Labour Will Increase Demands on U.K. Banks If It Wins Power

Treasury Spokesman for U.K.’s Labour Opposition Ed Balls
Treasury spokesman for the U.K.’s Labour opposition Ed Balls said, “For many families, high child-care costs mean that it doesn’t even add up to go to work. So to make work pay for families, we must act.” Photographer: Simon Dawson/Bloomberg

Labour announced plans to step up demands on banks if it wins the next general election as the U.K. opposition party seeks to boost flagging poll ratings.

Under a Labour government, big companies including banks would be required to take on a local apprentice for every worker from outside the European Union they hired, while a levy on lenders would be increased to fund an extension of free child care, said the party’s Treasury spokesman, Ed Balls.

“We have a global financial system which is hugely important located in London,” Balls said in an interview with Bloomberg Television’s Francine Lacqua at his party’s annual conference in the south-coast city of Brighton today. “For that to work, you need an approach to migration which has tough controls but allows skilled workers in an internationally competitive sector to come in and work here.”

With 20 months to go before the next election, Labour is seeking to rebuild its lead over Prime Minister David Cameron’s Conservative Party. Recent polls have suggested that is narrowing as Britain’s economic recovery builds momentum, with one YouGov Plc survey last week showed the Tories running neck-and-neck with the opposition party.

The apprenticeship plan was announced by Labour leader Ed Miliband yesterday as part of an effort to reduce immigration and deal with youth unemployment. The Conservatives pointed out that under EU law such apprenticeships would have to be offered to any European citizen. The Institute of Directors described it as a “daft policy” that would make it harder for businesses to hire people.

Not Enough

Balls said the apprenticeship plan was part of the party’s program to strengthen the economy.

“I’m not going to start negotiating what makes our economy stronger for the future,” he said. “We talk to banks and finance houses and business all the time. But if you’re saying that companies should be able to play no role in training and skills, that isn’t good enough.”

The conference was reminded today of its divisions over its relationship with labor unions. Len McCluskey, the general secretary of the Unite union, who two weeks ago suggested he might cut party funding by 1.2 million pounds ($1.9 million) a year, spoke to argue for more government spending. “Our party’s credibility shouldn’t mean keeping in with the bond markets at all costs,” he said.

Miliband left the stage before McCluskey spoke. As the union leader finished his remarks, he received louder applause than had Chuka Umunna, the Labour business spokesman who preceded him.

Child Care

Under other Labour plans announced today, three- and four-year-old children in families where all adults are in work would be entitled to 25 hours of free care under the plans, up from 15 hours currently. The levy on bank balance sheets is set at 0.105 percent in order to raise at least 2.5 billion pounds ($4 billion) a year. Labour is seeking to generate an extra 800 million pounds.

“For the first time, parents will be able to work part-time without having to worry about the cost of child care,” Balls said in his speech to the conference. The governing Conservative Party responded that Labour had pledged to spend its levy on banks more than 10 times over on different policies.

Independent Audit

Separately, Balls asked the Office for Budget Responsibility, Britain’s non-partisan fiscal watchdog, to audit his spending plans to ward off criticisms they’re unaffordable. He told delegates Labour needs to demonstrate credibility on its spending plans before the 2015 election.

Balls also warned Labour that if the party wins in 2015, it will have to accept some of the spending reductions made by the current coalition government.

“There will be no spending spree for the next government, not with a deficit this big,” he said in the interview.

The start of the conference has been overshadowed by the publication of a memoir by Damian McBride, who worked alongside Miliband and Balls in the Treasury under Gordon Brown when Labour was last in power. The book, “Power Trip,” details how McBride worked on Brown’s behalf to undermine Prime Minister Tony Blair and punish political opponents, often by spreading misinformation.

Balls was this morning repeatedly questioned about his relationship with McBride and denied he was involved in any briefing against colleagues.

“People know that Ed Miliband and I have been doing things in a very different way for some years now compared to those Blair-Brown days,” he said. “There was awful personal smearing which we both condemned absolutely, but there was a wider antagonism, rows about policy, factionalism, which went on over the last 15 years, and that has changed. We’re not going back to those days. Those were bad times and they’re gone.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE