Ed Balls unveils plan for growth: build 100,000 affordable homes

Shadow Chancellor Ed Balls in a tackle at a football match between Labour MPs and journalists in Salford (AFP)

Labour will today propose a £2.5bn plan to build 100,000 homes in order to kick-start the economy, arguing that the move should take priority over paying off the deficit.

Ed Balls, the shadow Chancellor, will say that the £4bn imminent proceeds from the 4G mobile phone spectrum auction should be used to secure economic recovery. His approach marks a shift from a year ago, when he said any Treasury windfalls should be used to cut the national debt. In 2000, the then Chancellor Gordon Brown devoted the £22.5bn receipts from the 3G auction to reducing the debt. George Osborne has not disclosed how the 4G windfall will be used.

Mr Balls will tell the Labour conference in Manchester: "In difficult times, we urgently need to put something back into the economy. So with this one-off windfall from the sale of the 4G spectrum, let's cut through the dither and rhetoric and actually do something. Not more talk, but action right now."

The shadow Chancellor will argue that building 100,000 affordable homes to rent or buy would create more than 150,000 jobs in the construction industry and up to 600,000 jobs in the supply chain. He will also propose as well as a two-year stamp duty holiday for all first-time buyers purchasing properties up to £250,000, at a cost of £500m.

Mr Balls will argue: "If more people are on the dole, not paying taxes, you can't get the deficit down. If businesses are going bust, not hiring new workers, you can't get the deficit down. If the economy's not growing, you can't get the deficit down. And that is why we must act now to kick-start the recovery, tackle the causes of rising borrowing and start to make our economy stronger for the future."

Admitting that an incoming Labour government would face tough choices, he will refuse to promise to reverse any of the Coalition's spending cuts or tax rises. He will tell Labour delegates: "Unlike Nick Clegg, we will not make promises we cannot keep. And because we all know there can be no post-election spending spree, in our first year in government we will hold a zero-based spending review that will look at every pound spent by government."

Yesterday Ed Miliband outlined Labour's plans for legislation to enforce the break-up of Britain's biggest banks unless they separate their investment and high street operations. It fears the Coalition Government is watering down the "hard ring-fence" proposal from the Vickers Inquiry.

Lord John Prescott, Labour's former deputy leader, told the unions to "grow up" after Len McCluskey, general secretary of Unite, pledged to "kick the New Labour cuckoos out of our nest" .