Labour's growth plan has been criticized for lacking ambition by a left-leaning think-tank.

The Fabian Society said Ed Balls needed to re-think his Plan B to boost employment and growth, featuring "major" tax cuts and a significant job creation scheme.

The think-tank backed shadow chancellor Ed Balls's judgment that the Government is cutting "too far, too fast" and that Chancellor George Osborne needs to change course now to revive faltering growth.

But the Fabians described Mr Balls's five-point plan - including a temporary VAT cut, investment in infrastructure, national insurance breaks for small business and a tax on bankers' bonuses to fund construction projects - as "small beer" compared to the scale of the crisis the UK faces.

Today's report, entitled The Economic Alternative, backed Mr Balls's decision not to promise to reverse coalition cuts if Labour wins the election expected in 2015.

Fabian Society general secretary Andrew Harrop wrote: "Where I quarrel with Ed Balls is not over his realistic stance on the public finances post-2015.

"It is that he is not balancing this message with a radical short-term programme proportionate to the scale of the economic troubles we face, including a state investment bank, major tax cuts and a significant job-creation scheme.

"So far there has been ambitious rhetoric about a different sort of capitalism, but the substantive proposals are small beer. Collectively Labour's reforms must amount to a shifting of the rules of the game to more balanced economy growth, more equal distribution of rewards, and different terms of business."