Labour are supposedly now a party of “iron discipline” when it comes to Government spending. Watching Ed Balls today talk about money being tight and needing to reduce the deficit was like watching Tiger Woods speak about the importance of marriage and fidelity.
Those big statements about looking after the pennies swiftly fall by the wayside when the opportunity to announce a spending splurge hoves into view, though. Today’s new spending is on free childcare, but how will Labour fund it? Why, through a tax on banks, of course.
For Ed Balls, “a tax on banks” is a magical phrase. So magical that Labour have so far claimed it as the funding source for no less than eleven different policies:
1) Youth Jobs Guarantee – £1.04 billion (Ed Balls, 4th January 2013)
2) Reversing the VAT increase – £12.75 billion (Ed Miliband, 6th January 2011)
3) More capital spending – £5.8 billion (Alan Johnson, 18th October 2010)
4) Reversing the Child Benefit savings – £3.1 billion (Ed Miliband, 10th October 2010)
5) Reversing Tax Credit savings – £5.8 billion (Ed Miliband, 6th January 2011)
6) More money for the Regional Growth Fund – £200 million (Labour Party Press Release, 14th March 2011)
7) Cutting the deficit – no specified cost (Ed Miliband, 25th March 2011)
8) Turning empty shops into community centres – £5 million (Chuka Umunna, July 2011)
9) Spending more on public services – no specified cost (Ed Miliband, 10th October 2010)
10) Build 25,000 new houses – £1.2 billion (Labour Party Press Release, 14th March 2011)
11) Free childcare – £800 million (Ed Balls, 23rd September 2013)
Some announcements (like today’s) are apparently going to be funded by an extension of the bank levy, while others are supposedly funded by a repeat of the bonus tax, which Alistair Darling introduced as a one-off. Ed Balls today claims the bank levy extension will raise £800 million, while the bankers’ bonus tax raised £2.3 billion. By contrast, the eleven policies above would cost more than £30 billion – a failure of budgeting which is remarkable even from the team that brought us the deficit crisis.
Labour are pulled two ways. Their instincts, and their paymasters, demand a return to spend, spend, spend. Meanwhile, the voting public oppose more debt and higher taxes. The solution of saying “we’ll tax the bankers” might get them out of an awkward corner in a media interview, but it isn’t sustainable when you use it time after time to plug every hole in your adding up.
The polls put them far behind on who can be trusted with the economy, so they’ll go into the next election trying to claim that they’ve changed. Ed Balls’ willingness to twist and torture the numbers to fit his fantasies cannot hold up to even the slightest bit of scrutiny. Not content with wrecking the nation’s public finances, it seems his solution is to spend the same money eleven times over – which means either his giveaway promise or his newfound commitment to “iron discipline” is a lie.