Shadow chancellor Ed Balls defends Labour's proposals to get unemployed people into minimum wage jobs, telling Channel 4 News that "there is no option of staying on benefits year after year".

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Talking about the new Labour proposals to withdraw benefits from long term unemployed who refuse to take jobs, Ed Balls told Channel 4 News: "Getting somebody back into work is the best way to get them paying tax, to pay bills of welfare down.

"I think it's fair to say to the taxpayer ... that there is no option of being on benefits year after year.

"To the small minority who are playing the system, no ifs and buts - benefit cut. There will always be some people playing the system, but the vast majority want to work."

On the government's charge that today's proposals "double-count" money already accounted for by other Labour plans, Mr Balls said: "They're accusing me of having spent the money already.

"I'm in opposition, I've spent no money. A year ago, I said they should use the money by restricting pension tax relief at the top ... they've ignored me and carried on. I'm saying, 'You didn't take my advice last year; here's a new plan to use that money to get people back to work and to make welfare reform stick'."

Read more: Do government work schemes ever work?

Mr Balls also warned that George Osborne should act now to address the "real possibility" of a triple-dip recession as Britain's economy is feared to have plunged back into the red. Figures suggest the powerhouse services sector shrank last month for the first time in two years.

Experts have warned that the decline for the services sector, which makes up almost 75 per cent of total output, gives a clear signal that the economy went back into reverse in the final quarter of 2012.

Ed Balls told Channel 4 News: "I think it's not the most likely outcome but a real possibility and a risk averse chancellor should act now to prevent a triple dip recession and I see more of the same from a chancellor who told us two years ago that we were safe and then there was another recession. It's a real concern and I think the chancellor should act."

Asked about Lord Mandleson's comments on Labour's credibility on the economy, he said: "Peter is completely right. After a financial crisis, for an opposition to turn around economic credibility is hard and it's a step by step process – its about judgment, values, they want us to be tough on spending and tough on tax avoidance. I've said to the shadow cabinet, 'No spending commitments, no promises we can't keep'. That’s the right way to build our credibility".

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