Jobs must be our priority

13th January, 2012 9:36 pm

These are tough times and they require tough decisions. As I will say at the Fabian Conference tomorrow, even with our five point plan for jobs and growth and the long-term reforms of our economy that Labour has been calling for, getting the deficit down will mean difficult choices on tax, spending and pay.

On pay, we recognised in government that – to secure the recovery, get unemployment falling and reduce the deficit – we would need restraint on pay in the public sector to match the private sector wage restraint we had seen in the recession.

So in 2009 we announced a 1% pay cap for two years, including a freeze for the highest paid workers like senior civil servants and NHS managers. And we also set out a process to limit the state’s contribution to public sector pensions in a fair and negotiated way – known as ‘cap and share’.

George Osborne continued Labour’s policy and went further, but has gone about it in a typically unfair and ill-thought out way. When he announced a two year pay freeze, he promised a £250 a year increase for all the lowest paid workers. But he has failed to deliver that promise for hundreds of thousands of low paid workers.

On top of that he undermined our sensible approach to public sector pensions reform by imposing, without negotiation, a 3p in the pound rise in pension contributions for all public sector workers.

George Osborne gambled that early tax rises and bigger spending cuts would kick start the recovery, get the deficit and unemployment down earlier and allow him to deliver rising living standards and tax cuts in the second half of this parliament.

But, as the Autumn Statement showed, his failure on the economy – choking off the recovery and pushing up unemployment which means they are set to borrow £158 billion more than they planned and fail to balance the books by the election – means that tough times are set to continue for longer.

That is why George Osborne has been forced to extend public sector pay restraint with a 1% cap in 2013-14 and 2014-15. I know that some people in the trade union movement and in the Labour Party will expect us to oppose this continued pay restraint. But, as I say in an interview with tomorrow’s Guardian, we can’t and we won’t.

Yes, public as well as private sector workers are paying the price for David Cameron and George Osborne’s mistakes. But Ed Miliband and I cannot just promise public sector workers higher wages when public spending is so tight and the costs of rising unemployment are pushing up borrowing projections so massively.

The fact is that in 2012 – apart from those at the very top – everyone in work, in the public and private sector, is going to experience a real incomes crisis: the combination of higher inflation and the rising cost of living, wage freezes, cuts in tax credits, overtime and bonuses withdrawn, some full-timers being asked to work part time and for thousands losing their jobs entirely.

It was always going to be hard, but it is much tougher because of George Osborne’s mistakes.

And we cannot reverse all that damage. Even if George Osborne acts now, as he should, to kick start the recovery and get unemployment falling, as we and the IMF have advised, Labour will have to make difficult choices, as Ed Miliband set out in his speech earlier this week. And jobs must be our priority before higher pay.

That said, there are important issues on incomes, pay and pensions that George Osborne must get right. We will continue to press for fair pay and pensions reform – the 3p in the pound rise in pension contributions should never have been imposed without negotiation. And it is wrong and unfair to penalise those on low and middle incomes by cutting tax credits, hitting women harder than men and families with children hardest of all.

We are also clear that discipline in the public and private sector needs to be accompanied by fairness. That is why the government should also ask the pay review bodies to deliver the 1% average settlement cap in a fair way – being tougher to those at the top in order to offer more protection to those at the bottom.

And we will oppose any moves to undermine the Pay Review Bodies by shifting wholesale to regional and local bargaining in the public sector. Of course, as has been the case for some time, pay needs to reflect local circumstances, for example the need to recruit teachers in London. We have shown we can deliver fair reform, such as through ‘agenda for change’ in the NHS and for school support staff before Michael Gove stopped it.

But the consequence of breaking up national pay setting through the Pay Review Bodies will be to make pay restraint harder, and real reforms more difficult – with costs getting out of control. That is what the previous Tory Government found when they failed to deliver regional pay in the NHS in the 1990s.

