Ed Balls sets out Labour plan to fix financial crisis

Shadow Chancellor Ed Balls has told Channel 4 News Britain needs a “stimulus for growth” after telling delegates at the Labour Party conference in Liverpool that he has a “better way” of getting the economy back on track.

In an interview with Krishnan Guru-Murthy he said: “The economy has flatlined.

“What I’ve not done is sat down and done a detailed economic forecast – that’s actually for the independent OBR (Office for Budget Responsibility).

“What I’ve said is five things the government could do which could have a material impact on growth, jobs and get our deficit down.”

He added: “I don’t think it’s the case that [Labour] spent more money than we had available [during the last 10 years].”

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Earlier, Mr Balls warned that the world economy was facing the “darkest, most dangerous times”.

Criticising the coalition government’s approach, he said: “Trying to cut the deficit too far, too fast isn’t working.

Call it Plan A plus. Call it Plan B. Call it Plan C. I don’t care want they call it. Britain just needs a plan that works. Ed Balls

“The government must adopt a steadier, more balanced plan to get our deficit down and take immediate action now to support the economy and create jobs here in Britain.”

He warned of a decade of economic stagnation unless steps were taken quickly.

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Mr Balls outlined five steps for immediate growth in the UK economy: repeating the bank bonus tax again this year and using the money to build more homes; bringing forward long-term investment projects; cutting VAT immediately to 5 per cent for home improvements; reversing January’s VAT rise for a temporary period; and giving a one-year national insurance tax break for small firms which take on extra workers.

He said Labour would back the coalition if these five steps were taken now, saying of the government’s current plans: “George Osborne’s economic plan is hurting but it’s just not working.”

In the longer term, the shadow chancellor said Labour could not pledge to reverse all the coalition’s cuts and realised it would have to take tough decisions in the difficult economic backdrop.

Detailed policy announcements were thin on the ground as Labour politicians know they probably have until 2015 before facing their rivals at the polls, due to new rules on fixed-term parliaments.

But Mr Balls said the party would set out tough fiscal rules ahead of the next election that the next Labour government would have to stick to – to get the budget balanced and get national debt down.

George Osborne’s economic plan is hurting but it’s just not working. Ed Balls

He also said that any windfall gain from selling shares in the state-owned banks would be used to repay the national debt, and admitted Labour had made some mistakes in the past but defended the party’s record.

Finally, he said Labour had to “win the national argument” for the good of the country – and attacked George Osborne‘s adherence to his “plan A” for recovery.

“Call it Plan A plus. Call it Plan B. Call it Plan C. I don’t care want they call it. Britain just needs a plan that works,” he said.

Reaction

But some said Mr Balls “could have been more positive” about what a Labour government would do to reverse the effect of coalition cuts.

Derek Simpson, the former general secretary of the Unite trade union, told Channel 4 News: “Of course he’s certainly not going to be saying: ‘I guarantee to reverse the cuts.’ It would be stupid and nobody would believe it anyway.

“But he could have said: ‘I will take whatever possible steps there are to reverse the damage done. These cuts are wrong. They’re not just badly-timed, they’re wrong, and we’ll find other ways of dealing with with the problem if humanly possible.'”

Asked if union leaders would be disappointed with the shadow chancellor’s lack of enthusiasm for strikes over public sector pension reform, Mr Simpson said: “Again, I think that could be said more positively. Of course he can’t come out in favour of srikes – he’s got to believe in the democratic process.

“But he could say: ‘I understand the frustration, but I’m concerned about the danger of the Tories turning the situation to their advantage. The solution has got to be a political one.”

However he said that overall it was a “well-balanced speech”.

“He made a point that I don’t think is made strongly enough – the deficit was lower than the one inherited from the previous Conservative government. Everything that the Conservatives are complainging about – Labour’s inheritance…it’s a lower deficit than the last Tory government. He’s saying: ‘Let’s not waste time defending our record.'”

Conservatives said Mr Balls had failed to come up with a credible plan to deal with the deficit.

Tory co-chairman Baroness Warsi said: “Ed Miliband is too weak to deal with the two biggest challenges facing Labour. He’s caved in to union pressure and dropped plans to reform Labour’s relationship with the unions. And Ed Balls still won’t admit that Labour left us with a massive economic mess.”