Ed Balls attacks Tony Blair over deficit claims in memoirs

Ed Balls today rounded on Tony Blair after the former prime minister claimed Labour had been wrong to allow the structural deficit to build up during the last decade. The Labour leadership contender said Blair was mistaken in his apparent support of the coalition's economic policy, which he said was "dangerous and risky". Blair caused controversy in Labour ranks by leaning towards the Conservative-Lib Dem coalition's policy on cutting the deficit in his autobiography, which was published this week. Asked about Blair's view that Labour should not have let the deficit grow in 2005-10, Balls, the shadow education secretary, said: "He's wrong on this in my view – in the same way as he was wrong that we should have joined the single currency at the beginning of the decade. "There was no significant structural deficit in the mid part of this decade. We had lower debts than France, Germany, America, Japan. "The reason why the deficit went up was because of a global financial crisis. The question is how you deal with that now." Figures from the Office for National Statistics show the deficit grew gradually during the 2000s and then shot up following the financial crisis in 2008 as relatively high public spending continued while tax receipts fell. Balls called the government's plans to cut the deficit by 2015-16, with cuts starting this year, "profoundly dangerous, very risky". He said: "The deficit matters and it has got to come down ... in a steady way over a number of years as we deal with the consequences of the financial crisis. "But if you try to cut the deficit hard and fast, this year and next, the biggest by far attempt to reduce the deficit since the second world war, the danger is you put jobs and growth at risk, you send us back to slower growth, even to a double-dip recession, you make things worse not better." He added: "There is no precedent in British economic history to say cutting spending will make things better. We ought to be investing ... in building houses, in building schools, in creating jobs now to get the economy moving again." Balls said the chancellor, George Osborne, was making "historic mistakes in denying the importance of growth and jobs". The shadow education secretary told BBC Radio 4's Today programme: "You, and everybody, are falling into a trap which says: 'There's a consensus, we all agree, getting the deficit down is the only thing to do.' "There is an alternative which is clear in history, analysis and international opinion, and we should make the alternative case." In his book, Blair said failure to tackle the deficit would store up problems. He wrote: "If governments don't tackle deficits, the bill is footed by taxpayers, who fear big deficits now mean big taxes in the future, the prospect of which reduces confidence, investment and purchasing power. This then increases the risk of a prolonged slump. "In my view, we should have taken a New Labour way out of the economic crisis: kept direct tax rates competitive, had a gradual rise in VAT and other indirect taxes to close the deficit, and used the crisis to push further and faster on reform." Blair added that "fiscal consolidation has to proceed with care", writing: "I agree entirely that a precipitate withdrawal of stimulus packages would be wrong." Nevertheless, these passages appear to put him much closer to the economic policy of the coalition than that of Labour – which has pledged to halve the deficit in four years – and those of the Labour leadership candidates. David Miliband backs the four-year plan, although Balls has argued that this is "too severe to be credible or sustainable". Ed Miliband has been more vague, arguing that "of course we must reduce the deficit, but don't believe for a moment that a lower deficit will on its own lead to the good, more equal society to which we aspire." Balls also said today that Gordon Brown had shrugged off Blair's description of their relationship and criticism of his character in his book. Balls – a key ally of Brown's throughout Labour's 13 years in office – said he had spoken to Brown on the night the book was published and told him it was "one-sided and unfair". "He shrugged his shoulders and said in life you should think about the future," Balls said. Yesterday, Brown announced he was to take on a number of charitable projects connected to education and the internet. Balls is assumed to be running third in the Labour leadership race behind David and Ed Miliband. Today, he is to announce a £250m plan to create 200,000 jobs and work placements for the unemployed. He said the policy went "to the heart" of the alternative he was offering on the economy, and called for a new guarantee to ensure that anyone unemployed for more than 18 months would be given a job or work placement. Balls stressed his plan would ensure everyone of working age had the right to a job, and the responsibility and requirement to take it. He said: "We need to do more to boost jobs, promote growth and get the economy moving again. That's why this week I have called for 100,000 more affordable homes to be built to tackle the housing shortage and create hundreds of thousands of private sector jobs." Ed Miliband today received the backing of the leftwing Tribune magazine and the key Labour activist and former Blackadder star Tony Robinson. But a poll commissioned by David Miliband's campaign found that he was seen by respondents as the most effective alternative to David Cameron. Forty-seven per cent backed him, while only 19% plumped for his brother – his nearest rival.