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Labour conference: Balls to get tough on debt Labour conference: Balls 'cannot reverse' all cuts
(about 3 hours later)
Ed Balls will bid to boost Labour's economic credibility by vowing to spend any windfall from the sale of bank shares on paying off the national debt. Shadow chancellor Ed Balls has said Labour cannot promise to reverse every spending cut by the coalition, "however unpopular or dangerous" they are.
The shadow chancellor will also vow to bind Labour governments to strict spending rules, in a speech to the party's conference. The party must be responsible as it cannot foresee what the economy would be like at the next election, he added.
He will say the coalition is "choking off" economic recovery in Britain. Ahead of his party conference speech, he said it was a "big task" to restore Labour's credibility on the economy.
Tory Deputy Chairman Michael Fallon said Mr Balls had taken Labour "further away from economic credibility". And he said he was "deeply, deeply sorry" over failures in bank regulation when the party's years in power.
A Conservative spokesman added that Mr Balls' had "deliberately fiddled" fiscal rules in the past, and the public would not trust his announcement of new restrictions. In Monday's speech, Mr Balls will pledge to spend any windfall from the sale of bank shares on paying off the national debt.
'No reversal promise' He will announce a "five-point plan" for boosting jobs and growth, while also vowing to bind Labour governments to strict spending rules.
Labour has made a commitment to halve the deficit in four years and admits it would have cut public spending if it had retained power. But the Conservatives said Mr Balls had taken Labour "further away from economic credibility".
But in a speech to Labour members on Monday, Mr Balls will say that rising unemployment and stalled economic growth prove that Labour was right to argue for slowing the pace of deficit reduction. 'Better way'
He will accuse Chancellor George Osborne and Prime Minister David Cameron of ignoring his warnings about increasing taxes too quickly and claim the coalition's economic strategy had gone "badly wrong". Labour has accused the government of cutting spending too fast and causing the economy to stall.
"We said that going too far, too fast would choke off the recovery and put jobs at risk; we warned that cutting spending and raising taxes too fast would create a vicious circle here in Britain and make it harder to get the deficit down." But while Mr Balls is urging the government to change course, saying Britain is "crying out for a better way", he said Labour would not be making any "irresponsible promises" of his own.
However, in href="http://www.independent.co.uk/news/uk/politics/we-wont-reverse-coalition-cuts-says-balls-2360884.html" >an interview with the Independent ahead of his speech, Mr Balls said no-one in the shadow cabinet would make any promises at this stage to undo cuts made by the coalition government. "I think people have to believe what we say and that means we have to be very careful about what we say," he told Radio 4's Today programme.
"No matter how much we dislike particular spending cuts or tax rises, we can't make promises now to reverse them," he said. "We can't come along and just say now we will promise to reverse every tax rise or spending cut, however unpopular or however dangerous for the economy, because we don't know what the state of the economy will be in five years' time."
However, he told the newspaper the financial markets were "grown-up" and would not be unsettled by any change to the cuts strategy. Mr Balls acknowledged the last Labour government had made mistakes over the economy, saying he was "deeply, deeply sorry" for not introducing tougher regulation on the banks.
'Global growth crisis' "The banking crisis was a disaster... If we had acted earlier on bank regulation, we could have avoided that economic crisis."
In his speech, Mr Balls will tell Labour delegates that Labour still had to work hard to establish a reputation for economic competence - like it did before Tony Blair came to power - to be in with a chance at the next election. Public trust
"It will not be enough to expose that David Cameron and George Osborne have got the economy badly wrong. He accepted it would take time for the party to earn the public's trust on the economy again.
"We still know today what we recognised in 1994: we will never have credibility unless we have the discipline and the strength to take tough decisions." "History shows it is hard... It took Labour 18 years after 1979 to restore credibility. We have not got 18 years. We have to do this in this parliament.
He will warn that Britain's economy faces a "global growth crisis" that is becoming "more dangerous by the day". "Opposition is about answering the big question but I cannot answer that question unless people are trusting in our credibility and ability to make tough decisions."
And that having a plan to boost growth "will help get the economy moving again and stop the vicious circle on the deficit - but by itself it won't secure our economic future or magic the deficit away" and tough decisions would still be needed on tax and spending. Mr Balls said David Cameron and George Osborne had "the wrong prescription" for the current economic crisis, which he said was the "most serious in his lifetime".
In his speech, Mr Balls will say Britain's economy faces a "global growth crisis" that is becoming "more dangerous by the day".
He will argue that having a plan to boost growth "will help get the economy moving again and stop the vicious circle on the deficit - but by itself it won't secure our economic future or magic the deficit away" and tough decisions will still be needed on tax and spending.
With the party in the middle of a two-year policy review, manifesto commitments are likely to be thin on the ground in Liverpool.With the party in the middle of a two-year policy review, manifesto commitments are likely to be thin on the ground in Liverpool.
But Mr Balls will make two new pledges in his speech, aimed at rebuilding Labour's reputation for economic competence. Share pledges
But Mr Balls will make two new pledges in his speech.
He will say: "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 out 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.He will say: "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 out 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."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."We could also pledge to spend that windfall.
"But - just as with the 3G mobile phone auction - 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.""But - just as with the 3G mobile phone auction - 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."
A Conservative spokesman said Mr Balls had "deliberately fiddled" fiscal rules in the past, and the public would not trust his announcement of new restrictions.