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Monday 1st October 2012 | 15:49
Ed Balls’ plans to spend the 4G auction receipts has a £2 billion black hole in it due to two basic errors.
1. Ed Balls says he’d spend 4G auction receipts on housing and a cut in stamp duty. But in the Spending Review, £600 million of the 4G Spectrum auction proceeds were allocated to the BIS budget for investment in science, innovation and further education, money which will leverage in at least £1 billion of further private sector investment. So Ed Balls’ policy would mean cutting growth-boosting capital spending already in the pipeline – or more borrowing and more debt.
2. Ed Balls’ 100,000 houses package would cost £1.4 billion more than he claims. Labour say 35,000 of these houses would be ‘private below-market rent’. But Labour have also said that if they were in power today, they would not be implementing the Government’s new affordable rents model. So the cost of these houses must be based on Labour’s old affordable housing model – not the Government’s new one. According to National Audit Office assessment of Labour’s old model, Ed Balls’ full package would cost £3.9 billion, not £2.5 billion – leaving a £1.4 billion black hole that would be filled by more borrowing.
And in a speech indicating that he is clearly rattled by attacks on his credibility, Ed Balls once again ducked an opportunity to apologise for the economic mess Labour left behind and failed to set out a credible deficit reduction plan.
Minister for Business, Matthew Hancock, said:
“Ed Balls isn’t learning. He’s got his sums wrong by billions of pounds, so his plans would mean either cancelling billions of private sector investment on science and skills or having to borrow even more money. No wonder Labour left this country with the biggest budget deficit of any major economy.
“It’s clear Ed Balls has no new ideas other than more borrowing and more debt. Until he apologises for the part Labour played in creating Britain’s economic problems today, Ed Balls will never be trusted with the nation’s finances again.”