Labour conference: Balls unveils five-point growth plan

 

Ed Balls admitted Labour made mistakes but listed what he claimed were "reckless" coalition policies.

Ed Balls has unveiled a five-point plan to kick-start Britain's stalled economy in a speech to Labour's conference.

It includes a VAT cut, tax breaks for small firms and using a bank bonus tax to pay for new affordable homes and guaranteed jobs for young people.

If the coalition adopted the proposals, Labour would back it, the shadow chancellor said.

Mr Balls is trying to boost Labour's economic credibility by saying it would not reverse all the coalition's cuts.

But the Conservatives said the plan would cost £20bn and Labour was "still dangerously addicted to debt".

In his speech to Labour's annual conference, Mr Balls signed the party up to tough spending rules and vowed that any windfall from the sale of bank shares would be spent on paying off the national debt.

His five-point growth plan includes:

  • Repeating the bank bonus tax - and using "the money to build 25,000 affordable homes and guarantee a job for 100,000 young people"
  • Bringing forward long-term investment projects, such as schools, roads and transport, to create jobs
  • Reversing January's "damaging" VAT rise now for a temporary period
  • Immediate one-year cut in VAT to 5% on home improvements, repairs and maintenance
  • One-year national insurance tax break "for every small firm which takes on extra workers, using the money left over from the government's failed national insurance rebate for new businesses"
'Not profligate'

Mr Balls admitted Labour had made mistakes with the economy - particularly on eastern European immigration and bank regulation - and "didn't spend every pound of public money well".

But he denied the party had been "profligate" - and launched an attack on coalition spending cuts, which he claimed were wrecking the country's chances of recovery.

Mr Balls said David Cameron and George Osborne had "the wrong prescription" for the current economic crisis, which was the "most serious in my lifetime".

The shadow chancellor said Britain's economy faced a "global growth crisis" which was becoming "more dangerous by the day".

He argued that having a growth plan would help get the economy moving again and "stop the vicious circle on the deficit" but said it wouldn't "secure our economic future" on its own and tough decisions would still be needed on tax and spending.

Share pledges

Analysis

Labour has a new golden rule: no spending promises.

If you thought you heard Ed Balls promise to cut VAT on home improvements or bring forward investment projects in his conference speech, listen again.

He did nothing of the sort.

Those were not Labour policies.

They were - in his words - "immediate steps" the current government should take.

He made the point in a newspaper interview and then from the conference platform.

"No matter how much we dislike particular Tory spending cuts or tax rises, we cannot make promises now to reverse them," he said.

That is an important political message; a key part of trying to build the party's economic credibility.

With the party in the middle of a two-year policy review, manifesto commitments have so far been thin on the ground in Liverpool.

But the shadow chancellor made two new pledges in his speech.

"First, before the next election - and based on the circumstances we face - we will set out for our manifesto tough fiscal rules that the next Labour government will have to stick to - to get our country's current budget back to balance and national debt on a downward path. And these fiscal rules will be independently monitored by the Office for Budget Responsibility.

"And second we know that, even as bank shares are falling again, David Cameron and Nick Clegg are still betting on a windfall gain from privatising RBS and Lloyds to pay for a pre-election giveaway.

"We could also pledge to spend that windfall.

"But we will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt. That will be Labour's choice - fiscal responsibility in the national interest."

'Ducking decisions'

But Treasury minister Justine Greening said the plans did not add up.

"Announcing £20bn new spending after claiming he would be tough on the deficit shows Ed Balls has zero credibility," she said.

"He's ducked all the tough decisions and refused to apologise for Labour overspending.

"Labour is still dangerously addicted to debt."

 

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  • rate this
    -27

    Comment number 339.

    I keep reading people saying the only way to cut the deficit is to cut spending, 100,000+ public sector jobs have gone since April and yet the deficit hasn't shrunk. The ratings agencies would not downgrade about a deficit per se provided a) there's a realistic plan to reduce it over time and more importantly b) that plan preserves growth. If cutting was the answer Greece and Ireland would be AAA.

  • rate this
    +32

    Comment number 338.

    A cry for a VAT is the hallmark of a party with no ideas, it's a populace option that does nothing for the economy. Things people are going to buy anyway, cost 5p per pound less it this simply does nothing for the economy. Try creating private sector jobs, grow the building industry, encourage green technologies. Anything but empty brainless gestures like this.

  • rate this
    +16

    Comment number 329.

    From a heartland for labour, I'm quite disapointed. Vague outlines and not enough details. I think I prefer Cameron's plan...

  • rate this
    +50

    Comment number 290.

    This man, like any other who was in a position of power in the previous, financially disastrous government, a government who put is in the greatest financial peril we have ever known, and yet continue to deny their errors, has absolutely NO CURRENCY to bring to the table of economic debate. Their foolish stupidity in matters financial is not debatable, it is an undeniable matter of public record.

  • rate this
    -16

    Comment number 277.

    By reducing VAT can only be a good thing in the current climate, as it will directly help people on low incomes and benefit small business, but as this is a Labour policy, I fear the Conservatives will never adopt this even if they realize this should be implemented as it admits they got it wrong.

 

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