank of England independent, one of the best decisions we made and …

DM: But the consumer boom, the overheated housing market, the debt of the nation, the personal indebtedness, all on Labour’s watch, was that a mistake, with hindsight?

ED BALLS: On national debt and public debt, we got it down to a very low level. On personal debt, personal debt did go up that is true and at that time I remember a speech by the Governor of the Bank of England, Mervyn King, in 2006. His view at the time was this wasn’t a personal debt driven boom, this was a reflection of a low inflation, low interest rate economy and I think at the moment many people, left and right ….

DM: … that record, why don’t you say it?

ED BALLS: What I’m saying to you is, in 2006 both Labour and Conservatives supported the governor’s judgement that at that time that was sustainable. We actually don’t know whether or not that would have led to a big unsustainable housing boom because that was nipped in the bud by the global financial crisis and in the balance of these things do I think the thing that pushed Britain into recession was mistakes in British economic policy alone or was it the result of what happened in America where there was definitely a sub-prime bubble which then went round the world …

DM: Indeed, but what you are saying effectively is that we were going along the right track and these unforeseen circumstances came from across the Atlantic and blew us off course.

ED BALLS: I didn’t say that.

DM: The fact is that the nation was not prepared as it should be to deal with unexpected financial and economic shocks.

ED BALLS: I didn’t say that because I said that the big thing was what happened in the banking industry and that was catastrophic for the world but what I do think is that every government gets some things right and doesn’t do everything right. We were completely right in my view to making the bank independent, to have a national minimum wage, not to join the single currency, to get our national debt down, to invest in the National Health Service. We did many good things. We should have been tougher on the banks. Should there have been a decision in 2006 to raise interest rates by the Bank of England? I don't know the answer to that because I think we don’t know the extent to which there was an unsustainable housing boom taking off at that point because the global financial crisis knocked it all on the head.

DM: You seem to have left out that government spending was at the right levels in your book, you think you were spending the right amount of money?

ED BALLS: We discussed this before. We had a very small deficit on the current account, we had a national debt that was low and stable – lower than America, France, Germany and Japan …

DM: So it’s not an apology here is it?

ED BALLS: I’m not going to apologise that the Labour government spent too much on the National Health Service. Do I think that we didn’t spend every pound of money wisely in that period? Of course not. If we had known though, and this is the point, when the deficit went up so much if we had known in advance that was going to happen, would we have decided to have raise taxes or cut spending? No, we would have decided to intervene in the banking world to stop that financial crisis happening in the first place. That is why I go back to that is the big mistake of that period.

DM: Okay, you’ve laid that out very clearly. I want to get back to your performance in the House of Commons, we’ve one other little clip we just want to run here, we can talk over it as we see it. You’ll know this, you say you’ve watched it back.

ED BALLS: I’ve not watched it back.

DM: Oh you haven’t watched it back?

ED BALLS: Of course not, I’ve been far too busy doing …

DM: Okay, well look at the top left, it’s Chris Evans, PPS to Chris Leslie … [Excerpt of Ed Balls speaking in Commons] Would you accept that you didn’t exactly put a spring in the step of the Labour side?

ED BALLS: It looks to me that Mr Evans had been in a nightclub until three in the morning and maybe done a bit too much karaoke and was trying to stay awake. The idea that … I’ll be totally honest with you, what we’ve been doing for the last 48 hours is we’ve been out in the country arguing the case on cost of living, Small Business Saturday …

DM: No, I’ll have to bring you back to that, yes indeed, there are some very good points but people make judgements on things they see on the television. You’re the Shadow Chancellor, the man that wants to be Chancellor, the man that wants to lead this economy to the sunny uplands and there you were, you seemed unsure of yourself, you were bellowing, you lost track …

ED BALLS: Were you in the House of Commons chamber at the time?

DM: I was watching it live from start to finish, as were a lot of the nation.

ED BALLS: And, as I said to you, I’ve more people in the last 48 hours than at any time since I’ve been Shadow Chancellor, coming up to me on the train, in the town centre, saying keep up the fight against this out of touch government who are making our lives and harder …

DM: Did they say ‘Well done Shadow Chancellor’?

ED BALLS: I’m afraid, Dermot, tragic as it may be to you to tell you this, but most people don’t spend their time watching the House of Commons chamber, they are not watching that live, as I haven’t done since. There is a Westminster bubble and there are always going to be debates on who did well, who did badly, all that kind of stuff but out there in the country they are not talking about the House of Commons chamber, they’re talking about who’s right and who’s wrong and the big issues for our economy – living standards and the future. The fact is they think David Cameron and George Osborne are totally out of touch and doing nothing on energy prices and …

DM: You and your family are part of it, what did Yvette say? Did she say well done Ed?

ED BALLS: Yes, she did actually, she did.

DM: And she watched it all because she was there, she said well done?

ED BALLS: She did, yes and so did Harriet Harman and Ed Miliband because when you’re in there … Look I’ve got George Osborne and David Cameron wanting me to retreat on the big argument which is who’s right and who’s wrong on the cost of living and the one thing that nobody seeing these pictures here thought was I retreated an inch on the fact that we’re in touch with the nation and their concerns and we’ve got the policies to answer them on energy prices, on childcare, on the 10p tax and David Cameron and George Osborne are the guys who cut income tax for people over £150,000 and won’t freeze energy bills. They are totally out of touch with our country. There may be some people who are cheering this recovery Dermot but most of them aren’t.

DM: Okay, the fact is a lot of people will have felt some sympathy for you because you were facing a wall of sound from the other side, struggling to shout over it and I know with a bit of a cold and all the rest of it …

ED BALLS: I know if you shout for fifteen minutes your voice goes hoarse!

