Home > deficit, economy, Ed Balls, George Osborne, Parliament > Treasury Questions end in a score draw as Ed Balls makes his debut

Treasury Questions end in a score draw as Ed Balls makes his debut

February 8, 2011 Leave a comment Go to comments

Well that was rather disappointing.

New shadow chancellor Ed Balls took to the dispatch box for his first question time since getting the job after replacing Alan Johnson, who resigned for personal reasons.

On the day that George Osborne announced that he was increasing the banking levy to £2.5bn this year, up by £800m, you would have been excused for thinking the Osborne was nervous heading into his first confrontation with Balls.

The problem for Balls—who is undoubtably more economically astute than his predecessor in the role—is that he is tarnished with Labour’s economic record during their 13 years in government.

Clashes over the economy are becoming rather predictable as the Coalition turns everything back on Labour. They point to the deficit run up by the now opposition and use that as the explanation for their policies.

The negative economic growth in the final quarter of 2010 should make the Government think again about the cuts they’ve made, and desperately need to provide more plans for growth.

Osborne and his front-bench team argue that the UK had the biggest real estate bubble in Europe and was more profoundly affected by the economic crises than other countries.

But the US—whose growth during the first half of the last decade was just at predicated on house prices as in the UK—recorded a 3.2% growth in GDP over the same quarter.

As Balls pointed out this was despite cold weather shutting airports and impacting upon infrastructure. So, he asked of his opposite number, if the “wrong sort of snow” was responsible for the UK’s poor performance.

Osborne deflected with usual line about Balls being a deficit denier and said that if they were in power, Labour would have made many of the same decisions as the Coalition.

Actually, a key difference between the US and the UK is that Obama’s recovery plan involved increasing state spending with a massive impetuous package. In comparison, Osborne has presided over massive cuts and a VAT rise.

One area where Osborne does have the upper hand over Balls is when it comes to regulation of the financial sector.

One of the key coalition policies currently being formed involved the replacement of the tripartite regulatory system. Gone will be the system whereby regulation is split between three bodies: the Treasury, the Bank of England and the FSA.

In comes a “twin peaks” arrangement: a Prudential Regulation Authority within the Bank of England, and the Consumer Protection and Markets Authority.

Although the exact roles of the two new creations are yet to be decided, the aim should be to ensure that Banks no longer are allowed to take gambles that put the taxpayers and the economy at risk. Breaking up the banks to separate the high street deposit functions from investment practices will also protect taxpayers, as well as having the added advantage of increasing competition in the sector.

Instead of focusing on bankers’ bonuses—which would be difficult philosophically to legislate against and any taxes directed at them could be easily avoidable—the opposition should be ensuring that the new system prevents the practices that lead to the economic crisis from reoccurring.

 

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  1. jools
    February 13, 2011 at 2:50 pm

    To questons that everyone seems to be asking first Why are we paying council tax for services that are being taken off us? Big society says do it yourself! Second would the Lib/cons have left the banks to fall and if not how would they have supported them? Sick of hearing ‘what they left us’ should imagine the rest of the population is aswell. Question is what are you going to leave us?

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