UK Politics

Autumn Statement: Labour to be 'tough on deficit', says Balls

Ed Balls
Image caption Labour has pledged to eliminate the budget deficit by 2020

Shadow chancellor Ed Balls has said a future Labour government would be "tough on the deficit and tough on the causes of the deficit too".

He told the BBC that public borrowing was too high and he would not make any "unfunded" spending commitments.

But he said Labour recognised the way to cut the deficit was to create "good jobs" and boost economic security.

David Cameron said investment in the NHS and transport was possible as "the nation's finances were under control".

The Conservatives, the Lib Dems and Labour have been setting out their stalls ahead of Chancellor George Osborne's Autumn Statement on the economy of Wednesday, which comes less than six months before May's general election.

Despite the strengthening economic recovery, with the UK on track to be the fastest growing economy in the G7 this year and unemployment falling below two million, ministers are facing renewed questions over the public finances, with borrowing expected to rise this year.

Labour has accused the government of missing all its targets on deficit reduction during the current Parliament and has said getting to grips with borrowing levels will be a "major challenge" if it regains power after May's general election.

'Unfunded commitments'

Mr Balls told the BBC's Political Editor, Nick Robinson, the deficit was "big and it has got to come down"

"Unlike George Osborne, I am not going to come along and make promises I can't know I can keep, unfunded commitments," Mr Balls, who has pledged to balance the books by 2020, said.

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Image caption Labour argues that most people are worse off than in 2010

But aping a slogan first used by Tony Blair to characterise Labour's policy on crime - when he pledged to be "tough on crime and the causes of crime", Mr Balls said he would focus on generating wealth as well as squeezing expenditure to boost the finances.

"Labour is the party of good jobs and good jobs are the key to solving this deficit crisis."

Asked to name some substantial spending cuts a Labour government would make, Mr Balls repeated announcements he has already made - such as matching the government's spending plans in 2015-16, a 5% pay cut for ministers and the loss of the winter fuel allowance for pensioners who are higher rate taxpayers.

'Missing targets'

Labour has commissioned work from the House of Commons Library suggesting that, over the course of this Parliament, income tax receipts were £66bn less than forecast, National Insurance contributions were £25.5bn lower than expected and welfare spending on those in work was £25bn higher than planned.

Image caption The prime minister said the government was investing in road projects, which would spread prosperity

Labour says that, because less tax is being brought in and an increase in people in low-paid jobs is pushing up the welfare and the housing benefit bills, government borrowing is higher than expected.

The resulting £116.5bn bill is the equivalent of nearly £4,000 per taxpayer, it says.

Speaking earlier in Nottinghamshire, Labour leader Ed Miliband said Prime Minister David Cameron and George Osborne, had missed "every single target they set themselves on clearing the deficit and balancing the books by the end of this Parliament".

But critics say Mr Miliband's commitment to tackling the deficit was undermined by his failure to mention the issue in his party conference speech in September - which he later acknowledged was a mistake.

On a visit to Stonehenge to highlight plans to upgrade the A303 road link to the south west of England - part of a £15bn package of investment in road schemes by 2020 - Mr Cameron said the deficit had fallen by a third since he came to power in 2010.

"The fact is we have got the nation's finances under control so it makes sense to spend money on long-term investments like road and rail schemes and improvements in our ports - things that will make our economy grow faster and spread prosperity to every part of our country," he said.

'Not dogmatic'

Lib Dem leader Nick Clegg rejected claims the government's deficit reduction strategy has been blown off course, saying it was taking longer than planned but the cuts had happened at a pace which was "socially, politically and economically acceptable".

"No-one would have thanked us if we had stuck so dogmatically to our original timetable that even more stringent cuts and savings had been implemented during the course of this Parliament," he told BBC Radio 4's Today programme.

Economists say the state of the public finances mean Mr Osborne will have little room for manoeuvre in Wednesday's statement.

Analysts at the Ernst and Young Item Club said that while forecasts for growth are likely to be revised up slightly, this will not be matched by an increase in tax receipts and borrowing figures are "in danger of not just stalling but going into reverse".

Meanwhile, the Taxypayers' Alliance campaign group has called for the Department of Culture, Media and Sport and the Department for Business, Innovation and Skills to be scrapped as part of an "urgent and radical" plan to reduce spending.

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