Ed Balls sets out five-point plan to boost growth
Shadow chancellor proposes help for homeowners and small businesses and repeat of bankers' bonus tax using the money to guarantee 100,000 jobs and build 25,000 homes
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The shadow chancellor, Ed Balls, has set out a five-point growth package including slashing VAT to 5% for home improvements and a one-year small firms national insurance tax holiday for taking on extra workers.
He also reaffirmed previous proposals to reverse January's VAT rise from 17.5% to 20% and promised a repeat of this year's bankers' bonus tax, using the money to guarantee 100,000 jobs for young people and building 25,000 affordable homes.
He also said the government should bring forward genuine long-term investment projects covering schools roads and transports, but did not put a figure on this.
There was no costing for his overall proposals but his aides said the targeted VAT cut for the housing industry would cost between 100m and 500m, adding similar targeted VAT cuts were being tried in France.
The national insurance holiday for small business taking on extra staff would be funded from money left over from the government's failed national insurance rebate fund. Ministers had originally set aside 1bn for this fund.
Balls in interviews afterwards said he could not specify how much extra spending he was proposing over the government's spending plans.
He also made a series of admissions about Labour mistakes in government and promised he would set up tough fiscal rules monitored by the Office for Budget Responsibility (OBS). He also admitted he could not promise to reverse every Tory spending cut.
In a shift of tone, reflecting Labour's current low credibility on the economy, he said: "No matter how much we dislike particular Tory sending cuts or tax rises we cannot make promises now t! o revers e them." He added: "I won't do that and neither will any of my shadow cabinet colleagues."
He added: "We still know today what we recognised 17 years ago, we will never have the credibility unless we have the discipline and strength to take tough decisions." He said he "always knew that a reputation for credibility and a platform for stability were the essential preconditions for achieving [Labour's] goals".
He promised discipline in pay, adding: "We cannot duck difficult decisions on pensions," and that under Labour contributions and the retirement age would be rising too.
But the bulk of his speech was an attack on the Conservative-led coalition for continuing to cut at a time when unemployment was rising and growth faltering. Plan A was not working, he said.
Balls ridiculed the idea that Britain was a safe haven and said he did not believe there was any risk of retribution from the fund markets if the government spent more. But he added he did not know what the debt levels will have reached by the end of November when growth figures are published.
Underling the scale of the crisis the shadow chancellor said: "These are the darkest, most dangerous times for the global economy in my lifetime. Our country the whole of the world is facing a threat that most of us only have ever read about in the history books a lost decade of economic stagnation."
He said: "This is not a crisis of debt as the government claims, which can be solved country by country, by austerity, cuts and retrenchment, but truly a global growth crisis which is deepening and becoming more dangerous by the day."
He said: "The world must learn the lessons of the 30s. There is no credibility [in] piling austerity on austerity, tax rise on tax rise, cut upon cut in the eventual hope that it will work when the evidence is pointing the other way."
He claimed Labour had shown discipline in office and rejected suggestions that Gordon Brown's Treasury had spent too heavily in advance of the bankin! g crash in 2008.
Balls said: "Don't let anyone tell you that a Labour government was profligate with public money. When we went into the crisis with lower national debt than we inherited in 1997, and lower than America, France, Germany and Japan. Don't let anyone say it was the public spending on public services here in Britain which caused the global financial crisis."
But he added: "We did not get everything right, we made mistakes". The list of Labour errors offered by Balls included "the 75p pension rise, we did not do enough to get all employers to train, we should have adopted tougher controls on migration from eastern Europe, we did not spend every pound of public money well. And yes we did not regulate the banks toughly enough and stop their gross irresponsibility."
All these apologies have been made before either by Tony Blair, Brown or Balls himself. Blair apologised for the 75p pension rise a decade ago.
John Cridland, the CBI director general, said: "Labour has form spending money it does not really have."
He questioned whether the five-point plan was affordable, adding the reversal of the VAT rise could cost billions. But he welcomed proposals to help the young unemployed.
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