Labour conference: Balls to get tough on debt

Ed Balls will bid to boost Labour's economic credibility by vowing to spend any windfall from the sale of bank shares on paying off the national debt.The shadow chancellor will also vow to bind Labour governments to strict spending rules, in a speech to the party's conference.He will say the coalition is "choking off" economic recovery in Britain.Tory Deputy Chairman Michael Fallon said Mr Balls had taken Labour "further away from economic credibility".A Conservative spokesman added that Mr Balls' had "deliberately fiddled" fiscal rules in the past, and the public would not trust his announcement of new restrictions.Labour has made a commitment to halve the deficit in four years and admits it would have cut public spending if it had retained power.But in a speech to Labour members on Tuesday, Mr Balls will say that rising unemployment and stalled economic growth prove that Labour was right to argue for slowing the pace of deficit reduction.He will accuse Chancellor George Osborne and Prime Minister David Cameron of ignoring his warnings about increasing taxes too quickly and claim the coalition's economic strategy had gone "badly wrong"."We said that going too far, too fast would choke off the recovery and put jobs at risk; we warned that cutting spending and raising taxes too fast would create a vicious circle here in Britain and make it harder to get the deficit down."However, in an interview with the Independent ahead of his speech, Mr Balls said no-one in the shadow cabinet would make any promises at this stage to undo cuts made by the coalition government."No matter how much we dislike particular spending cuts or tax rises, we can't make promises now to reverse them," he said.However, he told the newspaper the financial markets were "grown-up" and would not be unsettled by any change to the cuts strategy.In his speech, Mr Balls will tell Labour delegates that Labour still had to work hard to establish a reputation for economic competence - like it did before Tony Blair came to power - to be in with a chance at the next election."It will not be enough to expose that David Cameron and George Osborne have got the economy badly wrong."We still know today what we recognised in 1994: we will never have credibility unless we have the discipline and the strength to take tough decisions."He will warn that Britain's economy faces a "global growth crisis" that is becoming "more dangerous by the day".And 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.With the party in the middle of a two-year policy review, manifesto commitments are likely to be thin on the ground in Liverpool.But Mr Balls will make two new pledges in his speech, aimed at rebuilding Labour's reputation for economic competence.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 out 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."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." From / BBC