Rolling coverage of all the day’s political developments as they happen, including Nick Clegg’s Call Clegg phone-in and Ed Miliband’s speech on the economy
And my colleague Rafael Behr has written his analysis of the speech here.
Here are three blogs about the Ed Miliband speech that are worth reading.
Please forgive a shorthand that may hide important nuances, but Labour believes that by cutting less in the short term, the economy would grow faster - and that would yield higher tax revenues that would finance a relatively bigger public sector. And debt as a proportion of GDP would be reduced by a swelling of the GDP denominator.
The Tories are convinced that the momentum in the economy is sufficient to absorb more immediate and larger public sector cuts - and that the imperative is to cut debt sooner rather than later.
So one thing is clear: Ed feels that now is not the time to be clear about cuts. His only advantage is that the other party leaders agree. His disadvantage is that the polls show that voters are less inclined to trust his judgement on these matters than they are David Cameron’s (or indeed Nigel Farage’s).
On the World at One Carl Emmerson, deputy director of the Institute for Fiscal Studies, said Labour could end up spending £50bn a year by the end of the next parliament more than the Tories would be spending under their plans. But this would involve more borrowing, he said.
He said that it was significant that Labour was only planning to balance the budget for current spending, not for all spending.
Perhaps the biggest thing is Mr Miliband reconfirming what Labour had previously said, that they want to balance the deficit on day-to-day spending. In other words, allow borrowing to be carried out for investment purposes, but not for day to day purposes by government. That would require some cuts in the next parliament but nowhere near as much as what the Conservatives’ aspiration to eliminate the whole budget deficit would imply.
Beyond that, the cuts that Labour would have to find could be very shallow indeed. It could just be cuts of 2 or 3% across unprotected areas outside the NHS and overseas aid, if they were to borrow as much as their rule would allow them ...
There’s two things that give Labour potentially a lot of wiggle room. Firstly, Mr Osborne is aiming for a £23bn overall budget surplus. So, if you only want to balance that, that gives you £23bn to play with. In addition, Mr Miliband has said that the Labour government would be happy to borrow to invest. Investment spending at the end of the next parliament is planned to be £27bn. Which means in total the amount of wiggle room that Labour would have could be as much as £50bn in any one year.
IFS' Carl Emmerson on Wato about Labour's policy: "you'd have much more borrowing, and therefore government debt".
Here’s Labour’s Diane Abbott on Ed Miliband’s speech.
Labour Leftwinger Diane Abbott on Ed Miliband's deficit speech today - "fine" but "quite short of specifics" @JoeWatts_ on @LondonLive
Simon Walker, the director of the Institute of Directors, has welcomed Ed Miliband’s speech. He said:
It is prudent that the Labour Party is pledging no unfunded spending commitments and that Ed Miliband has confirmed their manifesto policies will not require additional borrowing. The strong message from both Ed Miliband and Ed Balls on the need to cut departmental spending is one of the clearest signs yet that Labour acknowledge there is still a long way to go.
We look forward to seeing more detail on Labour’s plans for deficit reduction as we get closer to the election. Business will be looking for the party to propose a programme which will restore government finances, while fostering a dynamic and entrepreneurial economy. This will not be achieved with new taxes on effort and aspiration.
Businesses want the next government to continue to prioritise tackling the deficit. Getting the UK public finances in order is critical to our long-term growth and international credibility.
At the same time as getting the deficit down, we need to remember the growth-boosting benefits of investment in infrastructure.
Kris Hopkins, the Conservative local government minister, has dismissed Labour’s claim to be able to save £500m from local government efficiency savings. (See 1.43pm.)
We are already delivering these local government savings to clear the deficit as part of our long-term economic plan.
So Labour are proposing a zero-based spending review that saves precisely zero money.
Here is some comment on Ed Miliband’s speech from political journalists on Twitter.
From the Guardian’s Rafael Behr
EdM speeches nearly always based on a big macroeconomic argument working towards a strategic position. In this case ... (1/3)
... that cost of living crisis and deficit reduction are in fact the same issue; have been all along; can't fix latter without former (2/3)
... which is neat. But drains life out of political language. No story, no colour, no rhetorical pleasure with words. Those things matter.
Miliband reiterates no borrowing to invest in capital spend pledge. It was wrong at conference at it’s wrong now *HEADDESK*
Borrowing to build infrastructure pays for itself and grows the economy. Miliband wrong to rule it out (or at least, out of the manifesto)
Like clarity of Miliband pledge to cut deficit, mend social fabric, but 'everyday people' v offputting phrase. Special ppl vs everyday ppl?
Miliband event in short - no detail of new cuts, but fact he is talking about deficit will cheer many in Labour.
I wouldn't agree with everything in Ed Miliband's speech on the economy this morning but it had the essential quality of credibility
Typical fiscal consolidation around world 70/30 split or 80/20 on spending cuts/ tax rises. Ed won't say what split he has in mind
But still a big moment to hear ed m speaking so openly about spending cuts- lab think they can get back into deficit debate. But too late?
Miliband speech reminds me of Cameron NHS/deficit poster in 2010. Says too many hard-to-reconcile things to persuade anyone.
"I'll cut the deficit, not the NHS" @LabourListpic.twitter.com/3OqGsqTpHS
The Tory press office is making a similar point to Robert Peston. (See 1.50pm.)
So @Ed_Miliband saying he won't return public spending to the same level as when he was a special adviser in the Treasury setting budgets
The BBC’s economics editor, Robert Peston, has been interviewing Ed Miliband. He is not impressed by Miliband’s claim that the Tory plan to cut state spending to 35% of GDP would inevitably be disastrous.
In interview with me, @Ed_Miliband attacks Tory plans to cut public spending to 35% of GDP. But when was it last less than 36%?
public spending was sub 36% of GDP in 99/2000, when Lab in office. Matters coz Miliband says Tories wrecking public services with 35% target
Here’s a Guardian video with extracts from Ed Miliband’s speech.
In his Q&A Ed Miliband talked about Labour’s plans to save money from local government back-office reforms. (See 11.37am and 1.05pm.) There was also a brief reference in the speech.
The details here here. Labour has published a report from its zero-based policy review, covering local government (pdf), and it says £500m could be saved by 2016/17.
In the third interim report from Labour’s Zero-Based Review (ZBR) of every pound spent by government, Chris Leslie, shadow chief secretary to the Treasury, and Hilary Benn, shadow communities and local government secretary, outline how Labour will:
· save over £500 million a year from 2016/17 through shared services, back-office collaboration, and streamlining, to better protect the frontline;
Danny Alexander, the Lib Dem chief secretary to the Treaury, told Sky News that there was nothing new in Ed Miliband’s speech.
I think we have learnt today why Ed Miliband didn’t mention the deficit in his conference speech - because he’s got absolutely nothing new to say.
In a sense both Labour and Conservative parties now are saying that the process of deficit reduction will need to carry on for the whole of the next parliament - Labour more slowly, the Conservatives going too far.
A poll yesterday showed that there is clear public support for the idea the government should cut public spending, but at a slower rate than is being proposed by the Tories. This, essentially, is what Ed Miliband is proposing and this was a solid, intelligent speech that explained, reasonably clearly, how Labour’s deficit reduction programme would differ from the Conservatives’. Miliband pitched it as kinder, smarter deficit reduction. The Labour leader did not, though, announce any new cuts and, as Tom Bradby suggested in his question (see 11.47am), the speech did not do much to illuminate what a cuts programme would actually look like in practice. Miliband made a fair stab at trying to answer this charge. (See below.) But the most honest answer was the one that he didn’t use: if you think we’re being evasive, the other lot are even worse.
Much that was in the speech was briefed overnight. Here’s a summary of what Miliband said, focusing on the new points. And here’s the text of the speech.
And so I can announce our first pledge of the general election campaign:
We will build a strong economic foundation and balance the books.
We will set out our tax plans at the election but I think I would steer you well away from any Labour government raising VAT. It hasn’t happened in the past and I don’t think it’s going to happen in the future.
It is always important that we are careful on these taxation issues and we judge carefully any measures that we announce. And that’s the basis on which we will proceed.
It’s not what Labour leaders have said in the past. It’s not what was said in the 2010 general election. It is me being very clear.
