Setting out Labour’s task Ed Balls said: "Labour’s economic plan will balance the books. But an economic plan must do much more than that. We also need to change the way our economy works… Because while our economy is growing again most working people are still not seeing any benefit from the recovery. This is our task: not to flinch from the tough decisions we must make and to show the country that there is a better way forward. Labour's plan for Britain's future: to build an economy that works for the many, and not just a few - for all working people in every part of our United Kingdom.”
He set out Labour’s commitment to balancing the books in the next Parliament: "Three years of lost growth at the start of this parliament means we will have to deal with a deficit of £75 billion – not the balanced budget George Osborne promised by 2015. And that will make the task of governing hugely difficult. People know we are the party of jobs, living standards and fairness for working people. But they also need to know that we will balance the books and make the sums add up and that we won’t duck the difficult decisions we will face if they return us to government.
"Working people have had to balance their own books. And they are clear that the government needs to balance its books too. So Labour will balance the books in the next parliament. These will be our tough fiscal rules. We will get the current budget into surplus and the national debt falling as soon as possible in the next parliament. And we will legislate for these tough fiscal rules in the first year after the election and they will be independently monitored by the Office for Budget Responsibility. And our Zero-Based Review of public spending is examining every pound spent by government to cut out waste and make different choices."
He announced that the total pay of Ministers will be cut by five per cent and frozen until the next Labour government has achieved its promise to balance the books: "The next Labour government will get the deficit down. And Ed Miliband and all my Shadow Cabinet colleagues are clear it will mean cuts and tough decisions and we will take the lead. So I can announce today that if we win the election, on day one of the next Labour government the pay of every government Minister will immediately be cut by five per cent. Ministerial pay will then be frozen each year until we have achieved our promise to balance the nation’s books. Because we are all clear that everybody in the next Labour government will be fully focused on that vital task of getting the deficit down."
And he announced that rises in child benefit will be capped at one per cent for the first two years of the next Parliament: "We will have to make other decisions which I know will not be popular with everyone. At a time when the public services that pensioners rely on are under such pressure, we will stop paying the winter fuel allowance to the richest five per cent of pensioners. I want to see child benefit rising again in line with inflation in the next parliament, but we will not spend money we cannot afford. So for the first two years of the next parliament, we will cap the rise in child benefit at one per cent. It will save £400 million in the next Parliament. And all the savings will go towards reducing the deficit.
“But unlike the Tories we will always ask those who have the most to make the biggest contribution. That is why, with the deficit still high and working people already paying more, we opposed David Cameron cutting the 50p top rate of tax. Now cannot be the right time to give the richest one per cent of people in the country a £3 billion tax cut. So as we get the deficit down in the next parliament, the next Labour government will reverse this Tory tax cut for millionaires. Because Labour will balance the books in a fairer way."
His speech also set out a number of other elements in Labour’s economic plan, including:
- A Compulsory Jobs Guarantee for young people and the long-term unemployed – paid for by a tax on bank bonuses and restricting pensions tax relief for the highest earners on the top rate of tax
- Raising the minimum wage to £8 an hour by the end of the next Parliament
- A plan to get at least 200,000 new homes built a year by 2020
- Making work pay by expanding free childcare for working parents – paid for by increasing the bank levy
- Radical plans to devolve economic power and resources to city and county regions of England
- Establishing a proper British Investment Bank and ensuring proper competition in banking and energy markets to help families and business alike
- A cut in business rates for 1.5 million business properties – paid for by not going ahead with next year’s further cut in corporation tax
- An independent National Infrastructure Commission to end the dither and delay on the big decisions Britain needs to make for the future
Exchequer Secretary to the Treasury, Priti Patel, responding to Ed Balls' speech commented: "This speech isn’t a serious plan for the economy – Labour would put the deficit up, not down These savings on ministerial pay only cut a miniscule fraction of the deficit - less than 1 per cent of 1 per cent. And it comes just days after the IFS said Labour’s economic policy means £28 billion extra borrowing. For all his bluster, Ed Balls still refuses to admit that Labour spent too much and he’s opposed every decision we’ve taken to cut the deficit. All a Labour government would offer is more inefficient spending, more taxes and more debt than our children could ever hope to repay."