Pay also needs to be fair in the private sector, where there have also been tough decisions – with real pay in the private sector falling by almost 3% in the last year. But for those at the top boardroom salaries in FTSE 100 companies have increased by 50% in the past 12 months. That is why Ed Miliband has rightly called for reforms to ensure that rewards at the top better reflect the success people achieve and the contribution they have make to our economy.

Pay restraint in the public sector in this parliament would have been necessary whoever was in government. But George Osborne’s economic mistakes mean more difficult decisions on tax, spending and pay. It is now inevitable that public sector pay restraint will have to continue for longer. Labour cannot duck that reality. And we won’t.

Ed Balls is the shadow chancellor

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  • GuyM

    Cost of your 5 point plan?

    You have no idea

    Required borrowing for your 5 point plan?

    You have no idea

    Effect of a few billion on national demand and job creation?

    You have no idea

    Effect on UK interest rates by doing U-turn on deficit reduction?

    You have no idea

    What cuts would you undertake to bring down the deficit?

    You have no idea (or won’t say)

    Person most to blame for lax regulation of UK finance industry pre crash?

    That would be you Mr Balls.

    You are a complete incompetant when it comes to the national finances and all you do when pressed on the above points is dissemble, avoid and deny.

    You are not fit to manage the contents of my daughters piggy bank, let alone the UK finances.

    • Anonymous


      By not reading the follow on article in the Guardian, you have missed the main point of this piece.

      In summary, this is Ed Balls accepting the Tory narrative on public sector cuts in an attempt to gain “economic credibility”.

      Just type Ed Balls into Twitter.  The extreme far left (Owen Jones et al) are currently on fire, threatening to leave the Party.

      • Anonymous

        The problem is labour has little or nothing to offer it has run out of steam and ideas it happens to all parties, the problem is of course Labour took this party into the biggest ever break down in banking and the financial sector.

        Like it or not Labour needed somebody strong to take over a politician , sadly labour does not have any.

        • Anonymous

          I agree completely. What completely baffles me is that even on areas where Labour has a good record, such as the NHS, it still refuses to stand up to the Tories. Ed’s leadership team are weak, do-nothing people.

    • Chris Cook


      I have to agree with virtually all of the above.

      Unfortunately, the Coalition, you and Ed Balls all have no idea because of a shared assumption that the UK economy is like your daughter’s piggy bank.

    • And your answer is murder. Bathing the blood of the poor.

      1%ers like you are raising a new generation of low-empathy children…it’ll rebound on them, sadly.

      • Anonymous

        So has Labour it was labour that always gave us something after kicking us to death, now we are to believe that the Tories are right but vote for us because well we are labour they are not, they made this mess.

      • GuyM

        You are a fruitcake, so apart from serving you up with afternoon tea I can’t see any point to you…..

        • Of course, I’m an inanimate object which you’d dismember and kill.

          Classic psychopathy.

  • M Cannon

    “Ed Balls is Shadow Chancellor”: thank goodness!  May he remain so until the next election.

    • If Ed Balls was Chancellor now there’d be no difference.

      You can’t put as much as a cigarette paper between the policies of both.

      • Not even remotely true.  We’d still have growth for a start, so the cuts would be less severe.

        Please note the lack of rocket science.

  • Anonymous

    I spent a long time in labour as a kid I always thought the way forward was a Labour government now of course when I look back over the years what do I see, we had  nothing from labour except a mess, oh yes the min wage  you lot believe people could live on 10%  above the dole or JSA.

    You allowed into this country millions of people and lied about it something New labour were experts at. you stated to everyone who was seeking work we had 600,000 jobs,  but how can that be with what four million immigrants, you built sod all except silly computer  system which failed yet you kept that silly  American firm employed.

    You took from the poorest and you gave to the beloved middle class, what did you think people would do forgive you, you allowed bankers to do as they like, and then blamed the American, you allowed that moron Brown to take over knowing what he was like, and  do not BS that he was brave and saved the world.

