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Monday, 09 March 2015

Balls accuses Tories over 'colossal' NHS and social care cuts

Written by The Press Association

The Tories will be forced to cut spending on the National Health Service - or introduce charging - if they are to press ahead with their plans for "colossal" cuts in the next parliament, shadow chancellor Ed Balls has claimed.

Mr Balls said the "unprecedented" scale of the cuts planned by the Chancellor George Osborne if the Conservatives win the general election - adding up to £70 billion - meant they would be unable to keep their promise to ring-fence the NHS without putting up taxes.

In a speech in London, he said that finding the cuts they would need to make their figures add up would be so "destructive", the Conservatives must have an "alternative plan" to increase charging.

"Our analysis shows clearly - countries which reduce public spending at the pace George Osborne intends have found they have had no alternative but to cut health spending," he said.

"And those who have reduced public spending to the levels that George Osborne is seeking have health systems where charging for NHS-style services is triple the share here.

"This shouldn't be a surprise. When George Osborne's plan means such extreme cuts to day-to-day departmental budgets, it's common sense that the NHS, which makes up a full third of the £317 billion spent in those budgets, ends up footing the bill.

"Even though our NHS is currently under great financial pressure, the international evidence which we set out in our document today suggests that the NHS will end up paying the price if George Osborne pursues his extreme planned spending cuts.

"With the Conservatives planning cuts to day-to-day spending in the next parliament more than double the level they claim - an unprecedented £70 billion of spending cuts which would be deeply destructive and close to impossible, even for this Chancellor - there is a real risk that the Chancellor will be forced to break his promise to ring-fence the NHS.

"And after their broken pledge not to have a top-down reorganisation of the NHS in this parliament, the British people know that the Tories have form when it comes to broken promises on the NHS."

Mr Balls said the Conservative plans would also lead to the smallest police force since comparable records began, the smallest Army since the time of Oliver Cromwell, and more than a third of older people currently receiving social care losing their entitlement.

"The Tories now have a choice. They can either say that these unprecedented, extreme and close-to- impossible cuts to our police, armed forces and social care are the true consequences of their spending plans," he said.

"Or they can confess that their plans are in fact impossible to achieve without breaking their promise to protect the NHS.

"If David Cameron and George Osborne cannot spell out how their sums add up for non-protected departments in order to achieve their fiscal surplus, the British people can only conclude - and would be right to conclude - that alternative plans do exist: to cut NHS spending and introduce charging.

"David Cameron and George Osborne must come clean or the British people will draw their own conclusions."

Mr Balls said that if the Conservatives were to keep to their promises to protect spending on health, schools and overseas aid, it would mean wiping out other elements of government completely.

"The Foreign and Commonwealth Office, the Department for Work and Pensions and the Department of Transport would actually have no day-to-day budgets left at all while others such as DCLG (Department for Communities and Local Government) would almost cease to exist," he said.

"Cuts on this scale would mean closing our embassies around the world, closing down all job centres and back- to-work programmes and all but ending central government's funding for local government. This is clearly impossible to countenance."

Conservative chairman Grant Shapps said the independent Institute for Fiscal Studies put the size of the consolidation planned by the Tories at £30 billion, and said the party had already spelt out how it would deliver this through £12 billion of welfare cuts, £13 billion from reductions in departmental spending and £5 billion from action to close tax loopholes.

Mr Shapps told the BBC that Mr Balls was "making this all up on the back of an envelope", adding: "It just shows how chaotic Labour are and why they are really not in a position to run this country. They would be a complete disaster."

Accusing Mr Balls of making "wild accusations" about Tory plans, Mr Shapps said: "He says we will be taking government finances back to the days of Cromwell. Nonsense. The IFS says we will be taking spending back to the years 2003 and 2004, when as far as I know it wasn't Cromwell in the Treasury, it was one Ed Balls."

Liberal Democrat Chief Secretary to the Treasury Danny Alexander said: "Both Labour and the Conservatives are saying they will lurch away from the centre ground. Labour will borrow too much and the Conservatives will cut too much. The Liberal Democrats have been the rock of financial stability during this recovery.

