Ed Balls To Say Labour Will Open Up Manifesto Pledges To Fiscal Scrutiny By Office For Budget Responsibility

File photo dated 03/06/13 of Shadow Chancellor of the Exchequer Ed Balls who has said that a Labour government would scrap a scheme in which employees give up certain rights for shares.
File photo dated 03/06/13 of Shadow Chancellor of the Exchequer Ed Balls who has said that a Labour government would scrap a scheme in which employees give up certain rights for shares.

Labour is to open up its election pledges to scrutiny by a spending watchdog set up by George Osborne in its battle to convince voters that it has economic "iron discipline".

Ed Balls will tell activists on Monday that he needs to be "straight" with the country about the tough choices the party would have to take in office, admitting that budget cuts will need to be made to balance the books.

In a push to boost the party's fiscal credibility, the shadow chancellor intends to show how Labour's "sums add up" in the approach to the 2015 election by asking the Office for Budget Responsibility (OBR) to independently review the costings of every spending and tax commitment in its manifesto.

It comes after Treasury minister Sajid Javid released an analysis by Treasury officials which he said showed Labour promises would require more than £1,000 extra borrowing per household in 2015.

Ed Miliband earlier described the claims as "nonsense" and insisted the party would not increase day-to-day spending in its first year of government.

Mr Balls has written to OBR chairman Robert Chote setting out the audit request, which party sources said appeared to be possible under the terms of its charter.

In his speech to the conference tomorrow, he will say: "In tough times it's even more important that all our policies and commitments are properly costed and funded.

"The British people rightly want to know that the sums add up. So we will go one step further and ask the independent Office for Budget Responsibility - the watchdog set up by this Government - to independently audit the costings of every individual spending and tax measure in Labour's manifesto at the next election.

"This is the first time a shadow chancellor - the first time any political party in Britain - has ever said it wants this kind of independent audit. A radical change from what's gone before, but the right thing to do to help restore trust in politics."

Earlier this year the party set out plans to claw back cash by stripping the wealthiest pensioners of their winter fuel allowance payment.

Mr Balls will concede that Labour will face more tough choices and admit that growth and jobs "cannot magic the whole deficit away at a stroke".

He is expected to say: "We stand to inherit a very difficult situation. After three wasted years of lost growth, far from balancing the books, in 2015 there is now set to be a deficit of over £90 billion.

"David Cameron and George Osborne's failure on the economy has led to their failure to get the deficit down, and it will be up to the next Labour government to finish the job.

"And I need to be straight with this conference and the country about what that means.

"The government's day-to-day spending totals for 2015/16 will have to be our starting point. Any changes to the current spending plans for that year will be fully funded and set out in advance in our manifesto. There will be no more borrowing for day-to-day spending. And we will set out tough fiscal rules - to balance the current budget and get the national debt on a downward path.

"Of course Labour will always make different choices. We will combine iron discipline on spending control with a fairer approach to deficit reduction. And with our zero-based review - a review of every pound spent by government from the bottom up - Rachel Reeves and my shadow Cabinet colleagues have begun the work of identifying savings so that we can switch resources to Labour's priorities.

"But we won't be able to reverse all the spending cuts and tax rises the Tories have pushed through. And we will have to govern with less money around. The next Labour government will have to make cuts too. Because while jobs and growth are vital to getting the deficit down - something this Government has never understood - they cannot magic the whole deficit away at a stroke.

"And delivering our Labour goals will be harder than at any time in living memory. But it can be done - if we get people back to work and strengthen our economy, cut out waste and focus relentlessly on our priorities, and make sure difficult choices are not ducked, but are rooted in our values, in fairness and in common sense.

"So conference, at a time when the public services that pensioners rely on are under such pressure, we cannot continue paying the winter fuel allowance to the richest 5% of pensioners.

"And a fairer approach to deficit reduction means we will crack down on tax avoidance, scrap the shares-for-rights scheme and reverse the tax cut for hedge funds.

"And we will insist that all the proceeds from the sale of our stakes in Lloyds and RBS are used not for a one-off pre-election tax give-away - but instead every penny of profit used to repay the national debt."

Earlier this month the Chancellor said Labour had "lost the argument" on calls for a "plan B" to revive the UK's fortunes after claiming the economy is "turning a corner".

But Mr Balls will lay the blame for the "slowest recovery for over 100 years" at the door of the Conservatives.

He is expected to say: "When David Cameron and George Osborne say that everything that is happening in the economy is down to them, let us remind them. Prices rising faster than wages, three years of flat-lining, the slowest recovery for over 100 years, a million young people out of work, welfare spending soaring, more borrowing to pay for their economic failure. That is their economic record. And we will not let them forget it.

"Three years of flat-lining - far longer than any of us expected - have caused long-term damage: businesses bankrupt, investment and capacity lost, long-term unemployment entrenched.

"And now even as growth finally returns, with prices still rising faster than wages, with business investment still weak, with unemployment still rising in half the country, with bank lending to business still falling, we can't be satisfied.

"For millions of families this is no recovery at all."

"Conference, this is our task. To show we are ready for the great challenges we will face on spending control and the deficit," he will add. "To set out Labour's alternative plan to create jobs, make work pay and tackle the rising cost of living.

"And to secure a mandate to build a One Nation Britain. A strong recovery that is built to last and works not just for a few at the top, but for all working families in every part of Britain."

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