POLITICS

Labour Conference 2014 - Poverty Campaigners Call For 'Re-Think' After Balls Speech On Keeping Child Benefit Cap

22/09/2014 14:50 BST | Updated 22/09/2014 14:59 BST
LEON NEAL via Getty Images
Britain's Shadow Chancellor Ed Balls addresses delegates during the second day of the Labour Party conference in the main hall of Manchester Central, in Manchester, on September 22, 2014. AFP PHOTO/LEON NEAL (Photo credit should read LEON NEAL/AFP/Getty Images)

Do you trust the man who could hold the Treasury's red briefcase aloft after next year's general election?

Trust was at the core of shadow chancellor's Ed Balls Labour conference speech, aimed at tackling the distinct lack of voter confidence in Labour's economic credentials.

But it was a tough speech with some measures going down badly with the Labour home crowd and poverty campaigners - like keeping the Tory cuts to child benefit.

"We will have to make other decisions which I know will not be popular with everyone," Balls said in his keynote address, highlighting plans to raise the state retirement age and scrap the winter fuel allowance.

Balls said the party will introduce limits on overall "structural" welfare spending, and keep the coalition's £26,000 benefits cap - albeit with adjustments to take account of local housing costs. "I want to see child benefit rising again in line with inflation in the next parliament, but we will not spend money we cannot afford," he said.

"So for the first two years of the next parliament, we will cap the rise in child benefit at 1%. It will save £400 million in the next Parliament. And all the savings will go towards reducing the deficit."

The plans have already been harshly criticised by the Children's Society, who said the continued child benefit squeeze would leave the average family more than £400 per year worse off by 2017 - and called for a rethink.

Chief executive Matthew Reed said: "Policy is about making choices and the shadow chancellor has made a choice - to look for savings by cutting help for children.

"Child benefit has already been frozen from 2010, and then increased by just 1% this year - falling well below rising prices. Now this proposal would compound that loss - seeing average families facing a £400 cut in child benefit per year by 2017."

"The shadow chancellor may plan to re-peg child benefit to inflation in the long run but it’s a bitter disappointment to learn that hard-pressed families must take another blow in the short term," Alison Garnham, chief executive of the Child Poverty Action Group said.

And Unite general secretary Len McCluskey told BBC Radio 4's The World at One the cap on child benefit was not the "cleverest tactic".

Under austerity measures introduced by the Conservative-Liberal Democrat coalition, child benefit was frozen from 2010 to this year. It went up by 1% in April and is due to rise by the same amount in 2015/16.

Balls sought to temper the extra squeeze proposed by Labour by declaring that ministers' pay would be cut by 5% at the start of the parliament and then frozen until the party is able to "balance the books".

The party has committed to run a surplus on the current budget and get national debt back on a downward path by 2020 at the latest. He also stressed previous pledges to re-introduce the 50p top rate of income tax for those earning more than £150,000.

Miliband is expected to play the 'good cop' to the Labour faithful tomorrow with a speech that will focus on Labour's plans for the NHS. Balls appeared to hint that more funding could be found to shore up health services.

"Next year, after just five years of David Cameron - with waiting times rising, fewer nurses and a crisis in A&E - we will have to save the NHS from the Tories once again. And we will do what it takes," he said.

Balls also cautioned that Labour could not be "complacent" about victory. "This is the hard truth that we learn - not just from events in Scotland - but also from the local and European elections, the rise of Ukip and from the conversations we all have on the doorstep and in our workplaces week after week," he said.

Balls said the party had to show it had "learned" and was ready to be "honest with the country about what the last Labour government got right and what we got wrong". Among the errors he listed were the lifting of transitional controls on migration from new EU states in 2004, and not regulating banks strongly enough before the credit crunch - although he stopped short of saying Labour had overspent before the financial crisis.

"While it was the banks which caused the global recession, and it was the global recession which caused deficits to rise here in Britain and around the world, the truth is we should have regulated those banks in a tougher way," he said.

"It was a mistake. We should apologise for it. And I do."

The previous government had also failed to tackle the "underlying causes" of rising spending on housing benefit and in-work poverty, and should not have abolished the 10p tax rate, Balls said.