I’ll balance books, says Ed (but he can’t say how)
In fact, his plan could land us with an extra £50bn of debt
ED Miliband’s bid to restore Labour’s battered economic credibility backfired spectacularly last night.
He pledged that reducing the deficit would be a priority if he wins the election but independent experts warned his plans would mean ‘much more borrowing and debt’.
The Labour leader – who forgot to mention the deficit in his party conference speech this year and has spent the past four years attacking Tory cuts – refused to say how and where he would reduce spending.
Mr Miliband claimed Labour would impose ‘year on year’ spending cuts to reduce the deficit, saying it was his ‘first pledge of the election campaign’.
And he admitted that being seen to deal with the huge budget deficit left by the last Labour government was now ‘an essential test of credibility’ for the party, which lags far behind the Conservatives on the issue in opinion polls.
Mr Miliband pledged to bring day-today government spending back into balance ‘as soon as possible’.
But he gave no date for bringing the public finances back into the black – suggesting that Britain’s towering debts
‘He would borrow more’
would continue to rise indefinitely under Labour. And though he said Labour was working on plans for ‘common sense spending reductions’, he refused to spell out where the axe would fall, saying the full detail would be released only after a Labour victory in next May’s General Election.
Experts warned that his lax rules on public finances would rack up gigantic debts for future generations. Labour would continue to borrow for capital spending on things such as transport infrastructure, which is forecast to hit £27billion by 2020. And Mr Miliband rejected Mr Osborne’s target of running a £23billion budget surplus that year, potentially allowing him an extra £50billion in spending and borrowing by 2020.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, said Mr Miliband and his Shadow Chancellor Ed Balls had left themselves ‘a lot of wiggle room’ to let them get away with spending cuts that were ‘very shallow indeed’.
Mr Emmerson told Radio 4’s The World At One: ‘ You would get much, much less spending cuts potentially under a Labour government but you’d have much more borrowing and therefore more government debt.’
George Osborne warned that Labour’s plans would mean ‘ economic chaos’. The Chancellor said Mr Miliband and his party ‘created the deficit and by delaying paying off the deficit what he’s really telling the British people is that he would borrow more and put up taxes’.
Mr Miliband claimed the Conservatives were proposing ‘extreme’ cuts. He pointed to official forecasts suggesting that, under Tory plans, the size of the state will shrink to its lowest level since the mid-1930s.
But Mr Emmerson said the comparison was misleading. ‘The size of the government as measured as a share of national income would indeed be back to the level last seen in the late 1930s,’ he said. ‘But that is not to say that living standards would be anything like they were in the 1930s. Our GDP is substantially higher than that, and therefore the amount we have to spend on our private consumption, on our public services in real terms is significantly higher.’
Mr Miliband said Labour had already spelled out some modest cuts, such as ending the winter fuel allowance for better-off pensioners, as well as proposing new taxes, such as a mansion tax on homes worth more than £2million.
Labour announced yesterday that i t would also save more than £500million a year from local gov- ernment budgets by cutting bureaucracy, scrapping a Coalition scheme to boost house building and considering mergers of fire and rescue services. But the savings identified so far pale in comparison with Britain’s £91billion annual deficit.
The Labour leader also claimed that Britain’s ‘cost of living crisis’ was holding back the recovery – just as official figures showed that Britain’s standard of living has risen to be the fourth highest in the EU.
The Eurostat figures suggest the UK has overtaken the Netherlands and is well ahead of France, Italy and Spain, with a standard of living 15 per cent above the EU average.
Only Luxembourg Germany and Austria are ahead of the UK.
Mr Miliband came unstuck yesterday when an advertising executive asked him to devise a short election slogan. Told it should be no more than eight words – and despite counting on his fingers – he came up with the effort ‘A country that works for you, not the privileged few’ – a ten-word slogan.