‘Hardman’ Ed takes the fight to the Tories
A tough and uncompromising politician has been put in charge of the Labour Party’s economic policy. The Conservative-led government expects a hard fight. The battleground? Spending cuts.
Labour MP Ed Balls had been looking forward to a party that night with friends and colleagues, but when the call came it was clear there was no time for delay. He stopped off at the party for just long enough to say hello, then set off to meet his boss Ed Miliband, the Leader of the Opposition.
By the time the meeting was over, Ed Balls had been promoted to the important post of Shadow Chancellor. In this role, he is now responsible for Labour’s economic policy. He also has the job of attacking the policies of the current Tory-led government.
It’s a job for which Balls’ predecessor, Alan Johnson, was widely thought unsuitable. Johnson, said critics, was too soft on the government and too woolly on the issues. Under him, Labour had no clear position from which to attack government mistakes.
Now that Balls has taken the post, things look set to change. Last Saturday, only two days into his new job, he was already on the offensive.
The government, he said, ‘is cutting too far too fast. Over the coming weeks and months, we will hold them to account for the reckless gamble they have taken, and the historic mistake they have made.’
So what is this ‘reckless gamble’ of which the government is accused?
It’s all about debt - specifically, how much debt the British government has, and how it’s going to pay the debt off.
Over recent years, the government has been spending more money than it’s been receiving. This has meant borrowing from international lenders to cover this gap, also known as the ‘deficit’.
The more we borrow, the higher our debt becomes. And debt is expensive. Lenders charge interest fees to borrowers. What’s worse, the more we borrow, the higher our interest fees for each loan become. And the more interest we have to pay, the higher the deficit gets and the more we have to borrow.
Everyone agrees debt is a problem, but the question is what to do about it. The Tories think we must cut government spending fast. That means lenders will charge less interest, and we’ll have to pay smaller fees for our debt. Failure to do this, they warn, could lead to economic disaster.
But Ed Balls thinks it’s the cuts that are disastrous. Many rely on government spending for their jobs. Spending cuts mean unemployment, and unemployment shrinks the economy by reducing the amount of money people spend. A smaller economy means smaller tax income and perhaps, ironically, more debt.
- Debt is expensive, and the consequences of failing to pay debt back can be severe. Are there any times when it’s sensible to borrow money?
- ‘Neither a borrower nor a lender be;
- For loan oft loses both itself and friend,
- And borrowing dulls the edge of husbandry.’
- (Shakespeare, Hamlet, Act I, Scene III)
- What does this Shakespeare quote mean? Is it true?
- Speeches in parliament are often very fierce and aggressive. Write and perform a parliamentary speech making the case either for or against severe cuts.
- Do some research to find out what governments spend their money on. Then imagine you were prime minister and had to cut spending by a fifth. Which areas would you cut and why?
Some People Say...
“Being in debt is morally wrong.”
What do you think?
Q & A
- Wow! This is heavy stuff.
- It is indeed. These are complicated economic questions. Even people who’ve studied the subject for years can’t agree on the right answer.
- Explain again why cuts might hurt the economy?
- The health of an economy can be measured by something called GDP – essentially, how much money people are spending. If the government spends less, government employees lose their jobs. That means they then spend less, so GDP shrinks.
- Why do the parties disagree so much?
- Well, they’d say that they’ve looked, independently, at the arguments and have come to different conclusions. But the odd thing is that each party’s conclusion is in tune with their traditional political thinking. The Conservatives, who have always favoured small government, want big cuts. Labour, who like big government, want small cuts.