Ed Balls has sought to reassure voters that Labour can be trusted with public finances by announcing plans to allow the Office for Budget Responsibility (OBR) to check future governments’ spending commitments are affordable.
The shadow chancellor said he would bring forward legislation to impose tough fiscal rules on governments in the first year after their election that the spending watchdog would monitor independently.
“In our manifesto there will be no proposals for any new spending paid for by additional borrowing,” he told a debate on the economy at Labour’s party conference in Manchester.
“No spending commitments without saying where the money is coming from, because we will not make promises we cannot keep and cannot afford.”
Rival parties would also see their spending commitments run through the OBR wringer so that every tax and spending measure was independently audited, he said.
Balls also reiterated his commitment to stick with the coalition’s current spending plans. In a distinct toughening of his rules for spending in a new parliament, Balls said he would not make any new manifesto commitments funded by extra borrowing.
His strategy, however, gives him room for manoeuvre because it allows the timing of a budget surplus to be dictated to some extent by the state of the economic revival.
Balls had earlier announced a 1% cap on child benefit for two years – a cut in real terms – and a reduction of 5% in ministerial pay followed a pay freeze until the end of the parliament to illustrate his willingness to get tough and claw back funds.
He said that taxes on the wealthy rather than extra borrowing would pay for policy initiatives, including a mansion tax on homes worth £2m and more rising in line with average house prices.
The reinstatement of the 50p tax rate and the withdrawal of the winter fuel allowance for the wealthiest 5% of pensioners will also give him some room to redirect spending, while a £3bn married person’s allowance planned by the Conservatives would fund a 10p starting rate of income tax.
Balls said Labour needed to be fiscally responsible to convince the British public it could be trusted with the exchequer.
“At a time when trust in politicians is at an all-time low, when even after deep spending cuts and tax rises for working people our deficit is still high, this is our task.
“Not to flinch from the tough decisions we must make, but to show the country that there is a better way forward.”
He was booed when he said Labour would be forced to continue raising the retirement age as life expectancy increased to prevent the social security budget from getting out of control, but he received a standing ovation when he said his plan was for “the many and not the few, fixing the economy for everyone”.
John Cridland, the head of the CBI, said it was a solid speech that showed Labour was putting together the building blocks of a strategy for government. He praised Balls for agreeing to expand airport capacity in the south-east, but added: “I would like him to say more about education and how it will improve competitiveness.”
The CBI has also voiced its dismay at Labour’s promise to raise the minimum wage to £8 an hour by the end of the next parliament, which Balls repeated in his conference speech.
A former CBI boss, Lord Digby Jones, had earlier said Labour should be careful not to embark on a “flight to populism” when it comes to business policy. Jones, a former Labour trade minister, said who last year spoke at Ukip’s annual conference, said Ed Miliband was failing to win over business leaders.
He said of the Labour leader: “I would like to see them actually standing up and saying ‘we get it’.
I’d like to hear Ed Miliband make a speech that says without a thriving business community in the UK there will be no tax receipt and therefore you will have no public sector and no jobs.
We get that, we understand it, we would like business to meet us halfway with better behaviour … but we do understand that [business] is important. And therefore we will stimulate investment by lower taxation.”
theguardian.com
The shadow chancellor said he would bring forward legislation to impose tough fiscal rules on governments in the first year after their election that the spending watchdog would monitor independently.
“In our manifesto there will be no proposals for any new spending paid for by additional borrowing,” he told a debate on the economy at Labour’s party conference in Manchester.
“No spending commitments without saying where the money is coming from, because we will not make promises we cannot keep and cannot afford.”
Rival parties would also see their spending commitments run through the OBR wringer so that every tax and spending measure was independently audited, he said.
Balls also reiterated his commitment to stick with the coalition’s current spending plans. In a distinct toughening of his rules for spending in a new parliament, Balls said he would not make any new manifesto commitments funded by extra borrowing.
His strategy, however, gives him room for manoeuvre because it allows the timing of a budget surplus to be dictated to some extent by the state of the economic revival.
Balls had earlier announced a 1% cap on child benefit for two years – a cut in real terms – and a reduction of 5% in ministerial pay followed a pay freeze until the end of the parliament to illustrate his willingness to get tough and claw back funds.
He said that taxes on the wealthy rather than extra borrowing would pay for policy initiatives, including a mansion tax on homes worth £2m and more rising in line with average house prices.
The reinstatement of the 50p tax rate and the withdrawal of the winter fuel allowance for the wealthiest 5% of pensioners will also give him some room to redirect spending, while a £3bn married person’s allowance planned by the Conservatives would fund a 10p starting rate of income tax.
Balls said Labour needed to be fiscally responsible to convince the British public it could be trusted with the exchequer.
“At a time when trust in politicians is at an all-time low, when even after deep spending cuts and tax rises for working people our deficit is still high, this is our task.
“Not to flinch from the tough decisions we must make, but to show the country that there is a better way forward.”
He was booed when he said Labour would be forced to continue raising the retirement age as life expectancy increased to prevent the social security budget from getting out of control, but he received a standing ovation when he said his plan was for “the many and not the few, fixing the economy for everyone”.
John Cridland, the head of the CBI, said it was a solid speech that showed Labour was putting together the building blocks of a strategy for government. He praised Balls for agreeing to expand airport capacity in the south-east, but added: “I would like him to say more about education and how it will improve competitiveness.”
The CBI has also voiced its dismay at Labour’s promise to raise the minimum wage to £8 an hour by the end of the next parliament, which Balls repeated in his conference speech.
A former CBI boss, Lord Digby Jones, had earlier said Labour should be careful not to embark on a “flight to populism” when it comes to business policy. Jones, a former Labour trade minister, said who last year spoke at Ukip’s annual conference, said Ed Miliband was failing to win over business leaders.
He said of the Labour leader: “I would like to see them actually standing up and saying ‘we get it’.
I’d like to hear Ed Miliband make a speech that says without a thriving business community in the UK there will be no tax receipt and therefore you will have no public sector and no jobs.
We get that, we understand it, we would like business to meet us halfway with better behaviour … but we do understand that [business] is important. And therefore we will stimulate investment by lower taxation.”
theguardian.com
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