Labour conference: Balls 'cannot reverse' all cuts
Labour conference: Balls unveils five-point growth plan
(about 1 hour later)
Labour cannot promise to reverse every spending cut by the coalition, "however unpopular or dangerous" they are, shadow chancellor Ed Balls has said.
By Brian Wheeler Political reporter, BBC News
The party must be responsible as it cannot foresee what the economy will be like at the next election, he added.
Ed Balls has unveiled a five-point plan to kick-start Britain's stalled economy in a speech to Labour's conference.
Ahead of his party conference speech, he said it was a "big task" to restore Labour's credibility on the economy.
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.
And he said he was "deeply, deeply sorry" over failures in bank regulation during the party's years in power.
If the coalition adopted the proposals, Labour would back it, the shadow chancellor said.
In Monday's speech, Mr Balls will pledge to spend any windfall from the sale of bank shares on paying off the national debt.
Mr Balls is trying to boost Labour's economic credibility by saying it would not reverse all the coalition's cuts.
He will announce a "five-point plan" for boosting jobs and growth, while also vowing to bind Labour governments to strict spending rules.
But the Conservatives said: "Ed Balls' VAT cut is unfunded and would add over £12bn to the deficit this year."
But the Conservatives said Mr Balls had taken Labour "further away from economic credibility".
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.
Labour has accused the government of cutting spending too fast and causing the economy to stall.
His five-point growth plan includes:
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.
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'
Ed Balls' speech suggests that on the deficit, the shadow chancellor feels vindicated.
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 on the question of economic credibility, Labour still feels vulnerable.
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 will tell delegates rising unemployment and anaemic growth prove Labour was right to argue for slower deficit reduction - and the coalition has got its economic strategy "badly wrong".
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".
But Labour knows that it lags behind the coalition in the polls on economic competence.
The shadow chancellor said Britain's economy faced a "global growth crisis" which was becoming "more dangerous by the day".
So Ed Balls will acknowledge that Labour's plan would also mean difficult choices - and he will say the party will never have credibility unless it has the discipline to make them.
He argued 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 will commit a future Labour government to new fiscal rules and will try and signal that Labour does not mean spending, by promising to put any windfall from the sale of bank shares towards paying off the national debt.
"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.
"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."
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.
"The banking crisis was a disaster... If we had acted earlier on bank regulation, we could have avoided that economic crisis."
Public trust
He accepted it would take time for the party to earn the public's trust on the economy again.
"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.
"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."
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.
Share pledges
Share pledges
But Mr Balls will make two new pledges in his speech.
But Mr Balls made 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 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.
"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.
"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 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.
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.