"We are the only party offering a fair and balanced approach to finishing the job of balancing the books by 2017/18. And we are the only party that has a plan after that point that will allow the investment in our infrastructure and public services needed to build a stronger economy and fairer society."

IFS director Paul Johnson told BBC Radio 4's The World At One: "I don't know about the £70 billion figure. You can talk about all sorts of different numbers. I think the £70 billion takes a particular set of assumptions and in particular says that the Conservatives will do what the Autumn Statement numbers say they will do - which is a bit different from the fiscal rules the Conservatives have set themselves.

"There is a difference of around about £25 or £30 billion between the two parties in terms of the level of fiscal consolidation and therefore the sorts of levels of spending cuts they are talking about.

"Labour would introduce less in the way of spending cuts than the Conservatives. Of course, there's a flipside to that in terms of the debt and deficit."

On the question of whether Conservative plans imply a reduction in spending levels to the 1930s, as Labour has suggested, or those of the early years of the Blair administration, as Tories insist, Mr Johnson said: "If you are looking at the total amount of money, adjusted for inflation, that the Government is looking at spending, then by 2020 we would be back to where we were in the early 2000s.

"If you are looking at the proportion of the economy that the Government is spending, that's heading down to 35-36% of national income, and yes, that's the lowest level since the 1940s - or would be on some of these plans.

"Exactly where we'll end up, of course, we don't know. There's a big difference between what the Conservatives have said they will do for sure and what was in the Autumn Statement. And Ed Balls is right about one thing - there's quite a big difference between what the Labour Party is saying it will do and what the Conservative Party is saying it will do."

Conservative Financial Secretary to the Treasury David Gauke said: "Ed Balls has today confirmed Labour's policy of billions of pounds of tax rises, more borrowing and more debt - which in reality would be even higher with an Ed Miliband government in the pocket of Alex Salmond and the SNP.

"There is a clear choice at this election: sticking with the competence and stability of David Cameron and the Conservatives' long-term economic plan that's securing a better future for Britain - the deficit has been halved, there are 1.85 million more people with the security of a regular wage and the economy is recovering from Labour's Great Recession - or abandoning that plan for the SNP and Labour, with hard-working taxpayers paying the price for the economic chaos that would result."

Mr Johnson later told the BBC: "The reason that Ed Balls has been able to come up with a number like £70 billion-worth of cuts is because if you look at the last Autumn Statement, it does say the Government is looking for a £20-odd billion surplus by the end of the next Parliament. And the Conservatives have said they want £10 billion-worth of tax cuts.

"You put all of that together and it's not very difficult to come to a world in which you are looking at £50, 60, 70 billion of spending cuts over that period.

"But the real question is are the Conservatives actually signed up to a budget surplus of that kind of scale? Where would they get the money for the tax cuts that they are talking about? How do you think about welfare spending cuts in all of this?

"So you can come up with all sorts of numbers. The truth is though, under the Conservatives there clearly would be some very significant spending cuts over the five years of the next Parliament."

Mr Johnson added: "There's a difference of about £35 billion or £30 billion between the two major parties. Now, that's quite a big number. And certainly in terms of looking at the scale of the cuts required that makes a big difference between the two main parties.

"The cuts would be much more significant under the plans that we've seen from the Conservatives than they would be under the plans we've seen from the Labour Party. Of course, on the other side of that, therefore, there will be more debt and more deficit under the Labour Party, not by a massive amount given the scale of the overall debt but there will be a difference."

Mr Balls later wrote to Mr Osborne to tell the Chancellor: "You now owe the British people some honesty and clarity over your extreme and risky plans.

"Will you proceed with £70 billion of cuts, which will have an unprecedented and deeply destructive impact on non-protected departments, or do you in fact plan to cut the NHS?

"Perhaps you agree with Conservative MP Charles Walker, who when asked today whether he supported protecting the NHS budget, said, `I'm not sure that I do agree with it'. This is an increasingly popular view within the Conservative Party, with senior Tory Cabinet ministers and backbenchers reportedly demanding that the NHS ring-fence be scrapped.

"If you cannot answer, people will draw their own conclusions."

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