Labour refuses to commit to ending squeeze on public sector pay

Ed Balls fought to counter the Conservatives’ “smear analysis” about Labour’s economic credibility by stressing he cannot commit his party to reversing the public sector pay freeze or scrapping council cuts in the first year after the election.

The shadow chancellor spelled out the potentially unpopular consequences of his pledge not to spend more than the coalition has set for 2015-16, as Labour furiously contested a Tory dossier purporting to have unearthed £21bn of extra spending proposed by the opposition.

Labour responded with its own rebuttal dossier entitled “The Tories’ Smear Analysis of Labour Party Policy”, in which Balls also said that when Labour shadow ministers criticise certain public sector cuts, this does not mean they will be reversed in 2015-16. The shadow chancellor said he could not promise to undo local council spending cuts or give public sector workers a pay rise beyond the 1% announced for payment from next spring. Balls’s statement comes despite previous Labour criticism of the 1% pay award. Labour will now only agree to fund higher increases for NHS workers, members of the armed forces and other public sector workers if individual secretaries of state can find a way to pay for the increased salaries through cuts elsewhere.

The shadow chancellor said: “I am not providing any more money for 2015-16 over and above. At the time this was announced, I said it was a mistake of Jeremy Hunt to reject the pay review bodies but I also … said I can make no commitment now to find additional money to pay for that … We’ve talked about the £2.5bn Time to Care fund [to fund new NHS staff] but I think the priority next year for us is going to be putting money into more doctors and nurses rather than pay.”

Labour has pledged to fund 20,000 more nurses and 8,000 doctors with its £2.5bn health fund raised from the mansion tax and a levy on tobacco firms.

In his first major policy intervention, Jim Murphy, the new Scottish Labour leader, said there would be at least 1,000 new nurses in Scotland, paid for by a mansion tax primarily raised on homes in the London and the south-east – a move he described as a “real win-win”.

Balls’ statement came at the end of a bruising first day of proper election campaigning, a day that started with a speech by Labour leader Ed Miliband promising “hope, not falsehood” and which descended into a battle between the two main parties amid accusations of lies and dirty tricks.

The Conservatives had timed a press conference led by Osborne and four other cabinet ministers to start almost immediately after this finished in the hope of overshadowing Miliband’s message. The chancellor claimed his document on extra Labour spending was based on official Treasury costings as well as “other reliable sources”. However, it quickly emerged that the assumptions on which the research is based were provided by Conservative special advisers, while the policies examined were a mixture of firm commitments, comments by shadow ministers and predictions about cuts Labour would reverse.

Osborne was challenged about the accuracy of a number of the calculations during the event. One of these was that Labour would spend £710m in the first year of a new government to ensure as many apprenticeships as university entries – even though Labour’s pledge was only that it would be in place before 2025. The Conservatives said they had spread the cost over 10 years.

Another contested “uncosted” claim was the idea that giving the Green Investment Bank more borrowing powers would cost £3.7bn. Osborne has himself said that from 2015-16, subject to overall debt targets being met, the Conservatives also would allow the government-backed bank to “borrow and invest in a better future”.

Osborne was asked about his own plans to give £7bn in tax cuts in the next parliament when the books have been balanced, even though there are no details yet on how spending cuts will achieved. Challenged to explain how this would be paid for, he said: “We have set out the spending totals, and they are subject to debate at the moment, that would deliver a surplus of over £20bn. I think you can see from our record in this parliament, where we’ve achieved a £9bn reduction in income tax while bringing the deficit down and taking difficult spending decisions … Those tax reductions are a key part of our long-term economic plan. They are about incentivising work.”

Shadow ministers spent much of the day rubbishing the “dodgy Tory dossier”, which the shadow chancellor said was a combination of error and pure fabrication. Balls ran off a list of Tory claims based on false assumptions, including the idea that Labour’s promise to make cycling safer amounted to a commitment to bring back £63m worth of scrapped cycling initiatives.

As each side claimed the other was making wild promises that could not be paid for, Lord (Gus) O’Donnell, formerly the most senior civil servant in Whitehall, told Radio 4’s World at One the independent Office for Budget Responsibility should audit all spending party plans.

Gemma Tetlow, programme director at the Institute for Fiscal Studies, said her own work had found Labour’s policies “slightly” more cautious than the other parties but all should be providing more detail.

“We took the party’s own costings and therefore only included things that had been very firmly committed to with precise details,” she said. “This is why we have come up from a very different picture to the Tory document, because they have included a lot of things that are much less specific, some of which Labour would say they haven’t firmly signed up to and some of which we haven’t got specific details or a timescale for. The net effect of measures that Labour have definitely committed to and for which we have costings suggests that the package amounts to a very small net takeaway rather than a giveaway.” During the Conservative event, Osborne was also challenged about why he would not let the independent OBR audit the spending plans of political parties as advocated by O’Donnell and Labour.

He said the budget watchdog had conducted an independent review last year, which concluded that “it was not right now to move the OBR into this space”.

Powered by article was written by Rowena Mason, political correspondent, for The Guardian on Monday 5th January 2015 21.30 Europe/London © Guardian News and Media Limited 2010