Ed Balls and Labour - wise choice to keep silent

I follow Ed Balls on Twitter just to understand what it is that Labour is trying to say these days. I found something to help me out today in his article in the Daily Mirror titled “Why won't Tories take the blame for economic crisis?”

The allegations of the title alone are laughable. As a reminder the symptoms of the crises were first noticed in 2007 when Gordon Brown was in power. Let’s not forget the role Ed played in influencing policy while his best pal was running the nation.

But mudslinging aside, let’s looks at what Ed has written about here objectively.  I find a rather large number of ludicrous claims but more than that, for a senior statesman such as Ed Balls, I’m sorry to note the underhanded tactics he’s employing in his one sided attack on the coalition government. The tone of this article is not to educate the population and explain reasonable differences between the Government’s policies that have been enacted and what Labour would have done if it were in power. Instead, the article appears to want to sway the less informed reader with brash assertions about what Labour would have done better. That’s it. Nothing about what exactly Labour would have done instead. Here is a nugget to cherish: Of course, after the biggest global financial crisis in a century, fixing the economy and getting the deficit down was never going to be easy for any country or any government. It would have meant difficult decisions on tax, spending and pay if Labour had won the election.

But Labour it seems has a 5 point plan:

 That’s why Labour has set out a five-point plan for jobs – including a temporary cut in VAT to help our struggling high streets and give an average £450 boost for a couple with children, tax breaks for small firms taking on extra workers and a tax on bankers’ bonuses to fund 100,000 jobs for young people.

 If the country is already in deficit, and the current Government inherited this deficit from the previous (Labour) government, where do the Eds hope to raise cash to fund the 5 point plan from?

The much debated Welfare Reform Bill is aiming to reclaim benefits from the undeserving to the deserving. That’s the boost to families, to single parent families, disabled and those out of work who are looking for work. See my previous post for more on this.

Cutting VAT from 20% down to 17.5% might sound great but the lowest income group on which VAT has the biggest impact, will not really see the gain. As we know certain basic items are either already exempt from VAT or are charged a lower VAT rate (5%) instead of 20%. Hence cutting VAT as Ed suggests will have a very limited impact but it sure sounds good, don’t it?!

Food and drink for human consumption is, in general, zero-rated as are all supplies of unprocessed foodstuffs such as:

• raw meat and fish;
• vegetables and fruit;
• cereals, nuts and pulses; and
• culinary herbs

As a general principle, you can zero-rate a product sold for use as an ingredient in home cooking or baking. Other items that are either exempt from VAT or are charged the lower 5% of VAT include:

• Smoking cessation products - nicotine patches and gum
• Talking books and vision aids for blind people
• Equipment for blind or partially sighted people
• Mobility aids for the elderly
• Health services provided by registered doctors, dentists, opticians, pharmacists and other health professionals
• Care or medical treatment provided by a qualifying institution like a hospital, hospice or nursing home
• Education, vocational training, research and other connected services provided by an eligible body like a school, college or university
• Electricity, Gas etc for domestic use is charged the lower rate of 5%
• Children’s clothes are either exempt or charged at the lower rate of 5%
• Insurance is exempt

What will benefit from a cut in VAT is alcohol, cakes, frozen foods which are charged the full rate.

 So next, let’s consider the boost to small businesses that Ed would like to see employ more people. He also says that “it’s only exports to other countries that stopped our economy going into recession last year”.

 Now I’m confused – all these businesses hiring people, what will they do? I thought they might produce to export to economies where there is consumption demand but Ed implies that’s quite frivolous. Maybe he thinks they will sell to the domestic consumer alone which will pull us out of a deficit.  But tell me Ed, what’s wrong with exports driving the economy? Isn’t that what Germany’s much admired robust economy is based on? If not exports, what would you have liked the economy’s growth to have been based on? Oh wait, I know, it must be the financial services!

 “We’ve all heard the excuses. First they blamed the snow. Then they blamed the Royal Wedding. Now they’re blaming the eurozone”

 Here we lay the last, low punch. Bravo. But hold on, what if Labour does take over from this “mess”. Uh oh, it might be tough to deliver all this big talk so Ed includes a caveat:

But I have to be honest with Mirror readers. If the Tories plough on regardless, the next Labour government will inherit a really difficult situation. Of course we would be making different choices now. And we will make tough but different choices in the future. But after five years with Cameron and Osborne at the helm we don’t know how bad the economy will be.

That’s why Ed Milliband and I have said Labour cannot make any promises now – more than three years before the next election – to reverse spending cuts or tax rises.

We will have to see where we are in 2015 because, unlike Nick Clegg, we won’t make promises we can’t keep. We’ll have a big job to sort out the deficit, clear up Osborne’s economic mess and deliver social justice in tougher times

So there we have it. That’s why Labour and the Eds are not providing us with any reasonable plans on what they would have done in power. Silly, it’s because the Tories are making SUCH a mess that who knows what situation Labour will end up facing. Of course they shouldn’t say anything now. Much more sensible.

Thanks Eddie,  that clears up a lot.