Ed Balls 'daunted' by chancellor task

Ed Balls has told me that he is "daunted" at the prospect of becoming Chancellor of the Exchequer, given the scale of cuts a future Labour government may have to make.

I put it to the shadow chancellor that he would have to make spending cuts deeper than those made by any government since the war (other, that is, than the coalition itself) - deeper than those made by Labour Chancellor Denis Healey in the 1970s and Margaret Thatcher's Tory government in the 1980s.

The Institute for Fiscal Studies estimates that Labour's plans would imply about £18bn cuts to departmental budgets, since spending on pensions, welfare and debt interest is rising at the moment.

Despite this Mr Balls insisted that the government was wrong to save £200m this year (and £400m in the year after) by refusing to give pay rises to 600,000 NHS staff already receiving automatic pay increments.

'Wiser'

The government was, he told me on a visit to the West Midlands, "reneging" on its promise to give public sector workers a 1% pay rise and for overruling the recommendation of independent pay review bodies. Labour, he said, was committed to a "tough but fair" approach to public sector pay.

When I asked him whether he would reverse today's announcement if he became chancellor, he was clear that he would inherit all the decisions taken by this government, was committed to matching its spending plans in the first year and had already pledged to continue public sector pay restraint. In other words, the answer was no.

Speaking five days before next Wednesday's Budget, the shadow chancellor announced that if he reached Number 11 he would scrap George's Osborne's tax break for married couples, which he said only applied to a third of couples.

More couples would be helped, he said, by spending that money on reintroducing the 10p rate of tax, which, he added, would benefit 24 million people on low and middle incomes.

Finally I asked Mr Balls how he would answer the question which is said to underlie the Conservative election campaign: "Why would you hand the keys back to the guy who crashed the car?"

He said that, although he had made mistakes in the previous Labour government, his time in office meant that he was now "wiser and more experienced".

UPDATE:

Sorry. My memory was playing tricks on exactly what Ed Balls said when I asked him to respond to the Tory charge that you shouldn't give the keys back to the guy who crashed the car.

Here's the quote : "All of us in our lives get things right, but all of us make some mistakes, and the last Labour government didn't regulate the financial services in a tough enough way, but we've learnt from that and we'll come in not just with experience, not just some wisdom which comes from that experience, but with utter determination to make this country fairer and stronger for the future."

Here are some of the key quotations from my interview with Ed Balls:

On Labour: "We made the Bank of England independent, a very important move for Britain. We didn't join the single currency, I was very involved in that decision, not joining the euro - a very important call. We invested in the NHS - a very, very important decision in the last Parliament. There was a global financial crisis - from which we all have to learn lessons, including me - because we didn't regulate in a tough enough way.

"But, in the end, who do people think understands the lives of people in our country, who's on their side and wants to make this a better, fairer stronger nation in the future? I think I know the answer to that and I think most people know it's Labour who will deal with that cost-of-living crisis."

More on Labour: "All of us in our lives get things right, but all of us make some mistakes, and the last Labour government didn't regulate the financial services in a tough enough way. But we've learnt from that and we'll come in not just with experience, not just some wisdom, which comes from that experience, but with utter determination to make this country fairer and stronger for the future."

On being chancellor: "I'm daunted, because it's going to be such a task with the deficit we'll inherit. And we've got such challenges as well to get the reforms we need in Europe, in our economy, in our banks, in our energy companies, in skills - but it's such an important moment. Can Britain earn our way to higher living standards for all? Can we get away from the unfairness of the last few years? I'm up for the task and I'm looking forward to it."

On public sector pay: "We've backed 1% pay restraint, which is a tough thing for us to do, and we've said do it in a fair way. That's what George Osborne promised. That is what Jeremy Hunt is reneging on today. He's rejecting the independent pay review body, which is - let's be clear - only recommending a below-inflation pay rise. He's doing that while he's wasted billions elsewhere. I don't think anybody's going to take seriously... Jeremy Hunt talking about fairness - people think what they've done is so unfair."

On the coalition: "I think David Cameron and George Osborne look so out of touch - they don't understand what's going on in Britain. I do. We do. We've been there and in the future we'll sort things out for people."