We’ve identified a whole series of areas - the winter fuel payments for the richest pensioners, capping child benefit rises, abolishing police and crime commissioners, cutting ministers’ pay, the local government back-office reforms that I’m talking about today.
Now, beyond that, the right way to make these decisions is frankly in government, when you have all of the resources behind you. Because if we start picking things out of the air without having done that work, without having gone into the departments and found how we make these reductions in the most sensible way, then they won’t be the most sensible changes for the country.
I know how seriously [David] took these issues when he was in government. He actually answered questions about this in the House of Commons while he was in government. He is never somebody who would ever countenance the British state getting involved in this kind of activity.
Ed Miliband’s Q&A is over. It was almost more interesting than the speech, given that the speech had been extensively trailed in advance, and I will post the highlights shortly.
Q: [From the Royal Institute of Chartered Surveyors] The property market is incredibly important to the economy. Will you work with us to ensure your property tax plans are not a drag on the economy?
Miliband says it is important to have a successful housing market. Of course Labour will listen to RICS on these subjects.
Miliband says the government has got to deal with businesses that avoid tax. That undermines trust in the tax system, he says. Margaret Hodge, the chair of the public accounts committee, has done “brilliant” work on this, he says.
Q: Do you think your brother David has questions to answer about torture?
Miliband says David has answered questions about this in the past. He is someone who would never countenance the government getting involved in torture.
Q: If cutting spending to 35% of GDP is wrong, what level should it be?
Miliband says he does not believe in plucking an arbitrary figure from the air.
Q: Will you introduce new measures to get the rich to pay more?
Miliband says Labour has already announced plans to raise more money from the rich. Their plans are proportionate and fair. It is best to proceed carefully with tax matters, he says.
Q: Are you saying you won’t borrow for investment?
Miliband says he does not believe the Tories will meet their target for balancing the overall budget.
Q: If you could sum up Labour’s message on a billboard, what would it be?
Miliband says it would be a country that works for you, not just the privileged few.
Q: Do you think Tony Blair has questions to answer about what he knew about the US’s use of torture? Should he give evidence to the intelligence and security committee?
Miliband says the senate committee report is “deeply troubling”.
Miliband says Labour is committed to keeping the most competitive tax rate in the G7. That would primarily benefit big business, he says.
But it also has plans to help small firms, he says.
Q: Can you give some indication as to the scale of the cuts envisaged? Are you planning cuts on an 80:20 basis (ie, with 80% of the deficit reduction coming from spending cuts, and 20% from tax rises)?
Miliband says he does not accept that a firm rule should apply.
Q: Are you prepared to rule out VAT?
Miliband says he will set out his tax plans at the election. But he would steer us well away from that. Labour governments have not raised VAT in the past “and I don’t think it is going to happen in the future”.
Q: [From Sky’s Faisal Islam] Under your plans, state spending would still be only 37/38% of GDP. Is there really that much difference between your plans and the Tory ones?
Yes, says Miliband.
Q: [From ITV’s Tom Bradby] This was billed as a big economy speech, but there is not much new in it. Would you accept that you, and all leaders, are failing to level with the public as to what cuts you would introduce if you get into power?
No, says Miliband.
Q: What is your policy on science?
This is really important, Miliband says. He recognises the importance it has for the productive potential of the economy.
The full text of Ed Miliband’s speech is now on Labour’s website.
Miliband is now taking questions.
There are a mix of journalists and party invitees in the audience.
Miliband summarises his five principles for deficit reduction again.
And he announces Labour’s first general election pledge.
So I can announce our first pledge of the general election campaign:
We will build a strong economic foundation and balance the books.
Miliband says the Tories are proposing unfunded tax cuts.
This is not responsible and not right.
And the British people should be in no doubt what the Tory promise means: they will pay the price for tax cuts one way or another.
Miliband says Labour will only make credible promises.
I understand why some people want us to make manifesto proposals funded by additional borrowing.
But while there is a deficit to be cleared it would be wrong to do that.
Miliband says Labour would cut the deficit fairly.
The Conservative approach is very different, he says.
This year, they have asked families with children to contribute five times more to deficit reduction than the banks.