    Now you want to tell you you can make jobs, well those million of immigrants are not working not around me they are not, and the Polish migrants are back, in my area they are everywhere again, and lots of them are elderly and disabled.

    Why  in this world would anyone believe you can make jobs, unless your going to expand the public employment.

    Nope sadly as much as I hate the Tories, I think right now your as bad as them mate.

  • Not killing British citizens via neglect, cold and starvation should be the priority.

  • Daniel Speight

    Ed, let’s agree that jobs are the priority. We cannot afford another Thatcherite episode of an entire new generation being out of work and on benefits. The big question I must ask is do you see a time of full employment ever returning when even the likes of Tesco operate with automatic tills and no checkout staff?

    If the answer is no then why aren’t we opposing the increase in retirement age while at the other end of the age spectrum kids are leaving school and university to join the dole?

    Let’s have some policies put forward to show we have an alternative vision. Seeing that all three major parties supposedly feel that excessive boardroom salaries are economically and morally wrong why not propose for example a 75% income tax rate kicking in at £250,000?

    Basically Ed if you’ve got them show them. If you haven’t then best you let someone else do the job.

    • The alternative is killing those people off, at this point. Why is that an acceptable alternative? Because there’s no hope of Labour getting off their backside and changing the economy, not even worth discussing when the Tory framing of the argument is still the one which has been accepted….

      • Anonymous

        Look we are seeing a brand new era of cuts and serious cuts to the infrastructure and the Tories have basically been given a green light to go for it, notice Miliband has gone missing again, perhaps he enjoys being seen as the one who will see labour out of power for a term or two or three or five, unless labour comes up with an idea which will see this country have a real alternative god help us, open door policies for the Tories.

        • …It doesn’t matter anyway, thanks to the Tory gerrymandering, unless the country turns on them. And that won’t happen if they’re allowed to win the debate as they are.

    • Yup, indeedy.

      Income Tax on high earners is one of the ways forward.  And if said high earners don’t like it they can sod off.

      The second bit is to adjust tax so that even if you live abroad if you earn money in Great Britain you pay tax in Great Britain.  Not where you live.  That’ll stuff the dodgy little tax dodgers.

  • Anonymous

    We had Stephen Twigg on here yesterday, and once you removed all the gloating self regard (“the first [from my school] to go to Oxford”, and the windy rheotric he was basically  saying he agreed with Michael Gove.

    Today we have Ed Balls, yet another not troubled by modesty saying in effect that he will follow Conservative pay policy, but of course softened with references to “tough” and “fair” – the two most overused words in the New Labour lexicon.

    Now they may really believe all their own waffle, but one thing is clear: despite all their slogans and buzzwords, the top table cannot disguise the poverty of their imaginations.

    They really have no fresh or new policies of their own and they are really just  agreeing with the coalition, even if they are not honest ebough, or have enough self-awareness to admit it.

  • Almost everything I read that refers to curtailment of services,radical  reform,cuts or opening up of Government  services to privatization which the current ConDem administration is being assailed for began under New Labour .

    The same New Labour who now try to claim credit for the parts of Government policy they like while declaring that the ConDems have got it wrong on implementation for the parts they do not.

    What is clear though it there is very little if any difference between Labour or Conservative policy….I have deliberately left out LibDems as they are an irrelevance now…so what happened to our Labour movement so proud of its achievements of decades of reform of society for the ordinary citizen ?
    I’ve said it before elsewhere if you  love Tory policy so much why do  not you go and join them in their party and allow the Labour movement to reclaim its party?traditionally a party of caring and equality, selflessness and community, common values born out of oppression by the capitalist system.
    I see no brave new approaches,no radical ideas,just a continued reaffirmation of the Tory capitalist vision and toadying to the Banking sector and the Little Englander Tory voter. 

