'It is not the rest of the world's fault': Balls joins in blame game

Jeers for shadow Chancellor after error in attack on Coalition's economic strategy

Ed Balls lambasted George Osborne for "failing, failing, failing" by presiding over an economic strategy that had resulted in falling growth and increased levels of borrowing and debt.

The shadow Chancellor accused Mr Osborne of trying to blame the rest of the world – notably the eurozone crisis and high oil prices – for the sickly state of the economy when the explanation was much closer to home. And he claimed the Autumn Statement was final evidence of the "true scale of this Government's economic failure".

Mr Balls fluffed his initial attack on his opposite number when he said that the national deficit was not rising, before correcting himself to clarify that it was rising. Amid uproar in the Commons, he went on: "The Chancellor's fiscal strategy has been completely derailed. The defined purpose of the Government, the cornerstone of the Coalition, the one test they set themselves – to balance the books and get the debt falling by 2015 – is now in tatters."

Mr Balls mocked the Chancellor for only producing economic growth that was even slower than that in the eurozone, telling him: "It is not the rest of the world's fault – it is your policies which have failed."

He said the Government had argued that the increasing the rate of VAT to 20 per cent and pushing through "accelerated spending cuts" would boost confidence, secure recovery and reduce the deficit. "But they depressed confidence, choked off our recovery, and borrowing has been revised up," Mr Balls argued. "It is the economy which has contracted and the borrowing and the debt which have expanded."

He said the Government's central mistake had been to fail to put in place "a plan for jobs and growth" alongside moves to cut the deficit.

Mr Balls claimed that the planned cut in the top rate of income tax from 50p to 45p announced in the March Budget would mean 8,000 millionaires would be at least £100,000 a year better off from April. "At the same time the Chancellor is cutting tax credits for working families, cutting child benefit for middle-income parents, raising taxes on pensioners and cutting benefits for the unemployed."

He said the Chancellor could not claim "we're all in this together" without a smirk and described the Government as "completely out of touch". Mr Balls referred to comments by the Tory MP Nadine Dorries, who appeared in I'm A Celebrity.... Get Me Out Of Here!, that Mr Osborne and David Cameron were "two arrogant posh boys who don't know the price of milk".

He said: "No wonder this Prime Minister keeps losing his temper, because his worst nightmare is coming true. Not snakes and spiders in the jungle, but their fiscal rule broken, their economic credibility in tatters, exposed now as incompetent and unfair. Yes, he's the Chancellor... can't someone get him out of here?"

Andrew Tyrie, the Tory MP who chairs the Treasury Select Committee, urged the Chancellor to consider breaking up state-owned banks such as Royal Bank of Scotland, which is 82 per cent owned by the taxpayer.

He suggested that Mr Osborne needed to "open up banks to much more competition from new lenders, clean up banks' balance sheets as the Bank of England has been advocating, and possibly even break up one or more of the state-owned banks to improving their funding and hence lending".

The Labour MP John Denham, a former shadow Business Secretary, said: "Is it a fair summary to say every time you have come here, the economy hasn't grown since last time, that you're planning to borrow more than last time he was here, that spending on public services is going to be cut more than last time he was here, that growth in the future is going to be less than you told us last time you were here. In view of that record, should you be looking quite so pleased with yourself?"

Mr Osborne said: "This Government came in in May 2010, picking up the pieces of an incredibly difficult economic inheritance. We were recovering from the deepest recession since the Second World War, which as I pointed out was an over-six per cent contraction in the economy, which puts into some context the numbers today."

What's in it for us...? Lib Dem scorecard

Wins...

* Larger-than-expected rise in the income tax threshold to £9,940 – almost hitting their £10,000 target.

* Blocking plans to introduce regional pay for public sector workers.

* Preventing a total benefit s freeze and plans to withdraw housing benefit from the under-25s.

Losses...

* No mansion tax or revaluation of council tax bands.

* No extra support for childcare costs.

* Big increase in support for gas, with 30 new power stations.

Why George has the Rock to thank

George Osborne unleashed a surprise when he reported that, according to the OBR, the deficit in cash terms in 2012/13 would be smaller than in the previous year. The Chancellor swore there was no trickery involved, because the OBR's figures stripped out the £11bn being transferred to the Treasury's coffers from the Bank of England's Asset Purchase Facility. But he didn't mention that the OBR figure didn't remove a £400m benefit from his decision to take the assets from the bust banks, Northern Rock and Bradford and Bingley, on to the state's books.

If one stripped out that windfall, the OBR forecast instead shows an increase in the 2012/13 deficit on the previous year. The former Northern Rock CEO Adam Applegarth might have been a disaster for the UK economy. But he gave the Chancellor a helping hand.

Ben Chu

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA celebration of British elections
News
Tottenham legend Jimmy Greaves has defended fans use of the word 'Yid'
people
Life and Style
tech
Arts and Entertainment
Kanye West, performing in New York last week, has been the subject of controversy as rock's traditional headline slot at Glastonbury is lost once again
music
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
Google celebrates Bartolomeo Cristofori's 360th birthday
techGoogle Doodle to the rescue
  • Get to the point
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Senior Digital Marketing Consultant

£28000 - £45000 per annum: Recruitment Genius: A Senior Digital Marketing Cons...

Recruitment Genius: Assistant Stores Keeper

£16640 - £18500 per annum: Recruitment Genius: An Assistant Stores Keeper is r...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Software Developer - C# / ASP.NET / SQL

£17000 - £30000 per annum: Recruitment Genius: Developer required to join a bu...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living