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Page last updated at 10:49 GMT, Sunday, 20 June 2010 11:49 UK

Balls: "we must break up the banks"

On Sunday 20 June Andrew Marr interviewed Labour leadership candidate Ed Balls MP.

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

Ed Balls MP
Labour leadership candidate Ed Balls MP

ANDREW MARR:

Now then, all those years ago when Gordon Brown started as Chancellor of the Exchequer, the man always at his side was Ed Balls. But he's switched from being the power behind the throne to standing for parliament himself. Elected, his wife was already an MP. Then, like her, promoted to the cabinet where before the election he was Education Secretary. He's now bidding to replace his old mentor as Leader of the Labour Party. Good morning, Ed Balls.

ED BALLS:

Good morning, Andrew.

ANDREW MARR:

Let's, since it's Budget Week coming up, let's start with the Budget. You've been sharply critical, particularly on rumours about a rise in VAT. But had your party been in power, you might have been the Chancellor by now. Who knows? You'd have been having to do much of the same sort of stuff, wouldn't you?

ED BALLS:

No, and I think it's a profound mistake to think the right thing to do now, the priority now is to start cutting the deficit faster this year. I think it's a huge mistake. And I know that there's lots of commentators saying it's what needs to be done and the government, the new coalition is encouraging that idea, but the priority has got to be growth and jobs. And you know I fear that what's happening is we're making the mistake of the 1930s - the mistake of thinking that cutting the deficit, even if that means putting growth and jobs at risk as a priority … It's not just the callousness of the cuts which are being proposed - the unfairness of a rise in VAT. It's the fact that it would undermine recovery and jobs and, therefore, make it harder to reduce the deficit. There was a phrase which Keynes used in 1936 when he wrote The General Theory about 'madmen in authority listening to voices in the air'. These voices are back and they're saying cut, cut, cut, and it's profoundly misguided.

ANDREW MARR:

But surely there is this massive … I mean there's a structural deficit of 70 billion, never mind the total deficit, and the markets are watching and you know the pound is always vulnerable and the country's credit status is vulnerable. Something has to be done.

ED BALLS:

Well those are important issues. But, as I said, those voices in the air in the 1920s and 30s said reduce the deficit; cut, cut, cut. The Governor of the Bank of England was saying that in the 30s as well. It was happening all around the world and it was wrong, and it led to …

ANDREW MARR:

(over) Do you think we could go back to a 30s style recession?

ED BALLS:

Well I think it is very, very dangerous. If you look at what's happening in Europe at the moment, you've got deflationary policies being pursued in other European countries. You've got President Obama and the American Finance Minister Tim Geithner saying be very careful, Europe. We now in Britain are going down that road. And we've just heard George Osborne brought in Norman Lamont, Geoffrey Howe, Nigel Lawson. The people who gave us the deflation and the unemployment of the 1980s now advising him to do it again.

ANDREW MARR:

And Ken Clarke who gave your party quite a good inheritance back in 1997, of course.

ED BALLS:

Look, the reality was that Ken Clarke was raising taxes year after year. But the recovery was established by that time, but it was …

ANDREW MARR:

(over) Right, enough history. Let's …

ED BALLS:

… it was Norman Lamont who said unemployment was "a price worth paying". I think the idea that you would raise VAT now deeply unfair, but also it would clobber and crush the recovery and destroy jobs. That is the way to increase the deficit, not to reduce it. I hope George Osborne will you know take some good advice and not listen to those deflationary voices, and maybe think again if it's not too late.

ANDREW MARR:

Okay, Labour Leadership Election. What have you got that the others don't?

ED BALLS:

Well, look, I think the defining issue for the next two or three years is going to be first of all what happens on the economy, growth and jobs, and the impact that has on our public services and also on our family finances. And first of all we need a leader who can fight the Conservatives and the Liberals and say don't do this, and who understands the history and the policy; but also somebody who can put together an alternative approach which is fair, and just and will strengthen our economy, strengthen the industrial base.

ANDREW MARR:

(over) So you're the economy man is what you're saying?

ED BALLS:

Well I think economy's important. But it's also the case … Look, we lost the election …

ANDREW MARR:

Yuh.

ED BALLS:

… and we lost because people said in communities like the one I represent - on tuition fees, on the impact of migration, on housing - we lost touch, we didn't get it. We lost low income voters. Now I'm somebody, I think, who can speak the language of mums and dads as well as of finance ministers.

ANDREW MARR:

Neo Endogenous Growth Theory. (laughs)

ED BALLS:

Well you know back in 1994, Gordon Brown used a rather techie phrase, but the reality is I think … You know I won in my seat, I'm a winner because I took the Conservatives on and beat them, and beat the BNP as well. And we need a winner - somebody who can do that, who's in touch, who's a team player. I'm all those things.

ANDREW MARR:

You see some people might say okay, so you say the party got it wrong on immigration, wasn't listening, wasn't speaking the language of ordinary people; got it wrong on housing and got it wrong on certainly parts of the economy - the tax issue that you mentioned. With all those things wrong, the British public were absolutely right to vote you out.

ED BALLS:

Hang on a sec, we never raised VAT at all in the parliament because that's deeply unfair.

ANDREW MARR:

(over) But I'm talking about what went wrong.

ED BALLS:

We've never ever cut public spending. We've raised public spending. We had a national minimum wage, Sure Start. We did some brilliant things. The problem was in the election, people in lower income families were saying look, we're not really sure. I mean we think they care, but they don't really get the reality of our lives. And that was a problem in our communication and in some of our policies. Look, we've got to look back and where we got it wrong admit it, but we've also got to look forward and say this is the biggest threat to the welfare state in our economy since the 1930s. Let's take the Conservatives and Liberals on and persuade them to change course. That's what I want to do.

