Ed Balls: Government cuts economically unsafe

Ed Balls today warned that the Government's deficit reduction plan is "economically unsafe" as he stepped up his campaign for the Labour leadership.

He said the challenge for the winner of the leadership contest would be to "expose the coalition's plans as heartless and wrong-headed".



In a keynote speech in the City of London he said Chancellor George Osborne's plan has as much economic credibility as a "pyramid scheme".



Shadow education secretary Mr Balls warned against rushing to cut spending, claiming even former chancellor Alistair Darling's plan to halve the deficit in four years - backed by Labour leadership rival David Miliband - was "a mistake".



In his speech at Bloomberg's headquarters Mr Balls said the "Tory cuts are not just unfair, but both unnecessary and economically unsafe".



He said Mr Osborne's plans would "suck money" out of the economy by cutting public spending and benefit payments while increasing taxes.



"George Osborne was fond of saying - wrongly - that the Labour government had failed to fix the roof while the sun was shining.



"What he is now doing is the equivalent of ripping out the foundations of the house just as the hurricane is about to hit."



He dismissed Mr Osborne's argument that slashing spending and benefits while raising VAT would not hit growth and employment prospects because the private sector would "somehow rush to fill the void".



He said: "This is 'growth denial' on a grand scale. It has about as much economic credibility as a pyramid scheme.



"For George Osborne, read Bernie Madoff: he'll take your money and take your job, but don't worry - if you wait long enough, he promises you'll get it all back from someone else."



Mr Balls acknowledged that the deficit has to be tackled "but only once growth is fully secured and over a markedly longer period" than is planned.



"For the medium term, a credible and pre-announced plan for reducing the deficit needs a careful balance between employment, spending and taxation," he said.



Mr Balls said he would start the top rate of income tax at £100,000 and reinstate Labour's rise in national insurance.



He added that he agrees with David Miliband's call for a wealth tax on the largest estates.



Mr Balls said Labour's next leader would need to give a "stronger, clearer vision of the fairer Britain we will fight for".



"We must persuade people in their heads as well as their hearts to come back to Labour again.



"And by comparison we must expose the coalition's plans as heartless and wrong-headed."











Mr Balls later disclosed that he believed that even the former Labour government's plans to halve the deficit had been going too fast.

"Before the election I said to Gordon Brown and to Alistair Darling that I thought that halving the deficit in four years was too fast," he told BBC Radio 4's The World At One.



"I thought it would be very difficult for them to command wider market and public support because it could put growth and jobs at risks and it could put public services at risk."



He strongly hinted that Mr Brown agreed with him but was overruled by Mr Darling, the then chancellor.



"In the end, these are decisions that are made by the chancellor of the exchequer," he said.



"In government you win some arguments and you lose some arguments. These are discussions that Gordon and Alistair had and then they decided the way forward."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Tradewind Recruitment: Science Teacher

£90 - £140 per day: Tradewind Recruitment: I am currently working in partnersh...

Recruitment Genius: Doctors - Dubai - High "Tax Free" Earnings

£96000 - £200000 per annum: Recruitment Genius: Looking for a better earning p...

Recruitment Genius: PHP Developer

£32000 - £36000 per annum: Recruitment Genius: A rapidly expanding company in ...

Recruitment Genius: PA

Negotiable: Recruitment Genius: A PA is required to join a leading provider of...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert