Ed Balls sets out election battle lines with promise to spend billions on housebuilding and road and rail projects

 

Labour would stick within the Coalition’s limits on day-to-day spending if it wins power in 2015 but would plough billions of pounds more into housebuilding and road and rail projects.

The spending switch, announced by the shadow Chancellor Ed Balls on Monday evening, draws a crucial dividing line between Labour and the Conservatives for the next election. Labour would borrow more to “rebuild Britain” and boost growth, as The Independent predicted in April. But government departments would not spend more on running costs and wages in the 2015-16 financial year than the figure George Osborne will announce in his spending review on June 26 – unless there were an emergency such as an NHS budget crisis.

Mr Balls signalled that he will drop his five-point plan to kickstart growth, including a £12bn temporary cut in VAT.  “As the economy begins [to grow], even in the most weak way, the balance of advantage will change over the course of this year from a tax cut to capital investment,” he said. “As for current spending, which is most government spending, I’m saying very clearly to my Shadow Cabinet colleagues: don’t plan on any more money – we’ll inherit very tough plans, we’ll have to work with those plans and reprioritise within them.”

A poll by Survation for the LabourList website suggests that sticking to the Conservatives’ limits would not bring an electoral bonus for Labour. It found that 63 per cent of the public say they would neither be more nor less likely to vote Labour if the party  matched the Tories’ spending plans. Some 18 per cent said such a move would make them more likely to back Labour but 19 per cent said it would make them less likely to do so.

In an important speech in London, Mr Balls promised that Labour’s 2015 manifesto would include “tough fiscal rules” to balance the nation’s books but declined to disclose his timetable.

The shadow Chancellor set out for the first time a hitlist of possible Labour cuts including an end to the building of new free schools and huge prisons; industry footing more of the bill for its regulatory bodies; scrapping police commissioners; axeing “top brass” senior officers’ posts in the Army and Royal Navy; abolition of  overlapping agencies such as those which oversee fire and police forces; slimming down the four bodies responsible for motorists and handing responsibility for the High Speed 2 project to Network Rail rather than a new company.

Mr Balls confirmed that Labour would end the Winter Fuel Allowance for 600,000 better off pensioners but said that their free bus passes and TV licences would remain.

His highly symbolic announcement on winter fuel payments, designed to show voters Labour is ready to make “tough choices,” provoked controversy because it undermined the party’s long-standing support for universal benefits. Peter Hain, the former Labour Cabinet minister, described it as a “slippery slope” that would lead to more means-testing.

Ed Miliband will spell out how Labour would “cap” welfare spending on Thursday as the party continues its drive to boost its economic credibility.

The Tories dismissed Labour’s repositioning exercise. Sajid Javid, Economic Secretary to the Treasury, said: “Ed Balls' promise of discipline on spending isn't remotely credible. The same old Labour plan for more borrowing and more debt would mean soaring interest rates with hardworking people paying the price”.

Yesterday we reported that the proposed earnings limit for the Winter Fuel Allowance (WFA) was to be £32,000 – in fact, it is around £42,000.  The WFA kicks in at the rate of £200 for the over 60s and £300 for the over 80s. 

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
footballA colourful discussion on tactics, the merits of the English footballer and rebuilding Manchester United
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
Travel
The shipping news: a typical Snoozebox construction
travelSpending the night in a shipping container doesn't sound appealing, but mobile crash pads are popping up at the summer's biggest events
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
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

Project Coordinator

Competitive: The Green Recruitment Company: The Organisation: The Green Recrui...

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Embedded Linux Engineer

£40000 - £50000 per annum + competitive: Progressive Recruitment: Embedded Sof...

Senior Hardware Design Engineer - Broadcast

£50000 - £65000 per annum + Benefits: Progressive Recruitment: Working for a m...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz