AndyC
Donor
The Treasury
“Ed,”, said Liam Byrne diffidently. “Don’t you think it might be wise to throw the Lib Dems some kind of bone or another?”
Balls looked up from the wide table. Papers were strewn around it, two laptops open and in use to one side, and three stacks of folders were just out of reach to his right. He was looking down a sheet with black marker scrawled over it, frowning.
“What?”
“I mean – is there something relatively economically minor but politically useful we can give them? You know – to get some good feeling going”, pressed Byrne.
“Why the hell would we want to do that?”, Ian Austin broke into the debate. He’d seemed a touch uncomfortable in his new role as Financial Secretary to the Treasury, but this seemed something he could weigh in on with no chance of looking foolish. Ed Balls had ripped him to pieces earlier in the day on a discussion about corporation tax – apparently Austin’s inability to explain “tax incidence” was a serious personal failing in Balls’ eyes.
Byrne pressed on. “Well, there’s going to be another election soon enough – we may need the Lib Dems. Or if we have some back benchers getting bolshie …
“Like sodding Clarke …” grumbled Balls.
“… we’ll need Huhne’s lot more than we do now”
Balls tilted his head considering. He glanced down at the sheet of paper as he opened his mouth to reply, but closed his mouth again and read it more carefully.
“What?” he murmured.
Byrne felt compelled to ask about it – he’d been slightly annoyed to be left in place during the reshuffle, but at least he was still in Cabinet. And having had some experience in the Treasury, at least he wasn’t completely sidelined by Balls when the economic debates broke out.
“What’s up, Ed?”
Balls pulled a sheet of rough paper towards himself and wrote a series on numbers on it, only half looking down. “Can’t do it”, he muttered to himself.
Byrne spoke up louder. “What’s the problem, Ed?”
“Gordon wants us to increase tax credits but taper them off faster”
Byrne tilted his head. “That’ll worsen the poverty trap, won’t it?”
“Yes, but that’s not the point. The point is that we really need to push some cash into capital spending and we don’t have any”, said Balls with a frown. “Seriously, Liam. What the hell were you and Alistair thinking of? The current plans are totally wrong for growth”
Byrne looked nonplussed. “There’s no money left! I’m sorry, Ed, but that’s the problem. Cutting current spending hurts people quicker, requires us to either reduce wages or sack people – and that means redundancy payments and unemployment – and capital spending is basically buying new things.”
Balls was looking unimpressed.
“When you’re skint, you slow down on buying new stuff and focus what you have on the day-to-day essentials,” Byrne pushed on. “We were borrowing shit-loads as it was”
Austin broke in, uncertainly. “Can’t we raise taxes somewhere? Not Income tax or VAT, of course. Employers National Insurance, or Corporation Tax”.
“Shut up, Ian”, said Balls absently. “Read that primer from the IFS website like I told you”.
He turned back to Byrne.
“Vicious circle, Liam. We’ve got to try to grow our way out, but we’re so far behind the 8-ball that we can’t raise borrowing. We have to maintain capital spending to restart the economy. HAVE to. It’ll be unpopular, but we can freeze wages for public servants, freeze some benefits, freeze recruitment and look to cut administrative costs somewhere. I need to free up at least ten billion to go into shovel-ready projects and I need to do it now. And I can’t”. Balls was looking extremely frustrated.
“Will Gordon accept any of that?”, asked Byrne.
“Short answer – no. Long answer – fuck no. And that’s the reason this Emergency Budget is taking so bloody long”
BBC News, 29 June 2010
The Chancellor, Ed Balls, today unveiled the Emergency budget. The standout measure was the announcement that all salaries of public funded employees will be limited to a maximum rise of £500 per year for at least four years. Housing Benefit will be frozen in real terms for a similar period of time, and the clawback rate of Tax Credits has been increased. The Identity cards Bill has been postponed indefinitely. Petrol, alcohol and tobacco duties are up from midnight tonight …
… Shadow Chancellor George Osborne stated “it’s fairly hard to get to grips with a so-called Emergency Budget that does nothing but tinker around the edges. It’s unavoidable to conclude that perhaps the Chancellor misunderstood the question?” …
… Liberal Democrat Spokesman Vince Osborne seemed to agree, noting that the apparent hesitance to engage with “any significant fiscal changes” was a pronounced failure of nerve on behalf of the Chancellor …
… UKIP leader Tim Congdon told the BBC, “The entire exercise was a waste of time from beginning to end. If he didn’t want to change anything, why bother in the first place?” …
“Ed,”, said Liam Byrne diffidently. “Don’t you think it might be wise to throw the Lib Dems some kind of bone or another?”
