What is Ed Balls up to?
His statement this weekend, at the Fabian conference, that he endorses Osborne’s public sector wage freeze until the end of this Parliament – possibly 3.5 years away – and accepts all the government’s spending cuts finally crosses a red line.
At a time when the central economic problem is febrile growth because of lack of demand, it is wholly unacceptable for several reasons:
- It would gratuitously weaken demand even further when low-paid public sector workers have a higher propensity to spend – exactly what the economy now needs – than better-off sections of the population.
- It is grossly unfair to inflict a wage freeze for this year and next year, and then a flat 1% rise in the next two years (still a wage cut in real terms because inflation is expected to be rising at 2% a year), when 1% for a female local government worker represents less than £3 a week while for a doctor it represents £19 a week.
- It lets the rich and particularly the ultra-rich off the hook completely, continuing to get gargantuan pay packets and bonuses hardly touched.
Why did Balls say this anyway? He didn’t have to make any such statement at all. The alleged reason – that it’s necessary to swallow the entire Tory scorched earth policy in order to gain credibility – is absurd. In fact the exact opposite is true – the Labour Party will never gain credibility whilst it continues robotically to parrot the Tory line.
Of course a shadow Chancellor cannot, more than 3 years from the next election, make any detailed spending commitments – nor would he be expected to – but, if pressed, he could certainly make clear his intention to redress the worst of the cuts as soon as the economic situation allowed. So why didn’t he say this? The only plausible explanation is pressure from the Blairite majority behind him.
What makes all this so unconscionable is the elephant in the room. The top 1% (300,000 persons) currently have an income of £150,200 a year (£2,888 a week), but no cap is being put on either their pay, incentive schemes, stock options, dividends, or bonuses. The top 0.1% (still as many as 30,000 people) currently get on average £1,179,900 a year (£22,690 a week), but are still laughing all the way to the bank.
The richest 1,000 Britons, according to the Sunday Times Rich List, in the last two years alone got richer by £137bn (yes, billion), enough to pay off the entire budget deficit themselves alone, yet are making virtually no payback at all for the financial crash and economic recession many of them caused. Justice, Ed Balls, is what the Labour Party is about, not sucking up to the Tory party or their Blairite friends.