    I am sorry to say the labour movement I have been part of for decades has morphed into something abominable that I do not recognise nor want to be part of  and I share the incandescent rage in Labour circles at where this party is being taken and in their desire to create a new party that represents the aspirations of the old Labour movement.

    The wheeling out of old Labour stalwarts like Neil Kinnock -whom I had a considerable deal of respect for- to give credence to the current direction of the party and leadership only in my view adds to the bankruptcy of its ideas and  its inherent weakness to tackle the issues in a radical and progressive manner.

    Wherever Labour goes in its current disguise I am afraid I saw through it long ago, as indeed I am sure most of my fellow Labour members and the voters have and I will not be along for the ride if it intends perpetuating the Tory dream.       

  • Anonymous

    I am staggered that the Shadow Chancellor does not realise that under the current Coalition, pay is actually going up and that the government is spending far, far more than Mr Brown was.

    Those of us on the right – yes, I am a troll – are horrified.

    We really need to get some figures. So, go on, grit your teeth, hold your noses and look for the facts on John Redwood’s blog. Or won’t you dirty your pretty little hands?

    • Pay is falling. There’s this thing called “inflation”, you’ve missed.

      And yes, your beloved government – at the same time as slashing away at the social infrastructure of the country – is wasting vast amounts holding things together with expensive duct tape and pork-barrel spending.

      • Anonymous

        Yes and labour have stated this is the way forward, no good attacking the Tories when our own dam party agrees with it.

        • No they haven’t Treborc.

          Seriously, why do you bother?

          • Because it’s true, perhaps? Moving right will NOT bring back the millions who stopped voting for New Labour’s centralism and paternalism.

            Killing off the poor and disabled isn’t “good policy”, it’s the policy of psychopathy.

            Treborc, you sound sensible half the time and like the Tories half the time. Where DO you stand?

    • Anonymous

      Sosban Fach, boyo!

      • Anonymous

        diolch yn fawr iawn

    • Tim Urlenk

      Would you care to explain *exactly* how spending cuts create jobs as Mr Deadwood claims? There is no obvious logical connection between the two.

      Actually there is no connection whatsoever – it’s a trick question. Cuts don’t create jobs, they just divert public money from public services, so that it can be siphoned into private wealth.

      Giving money to the private sector does not create jobs – it creates PROFITS. The only thing that creates private sector jobs is DEMAND. Demand comes from people having MONEY TO SPEND on products. Hence the need for wages to RISE. Is that simple enough for you?

      “It intends to promote a strong private sector led recovery, to create more jobs [] employing labour shed from the public sector” – so you take away a public sector job and replace it with a private sector job. How can you possibly claim that a zero sum is job creation?

      Well, that’s about as much as I could get from Deadwood’s refuse site before the stink became too overwhelming.

      Now go and read your Daily Mail and stop trolling here.

  • We really are now deeply in “couldn’t make it up” terrain.

    In an attempt to gain economic credibility Balls is mimicking the policies of a government that has no economic credibility and is failing even by the standards it set for itself.

    As the possibility of a growth-led recovery is dispatched into fantasy land by the self-defeating policy of austerity all we are left with is stupidity disguised as toughness: the determination to carry on digging, no matter how deep the hole.

  • Anonymous

    Last week it was Liam Byrne while this week Ed Miliband and Ed Balls try their best to out Tory the Tories. The result: According to the most recently available YouGov/Sun poll the Conservatives are 2 points ahead of Labour ( CON 40% LAB 38% LD 10%) with David Cameron 24 points ahead of Ed Miliband as far as who would make the best Prime Minister goes  (Cameron 41% Miliband’s 17%).   What I want to know is how many members of the Shadow Front Bench are actually agents provocateurs of the Coalition.

    • Its not just out Tory the Tory’s but  that we have a different priority of policy every week  depending on whats in the media and seemingly what the weather is like….changeable!….certainly not inspirational.

