Labour would raise retirement age and scrap winter fuel allowance

Shadow Chancellor Ed Balls at Manchester Central ahead of the Labour Party Annual Conference.
Shadow Chancellor Ed Balls at Manchester Central ahead of the Labour Party Annual Conference.
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ED BALLS has made a bid to rehabilitate Labour’s economic credentials by ruling out higher borrowing if it wins power - and warning of fresh welfare curbs.

Delivering his keynote speech to the party’s final conference before the general election, the shadow chancellor cautioned that with the deficit still running at £75 billion he would have to make “unpopular” decisions.

He also indicated that any money that can be found will be ploughed into the NHS - promising to do “whatever it takes” to preserve the health service.

The economy is set to be a key battleground at the general election next May, but Ed Miliband and Mr Balls have consistently trailed David Cameron and George Osborne in polls over who is most trusted to run UK plc.

In his address to activists in Manchester, Mr Balls said he would stick to “fiscal responsibility in the national interest”.

“We will have to make other decisions which I know will not be popular with everyone,” he said, highlighting plans to raise the state retirement age and scrap the winter fuel allowance.

Mr Balls said the party will introduce limits on overall “structural” welfare spending, and keep the coalition’s £26,000 benefits cap - albeit with adjustments to take account of local housing costs.

“I want to see child benefit rising again in line with inflation in the next parliament, but we will not spend money we cannot afford,” he said.

“So for the first two years of the next parliament, we will cap the rise in child benefit at 1%. It will save £400 million in the next Parliament. And all the savings will go towards reducing the deficit.”

Under austerity measures introduced by the Conservative-Liberal Democrat coalition, child benefit was frozen from 2010 to this year.

It went up by 1% in April and is due to rise by the same amount in 2015/16.

Mr Balls sought to temper the extra squeeze proposed by Labour by declaring that ministers’ pay would be cut by 5% at the start of the parliament and then frozen until the party is able to “balance the books”.

The party has committed to run a surplus on the current budget and get national debt back on a downward path by 2020 at the latest.

He also stressed previous pledges to re-introduce the 50p top rate of income tax for those earning more than £150,000.

Mr Miliband is expected to focus on the NHS in his conference speech tomorrow - and Mr Balls appeared to hint that more funding could be found to shore up services.

“Next year, after just five years of David Cameron - with waiting times rising, fewer nurses and a crisis in A&E - we will have to save the NHS from the Tories once again. And we will do what it takes,” he said.

In an address that was littered with praise for Mr Miliband, the shadow chancellor also cautioned that Labour could not be “complacent” about victory.

“This is the hard truth that we learn - not just from events in Scotland - but also from the local and European elections, the rise of Ukip and from the conversations we all have on the doorstep and in our workplaces week after week,” he said.

“Yes, the Tories are deeply unpopular.

“And yes, the country is crying out for change.

“But, even after the progress and successes of our last four years, we have more work to do to show Labour can deliver the change that people want to see.”

He added: “In our manifesto there will be no proposals for any new spending paid for by additional borrowing ...

“Because we will not make promises we cannot keep and cannot afford.”

Mr Balls said the party had to show it had “learned” and was ready to be “honest with the country about what the last Labour government got right and what we got wrong”.

Among the errors he listed were the lifting of transitional controls on migration from new EU states in 2004, and not regulating banks strongly enough before the credit crunch - although he stopped short of saying Labour had overspent before the financial crisis.

“While it was the banks which caused the global recession, and it was the global recession which caused deficits to rise here in Britain and around the world, the truth is we should have regulated those banks in a tougher way,” he said.

“It was a mistake. We should apologise for it. And I do.”

The previous government had also failed to tackle the “underlying causes” of rising spending on housing benefit and in-work poverty, and should not have abolished the 10p tax rate, Mr Balls said.

The Children’s Society said the continued child benefit squeeze would leave the average family more than £400 per year worse off by 2017 - and called for a rethink.

Chief executive Matthew Reed said: “Labour’s announcement on plans to cap child benefit rises comes after repeated squeezes on this bedrock of the family budget.

“It represents a major real-terms cut to 13 million children.

“Policy is about making choices and the shadow chancellor has made a choice - to look for savings by cutting help for children.

“Child benefit has already been frozen from 2010, and then increased by just 1% this year - falling well below rising prices.

“Now this proposal would compound that loss - seeing average families facing a £400 cut in child benefit per year by 2017.

“We urge the shadow chancellor to reconsider so that children and their already struggling families do not suffer even more unnecessary hardship.”