Balls defends Labour record on economy

ED Balls, the recently-appointed shadow chancellor, yesterday launched a staunch defence of Labour’s economic record, insisting that high levels of public spending had not exacerbated the financial crisis.

“There was no call from the Conservatives at the time, or from anyone else really, to have a fiscal tightening in that period [2007]. We went to the crisis with low debt,” Balls said on the Andrew Marr show yesterday.

In a combative performance, Balls accused George Osborne of “crushing” the economy with spending cuts and a hike in VAT and called on the chancellor to chart a different course.

“Osborne has got to get out of this denial where he thinks there’s only one approach. There’s no doubt he’s a good politician, but is he a good chancellor? Good chancellors are flexible, they change their minds when the evidence changes,” Balls added.

Meanwhile, Balls audaciously claimed that Mervyn King, governor of the Bank of England, did not agree with the government’s fiscal tightening.

He said: “I think if the governor... was to come out and say the country’s on the wrong track, that would cause a crisis. I don’t think that Mervyn King in his heart of hearts really believes that crushing the economy in this way is the right way to get the economy moving.”

King has repeatedly backed the coalition’s spending cuts, most recently as last week, often earning accusations of political bias.

Balls also said that Labour would not keep the 50p top rate of tax permanently, and backtracked from calls to lower the top rate threshold from £150,000 to £100,000.

Matthew Hancock, a Conservative MP and former adviser to Osborne, said: “Ed Balls still can’t accept that Labour didn’t live within their means, and he can’t accept that Labour would be cutting this year.”