ANDREW MARR:

There is a logical problem here, which is that you said we never cut public spending; it always went up and up - and it went up as a proportion as well. Well logically there has to come a time when that party stops, otherwise public spending is the only spending there is.

ED BALLS:

But the reason why the deficit is higher now and the reason why public spending is higher in the economy is not because in the last two or three years we spent a lot more. It was because we had the biggest financial crisis in the world since 1929, which we actually stopped turning to depression, but the reality was tax revenues went down and growth went down. There's two ways to sort this out. You either get growth and jobs back and get the tax revenues back, strengthen the economy. Or you say let's use this - as the Conservatives and the Liberals are doing - to say cut the state, get government out the way, cut public spending. But you can do that. I think that leads you to both a weaker economy and a profoundly unfair society. And, look, in the election campaign Nick Clegg said vote Liberal Democrat or you'll get the Tories. He has given us the Tories and Tory policies and people around the country are saying what is Nick Clegg up to? What has he done?

ANDREW MARR:

Well some are. Gordon Brown was your great mentor and yet would you agree, do you think that he was part of the problem in the election campaign too?

ED BALLS:

Well, look, it was about policy, but it was also about communication. Look, I've said in the last few weeks that I thought that Mrs Duffy moment was important because it suggested a government which wasn't listening and hearing what people were saying in communities. But it was also the legacy of the second term where on public service reform, we talked a language which alienated too many people in public service workers and in communities and where we didn't do the right things on tuition fees. So you know it was a mixture of both.

ANDREW MARR:

So that was … what you're saying there, decoded, is Tony Blair got it wrong as well, and of course some of your rivals in this campaign were very associated with Tony Blair in those days?

ED BALLS:

Well of course. And, look, you know one of the candidates says we've got to move beyond Blair and Brown. And absolutely right, of course we've got to. Gordon did some great things. He got us through a global depression. Tony Blair did some great things. But they're the past and we're the future.

ANDREW MARR:

What about style because some of your critics say it was too brutal in those days, there was too much sort of briefing and it was a rather over testosterone fuelled style of politics. Do you think … Have you learned from that? Do you think that there's a bit of truth in that and do you think the Labour party needs perhaps a more sort of civilised and calmer, comradely (in your language) style of politics in the future?

ED BALLS:

Well, look, you've known me for 17 years and I've never been somebody who to you, on or off the record, has ever done briefings.

ANDREW MARR:

No, that's true.

ED BALLS:

There are sometimes briefings, but that is bad politics. It will never come from me. Nobody in my team's doing this. Actually we have I think in this leadership election a really comradely and cooperative …

ANDREW MARR:

(over) What about tone?

ED BALLS:

(over) There's one thing people said about me in the last year or two. They said is he too tribal? Why does he keep talking about what the Conservatives and the Liberal Democrats are going to do? Well you know I was right to talk about those things because they are about to do it now. And, look, we have to actually be clear. There are choices in politics. Some people call them dividing lines. The dividing line is now very, very stark on VAT, on jobs, on fairness. You've got a Conservative Liberal government which is going to take free school meals away from the poorest children. I mean that's not fair.

ANDREW MARR:

Let's just ask about, since you mention children, yourself, because people always want to know a little bit about the man behind the policy as it were. And you've said recently that actually you had a really tough time as a kid. You had a stutter and you had a name that caused you to be bullied and so on. I mean was it a hard time?

ED BALLS:

I had a wonderful childhood and my parents were great. But, look, if you've got my surname and you move school and move region when you're 8 years old, you probably get a hard time. And I never really minded it when my classmates had a go. It was when the parents laughed that sometimes it was a bit tough. But that steels you up and it makes you who you are. And that is why I have always been passionate ever since about tackling the issue of bullying in schools and also children with special needs. The proudest thing I've done is being part of a campaign to have a centre for stammering children in the North of England. I hope that Michael Gove will stick with the commitments I made to make that happen because you know to come through with a stammer and then be in top flight politics, I think that means I can say I'm a role model and other children watching this programme thinking can I do it - you can speak and you can do it and it's really important.

ANDREW MARR:

And what about Gordon Brown? There's a lot of curiosity about you know how he's coping, how does he feel about it all? Presumably you're in touch with him? I don't know if he's going to endorse you as such, but what's up with Gordon Brown at the moment?

ED BALLS:

I spoke to him at the beginning of the week and I think he's doing a lot of writing and thinking and reflecting, and I think he's looking forward to his children moving back up to Scotland because they've been at school down here. And I think he's fine.

ANDREW MARR:

(over) A big family move.

ED BALLS:

Look, to be honest, what he's said to me most - if I'm honest with you - is he looks at what's happening on the economy in Europe and he's really worried about it. Typical Gordon. He's still worrying about jobs and what's right for the country rather than particularly talking about himself.

ANDREW MARR:

And in terms of the election, if you win would you expect the other candidates to be happy to serve under you? And vice versa - if one of them wins, would you be happy to serve under them whoever it is?

ED BALLS:

Look, I think it's really comradely what we're doing. We're all working together. There's not acrimony. There's actually a real sense of common purpose. We're all different and we've all made different judgements in the past. And some of us have disagreed on things like the euro. Where I was a big advocate for not joining the euro, some of my colleagues took a different view. So there's some history, but actually we're getting on. We're doing fifty different hustings, so we're travelling all around the country together. I've spent more time with Diane Abbott in the last fortnight than in the last 20 years.

ANDREW MARR:

Ah, there's a story at last! Okay.

ED BALLS:

To be honest, we flew down last Sunday on EasyJet and we had a nice chat and I think she's great.

ANDREW MARR:

Alright, Ed Balls thank you very much indeed for joining us.

INTERVIEW ENDS




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