ALISTAIR DARLING’S statement on Monday was a dramatic but decisive response to the extraordinary economic events we have seen around the world. When the Governor of the Bank of England tells the House of Commons that we cannot rule out nationalising all the banks, we know these are exceptional times.
But the one thing which is no surprise is the Conservative response. Instead of government action, the Tories would stand aside. Instead of being decisive, the Tories would leave families to sink or swim on their own.
The idea that this week’s pre-Budget report means the death of “new” Labour is absurd. By combining action to deliver economic stability and growth with measures to promote fairness and social justice the pre-Budget report is – in keeping with the economic policy we have pursued over the past 11 years – “new” Labour through and through.
Like every Budget and pre-Budget report since 1997, there’s more support for those who need it, investment in public services based on fair taxation, and measures to help businesses and boost enterprise.
Increases in universal child benefit, targeted tax credits and the state pension will support families and pensioners alike. The £60 bonus in January will be a helping hand not just for pensioners but millions of carers, disabled people and widows, too.
Billions of pounds of investment in new schools, housing and transport infrastructure will be brought forward to next year. And there are new measures to support small businesses and get the banks lending again.
Underpinning each and every one of these actions is Labour’s determination to do everything we can to get Britain through this downturn – and to do so fairly. And it’s here that the stark political choice is now clear to see.
This Government will act, because if we do nothing it will cost more: more to the economy, more to the public finances and more to our society. Putting money into the economy now will mean a shorter downturn than the longer and deeper recession that we would see if we did nothing.
That’s why – across the world and across the political spectrum – there is agreement that we need a fiscal stimulus. From America and Australia to Sweden and Spain, from the CBI and International Monetary Fund to the TUC, there is consensus.
For this Government, doing nothing is not an option. But for the Tories doing nothing is an economic strategy. Behind the talk of change, David Cameron has not moved his party from the days when their mantra was “unemployment is a price worth paying”. Only last week the Conservative Party vice-chair said: “The recession has to take its course”. On Tuesday, Shadow Health Secretary Andrew Lansley said: “Recession can be good for us”.
Just as they’d have let Northern Rock and Bradford & Bingley go to the wall, so they now oppose the fiscal boost we’re giving to the economy. Under the Tories, it would be a return to the 1980s and 1990s when the Government stood by and watched as the recession took its toll on millions of families.
And while we co-ordinate our response with other countries in the world, the Tories continue to ignore the global nature of this downturn. Their political strategy is to insist this is just a domestic downturn in Britain – even though the Americans themselves admit the economic crisis started in their country and has reverberated around the world.
But while we act globally, we will also do so fairly. The VAT cut from next week will help those on the lowest incomes the most. And once we are through the recession, those with the broadest shoulders should do their fair share to carry the burden. That’s why I think a new income tax rate for those earning more than £150,000 is the right thing to do.
As for the Tories, they still want to spend £1 billion on cutting inheritance tax for the 3,500 richest estates in Britain while refusing to commit themselves to our targets to end child poverty – to be enshrined in law by Labour for the first time. As I said in my previous column, this is the difference that tells you everything you need to know about the values of our two parties.
So we will act globally, we will act fairly and we will use every lever at our disposal. You can’t just use monetary policy – as the Tories would have us do. We need to combine monetary and fiscal policy – so interest rates have now been cut by the independent Bank of England to just 3 per cent together with an extra £20 billion injected into the economy in the coming year.
The choice is clear. With Labour, a credible and radical economic plan, which will give real help to families and businesses so we can get through the downturn as quickly and fairly as possible. But the Tories would do nothing. David Cameron and George Osborne would just stand back and let families sink or swim. The result would be a deeper recession, higher borrowing, massive spending cuts, and even more people unemployed. That’s the Tory prescription – a “do nothing” policy from a “do nothing” leader.
Ed Balls is Secretary of State for Children, Schools and Families and Labour MP for Normanton
