14/01/2012 06:20 GMT | Updated 15/03/2012 05:12 GMT

Ed Balls Makes Warning On Public Sector Pay

Shadow chancellor Ed Balls today warned public sector workers he would make no promise to reverse the freeze on their pay before the end of this parliament.

He blamed Chancellor George Osborne's "mistakes" with the economy for making such pay restraint necessary.

But he said Labour would not make commitments on public spending unless they were "responsible and credible".

Mr Balls angered unions by effectively accepting the public sector pay freeze up to 2015, the year of the planned next election.

But he said: "I can't just promise to people that I can just wave a magic wand and be able to spend more and tax less.

"I cannot make commitments now for three years' time. I won't do that, it wouldn't be credible."

Speaking to BBC Radio 4's Today programme, Mr Balls said voters faced a choice between higher public sector pay or tackling rising unemployment.

"George Osborne clearly hoped he would be able to have tax cuts later in the parliament and rising public pay. It's not going to happen because of his failures," he said.

"People might expect me to come along and say 'well of course we will back higher pay'.

"It's a question of priorities. I can't say to private and public workers or to the country that Labour would put higher pay above jobs when unemployment is so high.

"We've got to be honest with people about the choices they face."

Mr Balls said the economy was "stagnating" because of Mr Osborne's policies.

Referring to the string of credit downgrades in the eurozone last night, he said the Chancellor "won't listen to ratings agencies telling the eurozone austerity is self defeating".

Any government would have had to be "tough on pay", he said, adding: "It's going to be tougher because of George Osborne's mistakes but I can't promise to reverse that now."

Mark Serwotka, leader of the Public and Commercial Services union, described Mr Balls's comments as "hugely disappointing".

"Instead of matching them on the cuts they should be articulating a clear alternative and speaking up for public sector workers and ordinary people in society," he said.

RMT general secretary Bob Crow accused Mr Balls of betraying Labour's union supporters.

"By lining up with the Tory-led coalition on the assault on public sector pay, Ed Balls will today sign Labour's electoral suicide note as he alienates his core voters in their millions," he said.

"The idea that the public sector staff who make this country tick are going to head to the polls and vote for a Labour Party that supports up to a 20% cut in their living standards, while the spivs and speculators who caused the crisis are laughing all the way to the bank, is a sick joke and a total betrayal of trade union members who fund the party. "

In a speech to the Fabian Society today, Mr Balls said Labour faced "a big task" to regain economic credibility and win back public trust.

He acknowledged that Labour should have been "clearer" before the 2010 general election that it would impose spending cuts and tax rises if re-elected.

Mr Balls said that Labour would not have taken the approach of the coalition but stressed: "We are where we are."

"However difficult this is for me, for some of my colleagues and for our wider supporters, we cannot make any commitments now that the next Labour government will reverse tax rises or spending cuts. And we will not," he said.

"Because we don't know how bad things will be on jobs, growth and the deficit. But we do know that the next Labour government will have to sort out the deficit where this government failed and deliver social justice in tougher times.

"And as we make the argument that cutting spending and raising taxes too far and too fast risks making the economy and the deficit worse not better, it is right that we set out where we do support cuts and where we would be making the tough but necessary decisions."

The shadow chancellor said it was "inevitable" now that public sector pay restraint would have to "continue for longer in this parliament".

"Labour cannot duck that reality. And we won't. Jobs must be our priority before higher pay," he said.

Mr Balls insisted Labour had to offer an economic alternative which would boost growth now and deliver "responsible capitalism" over the longer term.

But he warned: "To make that alternative work and be credible, it must be underpinned by a clear commitment to balanced but tough spending and budget discipline now and into the medium term."