Ed Balls: I'm sorry for Labour failures on bank regulation
Balls seeks to restore public trust in Labour by apologising for failures that contributed to 2008 banking crisis and refusing to make premature tax and spending pledges
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Ed Balls, the shadow chancellor, has sought to restore Labour's battered credentials on the economy as he expressed profound regret for the party's failures which contributed to the banking crisis in 2008.
Warning that the current economic situation was "the most dangerous time in the economy in my lifetime", Balls refused to make promises about reversing tax rises and spending cuts, while he tried to rebuild public trust in Labour.
"The banking crisis was a disaster," he said. "All around the world the banks behaved irresponsibly, but regulation wasn't tough enough. We were part of that. I'm sorry for that mistake, I deeply, deeply regret it."
He added: "The thing which we said at the time was, we wanted it to be risk-based, we wanted it to be lighter where there was less risk, tougher when there was more risk. What we failed around the world to see was the scale of those risks. I'm sorry about that. It's also the case we made some mistakes in other areas of course we didn't spend every pound of public money well."
Balls's positioning is designed to counter Tory accusations that as a former senior member of the cabinet under Gordon Brown, he has no credibility on the economy.
He said that David Cameron and the chancellor, George Osborne, were "stuck in a false consciousness" about the economy, and Labour's job was to "win the argument" about an alternative and "better way" forward.
Balls conceded that Labour's image took a battering on the economy and that it would be a tough task to turn public opinion around. Doing so would have to involve acknowledging Labour's past mistakes.
! Part of restoring credibility meant not making promises now on tax and spending with little idea about the state of the economy in four years' time, he added.
"People are crying out for a better way, and opposition is about answering the big question. But I can't answer that question unless people are trusting in our credibility and our ability to make tough decisions."
His comments come ahead of his keynote speech to the Labour party conference in Liverpool his first as shadow chancellor in which he will promise that before the next election he will set out demanding and independently scrutinised fiscal rules for cutting the deficit.
He will also tell delegates that if there is any windfall from the sale of state-owned bank shares such as RBS, the cash will be used exclusively to pay down the deficit and not boost state spending.
Balls will use his speech to outline a "five-point plan", though he refused to go into the detail about its contents ahead of addressing delegates. The call for VAT to be cut temporarily to 17.5% is likely to be one of the measures reiterated on Monday.
He told the BBC Radio 4 Today programme that turning around public opinion was "hard".
"History shows it's hard. It took the Conservatives [13 ] years after 1997, it took Labour 18 years after 1979 to restore credibility. We've not got 18 years, we have to do this in this parliament because the world is in such a dangerous place, the coalition's economic plan is clearly not working in Britain and around the world, people are crying out for a better way and opposition is about answering the big question.
"But I can't answer that question unless people are trusting in our credibility and our ability to make tough decisions and that means acknowledging things that went wrong as well."
In his speech to the conference, Balls will warn: "The country and the whole world is facing the threat of a! lost de cade of economic stagnation."
He will also challenge the Tories over their central claim that the economic crisis is simply one of excessive public debt, and instead warn of a global growth crisis, which is deepening and becoming more dangerous by the day.
In a key passage of his speech, he will embrace the two fiscal goals set out by the coalition government bringing the country's current budget back into balance, and ensuring the national debt is on a downward curve as a proportion of GDP.
He will also promise the route to achieving these aims will be monitored by the Office for Budget Responsibility (OBR). The OBR was set up after claims that Labour politicians including Balls put improper political pressure on Treasury officials to produce over-optimistic forecasts.
But Balls will not spell out on Monday the speed with which he would bring the deficit into balance, arguing that it is too early to give such a detailed timetable.
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