DM: But the fact is that people say we don’t give that sort of sympathy to the Shadow Chancellor because he can dish it out so he has got to be able to take it himself. I want to show one more …

ED BALLS: But the thing is, I’m not complaining, I’m not complaining at all. What I want to talk about is what is happening in our country and what the policies are to make our economy strong for the future and the cost of living crisis.

DM: But people are talking about you remaining in the job. You must have seen that on the websites saying odds on Ed Balls being Chancellor, who’s going to replace him?

ED BALLS: Of course. The Daily Mail who have been …

DM: It’s not the Daily Mail, it’s the bookmakers.

ED BALLS: The Daily Mail would love me and Ed Miliband out because they want to keep in an out of touch Tory government that is cutting taxes at the top.

DM: But people are betting on you not being in the job.

ED BALLS: Well of course but that’s the nature of politics.

DM: They want to make money!

ED BALLS: They are betting on David Cameron, they’re betting on George Osborne, Ed Miliband, it’s just the way it is. The reason why you ask me these questions is because you want me to be bothered, frankly Dermot I couldn’t give a toss.

DM: I just want you to be honest with …

ED BALLS: I am being totally honest with you. What I am worried about is if my constituency thinks there is real trouble.

DM: You go around, you are very in touch with the Labour constituencies and we know you are very in touch with what goes on in the House of Commons. The fact is we’d be a bit shocked if you hadn’t heard someone saying, perhaps not to your face, but some of your lieutenants reporting to you that there is muttering about the Shadow Chancellor, there are those who are saying we should replace him with Alistair Darling perhaps, perhaps bring back Alan Johnson. You must have heard that.

ED BALLS: Look, people have been saying that for three years, since the first day I did this job. The nature of politics is you either spend your time in the bubble, obsessed, reading all the diary columns, worried about the Daily Mail or you think actually in the real world, let’s go and talk to people about what’s happening in their lives. I’ve been doing this for twenty years and I’ve never been less bothered about gossiping and the tittle-tattle, it doesn’t matter at all. In the end, if the country don’t want a Labour government, if the country think George Osborne is on their side, then I’ve got a problem, until then it isn’t a problem.

DM: We’ve one more clip and this is about the dishing it out and being able to take it element of it all, this is George Osborne responding. [Excerpt of George Osborne speaking in Commons] Now you know what he’s saying there, the implication is and you’ve been asking the Prime Minister and the Shadow Chancellor about that, is about class A drugs because that’s the allegation about the Reverend Flowers, that’s what you’re doing when you point to him like that?

ED BALLS: No, actually no, the opposite. What happened was the Reverend Flowers was the Chair of that bank for three weeks under a Labour government and three years under a Conservative government in which George Osborne and his Ministers were actively championing Reverend Flowers to take over 600 Lloyds branches and own them and this review which the Prime Minister announced, when he announced that a couple of weeks ago I thought George Osborne went completely white in the House of Commons because George Osborne is thinking, hang on a sec, we’ve got far more questions to ask about the regulation of the Co-op Bank than us. As for drugs, look, David Cameron is the one who decided ten days ago to have a big discussion about drugs and he tried to suggest that Ed Miliband and I had been out on the town with Reverend Flowers and I just pointed out to him that no, I never have.

DM: So you never have and asking, the implication being, have you?

ED BALLS: I have no idea.

DM: No, not you, you were asking them, the other side.

ED BALLS: I have no idea.

DM: But you want to know, don’t you, you asked them?

ED BALLS: I think it is unwise for the Prime Minister to get into a debate about those issues. I think it’s unedifying, not necessary and we should get on to the real issues. What I care about is why the Co-op Bank was being supported by George Osborne to buy all those branches with a bank chair that he should have been doing proper due diligence on. I don't think the regulator or the Treasury were doing their jobs and I think George Osborne will find this inquiry very, very uncomfortable.

DM: You also criticised, I mean the substantive stuff in that debate was you said ‘No proper plan. Mr Osborne you have no proper plan to earn our way to rising living standards’. Do you have one?

ED BALLS: That’s right and I think the problem with the OBR forecast, what did it say? It said business investment has fallen this year by over 5% and …

DM: That’s business investment not government.

ED BALLS: And the issue is, why aren’t British businesses investing in this economy now? Why is our export performance so weak? What we’re saying is, let’s have a business investment bank to back businesses that want to expand. Where is the plan to support small businesses that are struggling? We’re saying don’t do the large company tax rate cuts, freeze business rates for the smallest companies, thing that will help people to invest, get young people back to work by repeating the Bank Bonus Tax and having a job guarantee. Those are real policies which will make this economy built to last and give us a recovery which is strong for the long term. There is nothing about that from George Osborne in his statement, it was vacuous on economic policy.

DM: Okay, the last question about MPs pay, 11% rise coming after the next election perhaps. If it does would you take it, would the Labour front bench tell Labour MPs not to take it?

ED BALLS: We get this report on Thursday so we’ll see what they say. As far as I can see they have done this report entirely out of any context of the real world. How can they possibly be saying we should be discussing pay comparability when everybody else has seen their pay frozen or falling? I think it’s preposterous we should be having this discussion and as a Shadow Chancellor how could I possibly say to Labour MPs at this time, with the economy like this, when people are under real pressure and there is a cost of living crisis, that they should take a pay rise? It is about as ridiculous as the Chancellor saying people who earn over £150,000, I’ll cut your taxes. Both would make people look completely out of touch. They’re out of touch, we’re not going to make the same mistakes so I think it is a ridiculous recommendation.

DM: Well, Shadow Chancellor, thank you very much indeed for coming in to make your case and best of luck with your piano practice.

ED BALLS: I have a concert in half an hour. Far, far more stressful than the House of Commons, I’ll tell you! My gosh!

DM: Well good luck with that, Mr Balls, Ed Balls there.