And now for the future, theirs is the only deficit reduction plan in history which seems to involve asking the wealthy to pay nothing more.
Miliband says the Tory plans would deliver cuts “on an unprecedented scale”.
The equivalent of more than the whole budget for schools.
Or three times more than the entire budget for social care.
Miliband says his third principle is that Britain needs “common sense spending reductions, not slash and burn”.
NHS and aid will be protected, and the Labour manifesto will set out “a very limited number of other areas which will have spending protected”, he says.
But it won’t just be for the first year.
Outside protected areas, for other departments, there will be cuts in spending.
We must take the opportunity to do what no government has properly done: reshape public services so that they deliver better for people, doing more for social justice with less.
Here we should take inspiration from what Labour local government has been able to do and give them the chance to do more.
Miliband says Labour will not be able to reform through big spending.
The last Labour government increased spending year on year, using the proceeds of economic growth to make our country fairer.
That option will not be available to us.
Miliband says the evidence is now in that shows that, without tackling the cost of living crisis, government cannot tackle the deficit.
Last week the Office for Budget Responsibility said income tax and national insurance receipts were £43bn lower than forecast in 2010.
Putting our young people back to work will improve tax revenues and cut the social security bill.
Raising the minimum wage will do the same.
Miliband says it make sense to differentiate between current spending and capital spending.
(Labour wants to balance the books on current spending. George Osborne wants to balance the books on all spending.)
Miliband says Labour will take a “tough and balanced” approach to tackling the deficit.
He says Labour will adopt five principles for deficit reduction.
Miliband says the deficit matters.
Some people think the deficit simply doesn’t matter to our mission and should not be our concern. They are wrong. It matters.
Because unless there is a strategy for dealing with the deficit, it is working people who will end up paying the price of the economic instability that is created. It is also necessary for funding our public services because higher debt interest payments squeeze out money for those services and for investment in the long-term potential of our country.
Ed Miliband is speaking now.
He starts with an attack on the Tories.
The Tory plan is to return spending on public services to a share last seen in the 1930s: a time before there was a National Health Service and when young people left school at 14. There is only one 35 per cent strategy in British politics today: the Tory plan for cutting back the state and spending on services to little more than a third of national income.
And they have finally been exposed by the Autumn Statement for what they really are: not modern compassionate Conservatives at all - but extreme and ideological, committed to a dramatic shrinking of the state and public services, no matter what the consequences.
According to the overnight briefing, Ed Miliband will use his speech to set out five principles that Labour will apply to deficit reduction.
Here they are.
1. Setting a credible and sensible goal to balance the books and get the national debt falling as soon as possible within the next Parliament.
Not having a fiscal plan which sets a target of a 35 per cent state, putting public services and productive investment at risk.
William Hague, the Conservative leader of the Commons, has been joking about Ed Miliband during business questions ahead of Miliband’s speech.
Hague in the Commons on Miliband: "He has finally remembered the deficit, but he can't yet think of what to do about it" #MiliCrisis
Labour have got a slogan for Ed Miliband’s speech: a strong economic foundation.
New slogan for Miliband deficit speech: a strong economic foundation pic.twitter.com/QyHMoOHELy
Ed Balls, the shadow chancellor, was on the Today programme, BBC News and Sky this morning. Presenters who tried to get him to give more detail of where Labour would impose cuts did not have much luck, but his general points about Labour’s approach to spending cuts were interesting. Here are the key points.
It would be so extreme to go back to a 1930s Britain … I don’t want to have our children grow up in a society where people sit behind fences because there are not any police, or where children born into poverty stay in poverty, or where our National Health Service becomes americanised.
I think the idea of going to 35% would be hugely damaging, not only to our public services but to the productive capacity of our economy. And I think the important thing is not the percentage, but what you are spending the money on. If you are spending lots and lots of money on a rising housing benefit bill that is a bad reason to have it at 40%. If you are spending it on more young people getting apprentices, on the National Health Service expanding – that is a good thing.
