Alan Johnson has said banks should be forced to pay another £3.5bn in tax to help avoid some of the huge cuts to public spending to be unveiled by the Coalition Government tomorrow.
In his first speech since a surprise appointment as shadow Chancellor, Mr Johnson confirmed he would stick to Labour's pre-election plan to halve the budget deficit over four years, a policy developed by his predecessor, Alistair Darling.
He said he would place greater emphasis on tax rises than Mr Darling, to try to avoid £27bn of the brutal spending cuts to be outlined by the Chancellor, George Osborne.
Under Mr Darling's preferred route, 70 per cent of the deficit reduction would have been achieved through spending cuts, with 30 per cent coming from tax rises. Mr Johnson's plan, including the pledge to hit banks harder, means 40 per cent would be found from tax rises.
The extra money from banks could come through continuing the tax on bonuses, he said, though he added he was "open minded" about the way the sector was asked to contribute more. He also renewed his attack on the Coalition Government's decision to abolish child benefit for those earning more than around £44,000.
"The banking sector is contributing £2.4bn, while child benefit freezes and cuts will raise substantially more," Mr Johnson said. "So families take the strain while bankers grab the bonuses. There is no justification for such an unfair sharing of the burden. So we will ask the Government to think again and come forward with proposals for the banks to make a greater contribution."
Mr Johnson said he would not be producing a shadow spending review when the Government announces its plans on Wednesday. But he said Labour would accept some cuts, including the tightening of welfare benefits like the disability living allowance. Changes to the allowance could save as much as £1bn a year.
Labour calculates its slower timetable for cutting the deficit will give it an extra £7.5bn annually by 2014 to spend on major projects, compared with Mr Osborne's plan to completely eliminate the £109bn structural deficit within four years.
It is expected to argue it would use the funds to ease Britain's affordable housing shortage and avoiding huge cuts to major transport projects.
Mr Johnson criticised the Coalition for going "hell for leather on cuts", which was a "huge gamble with growth and jobs". He added safeguarding infrastructure investment was "the balanced, fair and most importantly pro-growth choice the Government should make".
"The additional cash means that vital infrastructure projects could go ahead – keeping people in work now and creating the environment for growth in the years to come," he said.
"Without growth, attempts to cut the deficit will be self-defeating. A rising dole queue means a bigger dole bill. And less tax coming in. The Tory plan, for all its Liberal Democrat cheerleaders, is a huge gamble with growth and jobs."
Meanwhile, Labour has claimed that education maintenance allowances, which are currently paid to 600,000 teenagers in English sixth forms and colleges, are to be scaled back in the spending review.