      • Anonymous

         we have a different priority of policy every week  depending on whats in the media”

        The solution lies in Labour’s own hands. If they chose a semi competent Leader…

        • By itself a new leader won’t help. What Labour need if they are to provide any kind of credible opposition, let alone a plausible alternative to the government is a new generation on the front bench, untainted by the failures of the past and the flat refusal of those who were responsible to face up to them.

          • Anonymous

            The problem is of course the whole labour party has been affected or infected by New labour there is nothing in this bunch which make them Labour socialist or even human half the time

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  • Anonymous

    Miliband has to go he is a waste of space, he has no direction he has no idea he is about as labour as my bloody socks, and he can take the other bunch of  New Labour Tories with him for god sake if you  do not have anything left to fight the Tories with they are  going to make mince meat out of you.

    It’s time to accept New Labour is really dead and shove off in your boat for the Tories. wasters.

  • Peter Carabine

    Irrespective of whether a new Labour government would or would not give the public sector employees a pay rise – it does seem quite ridiculous to annouce this in the deep gloomy mid-winter which just adds to the general misery of core voters. What the two Eds and the shadow cabinet do not seem able to do is to attack the Coalition in a ” hard”  manner. Its always too gentle, too complex, too apologetic- it never hits home about the massive inequalities of our society. The tory tabliods are happy as the public sector freeze is what they want Labour to say. Meanwhile whenever I hear a Tory on the radio/TV he is saying they have to reduce the mess left behind by Labour.

    I thought Balls was clever ; he is not ; he is compromising too much with Tory  propaganda, the Tory economic narrative. So many people want Labour Politicians to come out of their corner fighting for a different version of how they run our ecomomy not the same old economic Neo-Liberalism  clap trap I can read in the Tory Tabliods day in day out. For God’s sake bring back Labour people who tell it as it is. Yes we made mistakes but get that behind you forget it. Stop being apologetic we have one of the most unequal societies in Europe, we have massive tax abuse, we have massive bonuses, we the people arte angry. Please reflect this!

    • When Labour have exactly the same policies for tackling the economy et al (indeed they started them at the end of their term)its very difficult for them to now attack the Government without looking utterly hypocritical.
      Its perfectly clear that unbridled capitalism is a liability to governments and having once wrecked economies through their own greed cannot be relied upon  to pull countries out of recession yet this is exactly what both Tory and Labour  are pinning their hopes and policy on.
      Austerity measures only increase the risk of further recession and has been stated thus by Standard and Poor’s experts yet again this is what Tory and Labour are pinning their hopes on.
      The only economies doing well are the ones where those Governments  have a firm control of the private sector and lead it by the nose and encourage it to do what they want it to do with strong policy and a joined up strategy  not allow it run wild,set policy and please itself.
      The dog should be wagging the tail not the tail wagging the dog.
      There is no long term vision of where this country should be going,in fact there is no vision-period.
      Instead we have had three decades of boom and bust and going wherever the fortunes of the economy drag us kidding ourselves we will get there eventually except we are not quite sure where ‘there’ is.
      Until this stops and some real long term planning for the future of the nation with sound policy which is not codged together piecemeal and made up as we go along, ever it will be a nation of semi controlled chaos  and uncertainty…in this rapidly evolving world, uncertainty and chaotic policy  is something this or any other nation can ill afford.
      To use an old worn out analogy, we have to be on the ball at the top of the game and with a clear strategy of winning….not just turning up on the pitch to see what happens.
      I see nothing from the Conservative or Labour that shows leadership or strategy.
      They are both abysmal and lacking guts in equal measure.

  • Ray_North

    Labour has got it wrong. Ed Balls has got it wrong. It is time to move away from the economic orthodoxy that we must create as much wealth as possible and actually start to put social policy first. Follow the link:

  • Anonymous

    sorry two comments of the same.

  • Anonymous

    So this was down to Thatcher and the barber period not labour, also the bad period of 2008, spending cuts.

    Then Balls looked back to 1997 and new labour the good period of new labour.

    He really has to attack the Tories by agreeing with them, now he says what we are saying is that we must have a global cure for this, OK bring back Brown then he saved the world, he moans about the Tories and he moans about everything except the one area people saw with our own eyes.

    Labour wars, the open door policy on immigration without building a single home for them none of them  could get a mortgage spending on IT wasted.

    I listened to Balls and it old it past it’s day it’s returning to new labour, people do not believe it we have to have a real look at how we paid back our debts in 1945 yet build up a country that the Tories with labour are destroying.

    What Balls is doing is basically  saying to the Tories  swing voters who went home to Cameron come back because we can  do it again, we can be that New labour party of cuts to welfare, cuts to wages of the low paid, we can and will make your lives better.

    There is simple nothing left in the drawer he says we must  employ 100,000 young, what about the other 900.000 plus you moron.

    labour dead long live the Tories it’s as simple as that, after the next election labour will beg Blair to come back even though he’s dead, but to labour it all they have left, the fact is labour tells jobs are what we need but you did not make them when you were in power you used the public sector the same public sector your now cutting.

    I think labour will make a new record and I will be putting £20 on it at the bookies I may not be around to pick up, but Labour will be out of power for a five terms.

  • Holly

    Why are people coming down so hard on the two Ed’s?

    They had loads of plans and one idea…Spend more on everything…Problem sorted.
    Today Balls, trying to get the title of  fiscal responsibility, agrees with George.
    The left have ‘bought into this’ BIG lie and are going ape.

    He is trying to con the majority of bright voters who kicked him and his sorry excuse for a government out!

    You can rest easy in your beds, Balls WILL do precisely what he has been saying for just under TWO YEARS and spend like Viv.

    Shouldn’t laugh, but I can’t help it.

  • Franwhi

    And he’s just told the BBC that Labour cannot make a commitment to reverse any of the government’s cuts.

    “I understand the anger in the public and private sectors at the  income squeeze but the reality is given the economy failing as it is, that that pay restraint is going to have to continue.
    “And if people expect Labour to say ‘we’ll just oppose’, we can’t do that. –

    Why have an opposition ? Let’s restrain their pay by sending them all packing and getting them off the public payroll.

    Seriously it must be great being an opposition MP when you have nothing to oppose but you can still collect a six figure salary plus expenses as a shadow cabinet member.    

  • I totally agree Ed.  We have to get unemployment down, and keep peoples’ CV’s as alive as possible in the gaps between jobs.  And the priority has to be jobs for those who can work and are languishing/ suffering, rather than creating pie-in-the-sky rubbish to justify cutting Disability money.

    As for accepting these cuts?  We have no choice, and we are not happy to be forced into this situation by Osbornes’ mistakes.  Make sure you keep telling people that, or they will continue to misunderstand what you mean and think you approve.

    • It IS approval. It IS accepting that there’s no other way, and that we’re living in a third-world country.

  • Tim Urlenk

    This announcement is an outrage. Ed Balls needs to understand that it is not tory voters that he needs to woo, but Labour voters, who have lost all faith in the Labour Party to represent their views, after the sell out of the Blair years and now this – yet more Tory policy.

    If you give workers money, (by not freezing pay), they can then buy things. Buying things creates demand. Demand creates extra jobs – to cope with the demand, right? Voila – increasing pay creates jobs.

    So how does freezing pay create jobs? Answer – it doesn’t. It only creates profits. This announcement is just more of the same old  New Labour/Tory lies.

    For 30 years we have endured policies that make the rich grow richer, and that have now crippled our country. If Labour don’t start representing the views of Labour supporters, then we should all destroy our ballot
    papers in the next general election. Maybe that will give Labour the
    backbone to start representing the interests of the people again, not the interests of big business.

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