I think parents shouldn’t smack children. I think schools shouldn’t smack children. I think we should say it so wring to smack children, because if you start to say its ok then it starts to encourage in which the question is: ‘how hard?’ And I think that is actually a bad way to bring up children, I don’t agree with making it illegal. I don’t want to change the law. I think the law is already pretty tough, and somebody who smacks and marks and hurts a child, of course they should be punished.
Here are the key points from Nick Clegg’s Call Clegg phone-in.
Since you ask about the past, I think, once the police are investigations are done, once this report from the intelligence and security committee is done, we should keep an open mind, if we need to, about moving to a full judicial inquiry if there are any outstanding questions. Because I’m like everybody else; I want the truth out there. And that’s one of the big differences; however shocking the senate report is, it is worth remembering - I doubt very much any state run by [Islamic State] or al-Qaida would ever have the maturity to lift the lid on its own mistakes in a way that a mature democracy like America has done.
Morally speaking, if you are defending the values of decency, dignity before the law, human rights - that’s what we do in democracy, unlike [terrorists], that’s what we do unlike those barbarians, those animals in [Islamic State] - we stand up for values that we have cherished for centuries. And if we instead lower ourselves to their level, use their methods of treating people in such a degrading way by using torture, then we destroy the very values we are trying to protect from their attacks ...
The moment you, as a country, as a people, as a community, the moment we abandon the very values that we claim to be defending, it is no longer about whether you win or lose one particular initiative or whether you find the location of one individual or not, what you have done is you have lost the war before you even wage the battle because you no longer uphold the values that you claim. At the end of the day all conflicts are often about competing values. And if you don’t abide by those values, then you have lost the conflict before it has even started.
And this is what Nick Clegg said about why he was opposed to torture. He was responding to a caller who said it was justified to use torture against terrorists. Clegg replied:
Morally speaking, if you are defending the values of decency, dignity before the law, human rights - that’s what we do in democracy, unlike them [terrorists], that’s what we do unlike those barbarians, those animals in [Islamic State] - we stand up for values that we have cherished for centuries. And if we instead lower ourselves to their level, use their methods of treating people in such a degrading way by using torture, then we destroy the very values we are trying to protect from their attacks.
Q: Should the government allow parents to smack their children?
Clegg says violence against children should not be allowed. But he agrees with Nicky Morgan, the education secretary, who defended physical chastisement.
Here’s the quote from Nick Clegg where he hinted that he could back a full judicial inquiry into Britain’s involvement in torture.
Since you ask about the past, I think, once the police are investigations are done, once this report from the intelligence and security committee is done, we should keep an open mind, if we need to, about moving to a full judicial inquiry if there are any outstanding questions. Because I’m like everybody else; I want the truth out there. And that’s one of the big differences; however shocking the senate report is, it is worth remembering - I doubt very much any state run by [Islamic State] or al-Qaida would ever have the maturity to lift the lid on its own mistakes in a way that a mature democracy like America has done.
Clegg says he wants to move to a situation where the police have to get permission from a judge before they can seize phone records from journalists.
But the government is waiting for a report from the interception of communications commissioner before it takes a final decision on this issue, he says.
Q: Have you had a reply from Theresa May to your letter about the data communications bill?
No, says Clegg. But he says he does talk to her.
Q: Will you consider defecting to the Tories?
No, says Clegg.
Q: At PMQs yesterday you talked about inequality. Isn’t it the case that the figures do not represent the reality of the needs of the one in five voters who are deaf, disabled or carers?
Nick Ferrari raises the case of the court ruling against the man in a wheelchair who wanted to ensure that a mum with a buggy had to make room for him on the bus.
Q: Why hasn’t the Iraq inquiry report been published?
Clegg says he is really frustrated about this.
Q: Aren’t we justified in using torture against terrorists?
Clegg says he could not disagree more.
We’ve got a big speech from Ed Miliband on the economy this morning. Extracts have been released in advance, and here’s the Guardian’s overnight story.
Ed Miliband will seek to capture the middle ground on the deficit on Thursday, saying he will not follow the Tory plan for cutting total public spending to 35% of GDP but will promise to reduce spending in most departments year-on-year until the current deficit is eliminated.
In a speech on Thursday he will claim Labour is engaged in a fight for the soul of Britain, and assert that Tory fiscal plans will mean disintegration of public services.
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