Politics

Facts vs facts

The absurdity of the debate between Labour and the Tories

June 25, 2013
Ed Balls is to blame for all our economic woes. Harry Potts
Ed Balls is to blame for all our economic woes. Harry Potts

Today's Treasury questions were the "amuse bouche," in preparation for the more substantial dish to be served up at tomorrow's Spending Review. On Wednesday, after PMQs, the Chancellor, George Osborne, will set out exactly how he is going to cut spending and inject more capital into the growth areas of the economy. Government sources have made clear that £11.5bn is being wrung from departmental spending, to be diverted into the more productive areas of the economy. The word of the day is, wait for it, "infrastructure."

But that is tomorrow. Today, however, the questions followed a familiar clash of analysis. The Opposition's questions were predicated on the assumption that the economy was in out and out freefall; those coming from the Government's own benches were infused with the opposite assumption.

And so the opening question, from Simon Danczuk (Lab, Rochdale), who asked the Chancellor why it was that the banks were failing in their duty to lend to businesses. What is more, lending is falling, a strong indication that the government's Funding for Lending Scheme has failed. To this, the Chancellor replied simply that lending to businesses is up. And with that single exchange was contained all the intransigence of the UK—and also the global—debate about how economies might be fixed. The government puts forward one fact, and the opposition puts forth the diametric opposite. What is to be made of such debate? How can reasonable people examine the same data sets and from them draw not just differing conclusions, but ones that are the exact opposites of one another?

After a similar exchange, this time about the Business Bank, Peter Tapsell (Cons, Louth and Horncastle) rose to ask in his deliberate manner whether the Chancellor shared his own view that the recent rise in bond yields indicated that another banking crisis was drawing near. Does this not emphasise the importance of re-introducing the strict division between high street and investment banking practices? To this, Osborne pointed to the report by Sir John Vickers suggesting the ring fencing of risky banking activity and reminded the House that the regulator now has the power to split banks that violate these ringfencing rules.

There then came a more testing question from the opposition benches, as the Chancellor was asked whether he had followed the comments made this morning by Mervyn King, the Governor of the Bank of England, about the degree of government pressure that was exerted on the Prudential Regulatory Authority, which oversees bank activities, which might well have put at risk the regulator's independence. This was waved aside by the Chancellor, but a suggestion by King that the government had tried to influence the regulation of banks is not welcome—it is also unusual for a sitting Governor to make such politically-charged statements. (King is to leave the Bank at the end of this month.)

A further Opposition question asked why in the two weeks since Stephen Hester left RBS the value of the taxpayers' stake in the bank has declined by £4bn. This allowed the Chancellor to point out that stock markets have been falling sharply this week, but then, warming to his theme he shouted "how dare," the Shadow Chancellor Ed Balls heckle him about RBS, a back that had to be bailed out after Labour broke the banking system. There was real anger in Osborne's voice at this moment.

Danny Alexander then fielded several questions. As he stood, the atmosphere in the house changed dramatically. He is a softly-spoken man, not made for the roguish nonsense of debates such as these. He answered his questions in a jaunty, friendly voice, making observations about pensions and the importance of not repeating the goofs of the last government (remember the 75p rise?) Alexander stressed the importance of the so-called Triple Lock on pensions, and also the importance of the life sciences sector.

Osborne then took more questions, about unemployment, rate relief and the National Insurance holiday to lessen the burden of tax on firms. Throughout, Balls shook his head, shouting at the Chancellor, calling him incompetent. Osborne never misses a chance to throw a custard pie or two back the other way, constantly referring to Balls's record in office, which Balls does not like. He shouts, goes red. The two are evidently not on friendly terms.

Question: Why does the Institute for Fiscal Studies say that the average family is now £890 worse off per year?

Minister: We do not accept those figures.

That old intransigence once again. It comes up once more in a question about help for the poor, and also VAT rates. Geoffrey Robinson (Lab, Coventry NW) stands to ask why it is that despite all the noise made by this government, only seven infrastructure projects have got under way. Danny Alexander replied that this was so much nonsense and that there had been hundreds of projects, Crossrail, roads, rail upgrades and so on. John Woodcock (Lab, Barrow in Furness) asked essentially the same question and was told by Alexander that the Opposition ought to "show a little humility," on the subject—this is as close as Alexander comes to deploying a full-bore putdown. He then pointed out that his government was making "the greatest investment in rail since Victorian times." An Opposition question: why has infrastructure spending plummeted by so great an amount? Alexander: it has not.

A minister fielded some questions on banks and the economy. More and more of the answers were turned simply into attacks on Ed Balls, of the sort: "we are not on these benches prepared to accept criticism from a party that, when in power, increased borrowing by…" Why is debt so high? Ed Balls. And spending? Ed Balls. The largest structural debt in the G7? The one whose policy is still to borrow more? The one who wants more debt for Britain? It's all him. There he is. It's his fault. All of it. Ed Balls. The effect of this is rather wearing. But what must it be like for Balls himself? To this point, he had not put any questions in the debate, sitting, legs crossed, arms folded into his lap, a defensive posture, with his head on one side, jaw shot forward. His shoes had square toes, and he occasionally shook his head, or shouted. But what effect must this deluge of insults have? He shows nothing—but the effect must be something.

And when he finally rose to speak it was to point out that borrowing has gone up this year, in direct contradiction to the Chancellor's stated plans. What's more, bankers' bonuses are up. This April they were 65 per cent higher than in the same month in 2012. To this Osborne retorted that when Balls was in office, Labour borrowed much more than this government and that when he was City Minister, Balls presided over much higher bonuses than are now enjoyed in the City.

Balls then hit home with his big bonus point—that bonuses were so large because bankers deferred payments until after the fall in the top rate of tax, from 50-45 per cent. To this, Osborne replied that a lecture from the Shadow Chancellor on how to balance the books was rather like "getting a lesson from Dracula on how to run a blood bank," a line specifically concocted to be included in reports such as this one. The Shadow Chancellor has led his party down a "cul-de-sac," continued the Chancellor, and what's more, borrowing under Labour was £157bn and this year under the present government it will be £118bn. Balls was not having any of this. "UP, UP, UP," he shouted.

Douglas Carswell, (Cons, Clacton) then asked the Chancellor whether he was worried by the programme of quantitative easing and whether it was sustainable. Osborne replied that he felt the programme had helped to sustain demand. When giving his answer, however, he missed a syllable out of "quantitative," pronouncing it "quantative," a quite different word (a slip reminiscent of Gordon Brown's repeated omission of the final "s" from Bear Stearns.)

The questions concluded, Ed Balls stood to raise a point of order with the Speaker. He said that there was a risk that the Chancellor had misled the House over borrowing levels. Osborne had indicated that borrowing was falling, when recent independent figures from the Office for National Statistics had shown clearly that borrowing was rising. The Speaker replied that the Chancellor was not obliged to respond to this point of order—it was one of many factual clashes during the debate in which awkward facts were dealt with simply by the statement of their opposite. The final word on Balls's point of order, and of the debate, went to the Speaker, who commented that he had a feeling that such questions will be discussed at length in the days, weeks and—he added wearily—“the years to come.”

He is no doubt correct. With that, the benches began to empty. The Spending Review tomorrow will be more of the same.