Ed Balls: Osborne must change tack and steer towards growth

Share
Related Topics

With the world in turmoil, global oil prices surging and the British economy faltering there is still time for George Osborne to pause before the Budget and ask himself: "Am I getting this right?"

The big mistake would be to weigh that question in terms of headlines, backbench cheers, short-term reaction of the markets, or worse, his 2015 election strategy.

Instead, I would suggest three tests for this Budget: whether it stops the recent rot on growth and jobs; whether it reverses falling living standards; and what vision it sets out for our long-term future.

First on growth and jobs, Mr Osborne says he has no choice but to cut the deficit as hard and fast as possible. I have consistently disagreed: it was a political choice to abandon Labour's plan to halve the deficit steadily over four years. By going deeper and faster than any other major economy Mr Osborne has imperilled the fragile recovery and driven unemployment to a 17-year high. Britain has been left with little flexibility to cope with the economic effect of events around the world such as the Libya crisis, a world oil price shock or the aftermath of the Japan earthquake. With slower growth and more people out of work, it will be much harder to get the deficit down.

So will he have the courage and common sense to rethink his deficit reduction plan? Will he repeat Labour's bank bonus tax to create jobs? Or will he dig the country deeper into the hole of stagnation?

Second, Mr Osborne should recognise his VAT rise is adding 3p to a litre of petrol and adding to inflationary pressures in the economy, forcing the Bank of England to consider a rise in mortgage rates. And it is his decision to give the banks a tax cut this year, while cutting services, tax credits and child benefit for families. They will not be satisfied with a cancelled fuel duty rise and re-heated announcements on income tax. They want – and Labour will demand – clear action to support household incomes.

But there is a third vital test for this Budget. Can Mr Osborne set out a credible vision of where our future jobs will come from? The financial crisis exposed the vulnerability of banks and the over-reliance of the British economy on financial services. And it accelerated the rise of India and China as competitors, not just in low-cost manufacturing, but top-class design and education, and attracting international investment.

The Government has boasted of a "big bang" Budget plan for growth. But what we have seen so far – tinkering with planning laws, reheating failed policies like enterprise zones and rowing back on workers' rights – looks like a damp squib.

We need to rebuild the strength and competitiveness of our banking and financial sector, but on the basis of business models that reward investment and sustainable growth, not short-term risk-taking.

We need a modern industrial policy that supports incentives for technological, green and scientific innovation to flourish, starting with boosting R&D tax credits for small companies. And with too many employers ducking the need to invest in skills, we must ensure every company takes their responsibilities seriously and every employee gets the chance.

I don't claim Labour has all the answers right now – but it is worrying that Mr Osborne shows no sign of even understanding the questions.

Ed Balls is the Shadow Chancellor

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
iJobs Job Widget
iJobs General

Recruitment Genius: Senior Environmental Adviser - Maternity Cover

£37040 - £43600 per annum: Recruitment Genius: The UK's export credit agency a...

Recruitment Genius: CBM & Lubrication Technician

£25000 - £27500 per annum: Recruitment Genius: This company provides a compreh...

Recruitment Genius: Care Worker - Residential Emergency Service

£16800 - £19500 per annum: Recruitment Genius: Would you like to join an organ...

Recruitment Genius: Senior Landscaper

£25000 - £28000 per annum: Recruitment Genius: In the last five years this com...

Day In a Page

Read Next
Labour's Jeremy Corbyn arrives to take part in a Labour party leadership final debate, at the Sage in Gateshead, England, Thursday, Sept. 3  

Jeremy Corbyn is here to stay and the Labour Party is never going to look the same again

Andrew Grice
Serena Williams  

As Stella Creasy and Serena Williams know, a woman's achievements are still judged on appearance

Holly Baxter
The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea