Ed Balls: We will not slash frontline services, unlike the Tories

Labour will make decisions on tax and spend in a fair and balanced way
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The Independent Online

Some political commentators have tried to suggest in recent weeks that all the parties are now on the same page on tax and spending, with few differences likely at the next general election.

This is nonsense. Every election is different, and this one will be fought in tougher economic times. But over the past year we have seen two quite different approaches – not just to the recession, but tax and spending too – which will define the choice between Labour and the Conservatives.

Leadership is all about making the right calls under pressure. And at the G20 meeting this week world leaders will, I believe, be fulsome in their praise for the swift and decisive leadership of Gordon Brown and Alistair Darling in the last year. Who can now doubt that fiscal expansion and bank recapitalisation saved Britain and the world sliding from recession into depression.

George Osborne and David Cameron got it disastrously wrong. By standing alone in the world against the fiscal stimulus, the Tories made the mistake of the century – a call which would have led to higher unemployment and much bigger deficits and debt.

But the Tories now seem determined to compound the error. Just when there are early signs of the economy strengthening, their plans for immediate spending cuts would put the recovery at risk. By seeking to start reducing the deficit too early, aiming to reduce it too quickly, and planning to do it in such an unbalanced way, the Tories would take grave risks with our country's future.

The Chancellor's Budget, by contrast, set out a balanced deficit reduction plan: tax rises combined with spending rising at a slower pace than in the past. And all of us in the Cabinet have been thinking hard about how we can protect frontline services while making our budgets go further.

In my department, we have shown that efficiencies can be made. As the number of Academies has grown, we have been able to drive down set-up costs by 20 per cent, and in the next year we are making £650m of savings to fund more sixth form and college places so every school leaver can stay in learning – a guarantee the Tories refuse to match.

And we have already begun talking to teaching unions about where further savings can be made. For instance, schools spend £7.8bn a year buying goods and services like computers, energy and insurance. Almost all of this is done at school level, so if greater collective buying and smarter procurement could produce savings of 10 per cent, we would release over three-quarters of a billion pounds.

Schools are increasingly working together in federations to raise standards. And while federations should always be driven by local needs and circumstances, they can provide savings for the schools involved too – whether through combining administrative functions or management and leadership.

This is not about removing head teachers, but spreading great leadership and increasing collaboration to improve results and get better value for money. We know too that school business managers can help cut costs, that some schools are sitting on excessive surplus balances and that we must do more to find savings at the centre in my department and our delivery bodies.

In this way we can prepare now for more modest overall increases than we've seen in the last decade and still protect our frontline priorities like teachers, teaching assistants, one-to-one tuition and our school-building programme.

The Tory approach is fundamentally different. On tax, they have opposed the national insurance rise, the 50p top rate and changes to pension tax relief. Combined with their promised inheritance tax cut for the wealthiest estates, this means George Osborne has to find billions of pounds to plug his tax blackhole - before he has reduced the deficit by a penny more than the Chancellor's plans.

This Tory prescription – cuts now, faster deficit reduction, billions of pounds of new spending commitments and billions of tax cuts aimed at the wealthy few - can only mean deep and savage cuts to frontline public services. In education it will inevitably mean fewer teachers and teaching assistants, bigger class sizes, fewer apprenticeships and cuts to the school building programme.

Labour will take the difficult decisions on tax and spend, but we will do so in a fair and balanced way. We will not slash vital frontline services, put tax cuts for the wealthy few above the needs of the many or do anything that risks the recovery. That will be the choice on taxation, spending and the economy in the months ahead.

Ed Balls is Secretary of State for Children, Schools and Families and Labour MP for Normanton