Labour MPs told not to promise any undoing of coalition's cuts

(SUSANNAH IRELAND/THE INDEPENDENT)

The shadow cabinet has been banned by Ed Balls from promising to reverse any of the coalition Government's spending cuts as part of Labour's attempt to regain credibility on the economy.

In an interview with i, the shadow Chancellor said: "No matter how much we dislike particular Tory spending cuts or tax rises, we can't make promises now to reverse them. I'm clear that I won't do that and neither will any of my shadow cabinet colleagues."

Mr Balls has ordered Labour frontbenchers to clear any spending commitments, however small, with him and Ed Miliband. His tough line will be reinforced today in his speech to Labour's annual conference in Liverpool.

Although it will disappoint some Labour activists, it reflects concern in the leadership that the party trails the Conservatives on being trusted to run the economy despite growing doubts about the Coalition's cuts strategy. Some Labour MPs are worried that the party is playing into David Cameron's hands by giving the impression they "oppose every cut".

Mr Balls warned that the "global hurricanes" raging make it "easily the most dangerous time I can remember on the economy".

He said: "It is more dangerous than three years ago, because this time politics does not seem able to act."

In today's speech, Mr Balls will try to dispel any perception that Labour is wedded to a "tax and spend" agenda. The shadow Chancellor will announce that Labour will fight the next general election on a new set of "tough" fiscal rules to limit Britain's debt levels and curb year-on-year spending.

He will say the rules would "get our country's current budget back to balance and national debt on a downward path".

Mr Balls will also reveal that Labour would use any windfall from the sale of the state's shares in Royal Bank of Scotland and Lloyds Banking Group to repay debt. George Osborne, the Chancellor, is thought likely to use any profit to fund tax cuts, while Nick Clegg has floated the idea of handing free shares in the banks to the public.

Mr Balls will warn that Labour's plan to secure growth would not "magic the deficit away" and its policy to halve the deficit in four years would still mean painful cuts.

He will admit that it is not right to blame the Coalition for everything that is wrong with the British economy, but he will insist that its spending cuts strategy has made things worse.