Balls looked up from the wide table. Papers were strewn around it, two laptops open and in use to one side, and three stacks of folders were just out of reach to his right. He was looking down a sheet with black marker scrawled over it, frowning.
“What?”
“I mean – is there something relatively economically minor but politically useful we can give them? You know – to get some good feeling going”, pressed Byrne.
“Why the hell would we want to do that?”, Ian Austin broke into the debate. He’d seemed a touch uncomfortable in his new role as Financial Secretary to the Treasury, but this seemed something he could weigh in on with no chance of looking foolish. Ed Balls had ripped him to pieces earlier in the day on a discussion about corporation tax – apparently Austin’s inability to explain “tax incidence” was a serious personal failing in Balls’ eyes.
Byrne pressed on. “Well, there’s going to be another election soon enough – we may need the Lib Dems. Or if we have some back benchers getting bolshie …
“Like sodding Clarke …” grumbled Balls.
“… we’ll need Huhne’s lot more than we do now”
Balls tilted his head considering. He glanced down at the sheet of paper as he opened his mouth to reply, but closed his mouth again and read it more carefully.
“What?” he murmured.
Byrne felt compelled to ask about it – he’d been slightly annoyed to be left in place during the reshuffle, but at least he was still in Cabinet. And having had some experience in the Treasury, at least he wasn’t completely sidelined by Balls when the economic debates broke out.
“What’s up, Ed?”
Balls pulled a sheet of rough paper towards himself and wrote a series on numbers on it, only half looking down. “Can’t do it”, he muttered to himself.
Byrne spoke up louder. “What’s the problem, Ed?”
“Gordon wants us to increase tax credits but taper them off faster”
Byrne tilted his head. “That’ll worsen the poverty trap, won’t it?”
“Yes, but that’s not the point. The point is that we really need to push some cash into capital spending and we don’t have any”, said Balls with a frown. “Seriously, Liam. What the hell were you and Alistair thinking of? The current plans are totally wrong for growth”
Byrne looked nonplussed. “There’s no money left! I’m sorry, Ed, but that’s the problem. Cutting current spending hurts people quicker, requires us to either reduce wages or sack people – and that means redundancy payments and unemployment – and capital spending is basically buying new things.”
Balls was looking unimpressed.
“When you’re skint, you slow down on buying new stuff and focus what you have on the day-to-day essentials,” Byrne pushed on. “We were borrowing shit-loads as it was”
Austin broke in, uncertainly. “Can’t we raise taxes somewhere? Not Income tax or VAT, of course. Employers National Insurance, or Corporation Tax”.
“Shut up, Ian”, said Balls absently. “Read that primer from the IFS website like I told you”.
He turned back to Byrne.
“Vicious circle, Liam. We’ve got to try to grow our way out, but we’re so far behind the 8-ball that we can’t raise borrowing. We have to maintain capital spending to restart the economy. HAVE to. It’ll be unpopular, but we can freeze wages for public servants, freeze some benefits, freeze recruitment and look to cut administrative costs somewhere. I need to free up at least ten billion to go into shovel-ready projects and I need to do it now. And I can’t”. Balls was looking extremely frustrated.
“Will Gordon accept any of that?”, asked Byrne.
“Short answer – no. Long answer – fuck no. And that’s the reason this Emergency Budget is taking so bloody long”
BBC News, 29 June 2010
The Chancellor, Ed Balls, today unveiled the Emergency budget. The standout measure was the announcement that all salaries of public funded employees will be limited to a maximum rise of £500 per year for at least four years. Housing Benefit will be frozen in real terms for a similar period of time, and the clawback rate of Tax Credits has been increased. The Identity cards Bill has been postponed indefinitely. Petrol, alcohol and tobacco duties are up from midnight tonight …
… Shadow Chancellor George Osborne stated “it’s fairly hard to get to grips with a so-called Emergency Budget that does nothing but tinker around the edges. It’s unavoidable to conclude that perhaps the Chancellor misunderstood the question?” …
… Liberal Democrat Spokesman Vince Osborne seemed to agree, noting that the apparent hesitance to engage with “any significant fiscal changes” was a pronounced failure of nerve on behalf of the Chancellor …
… UKIP leader Tim Congdon told the BBC, “The entire exercise was a waste of time from beginning to end. If he didn’t want to change anything, why bother in the first place?” …
