Balls in public sector pay warning

Shadow chancellor Ed Balls has 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.

Ed Balls-Labour's economic plan must be credible

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."

©Press Association

Balls to outline Labour alternative

Labour faces "a big task" to regain economic credibility and win back public trust, Ed Balls is set to admit in a speech.

In a high-profile speech setting out what he terms the "economic alternative" to the coalition Government, the shadow chancellor will acknowledge that Labour should have been "clearer" before the 2010 general election that it would impose spending cuts and tax rises if re-elected.

And he will repeat his message that the party cannot make any commitments now to reverse coalition cuts or tax hikes if it returns to power.

Ed Ball want to regain trust with the electorate

Chancellor George Osborne's economic policy threatens Britain with "a decade of stagnation", Mr Balls will warn in a speech to the Fabian Society in London. Labour must offer an economic alternative which meets the twin challenges of boosting growth now through temporary tax cuts and investment in jobs and delivering reform over the longer term to build "responsible capitalism".

But he will caution: "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.

"However difficult it 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."

Labour's five-point plan for a temporary VAT cut and investment in jobs is needed to "stop a decade of slow growth and higher debts becoming a self-fulfilling prophecy", Mr Balls will say.

"Action now for growth, jobs and reform does not conflict with the need for a credible medium-term plan on the deficit, it reinforces it," he will argue.

This must be coupled with "long-term reform to ... build a stronger and fairer economic model for the future - what Ed Miliband has called a more responsible capitalism - which can, even in tougher times, meet our aspirations for social justice and strong public services", he will say.

But he will acknowledge that setting out an alternative to the coalition's economic policy is not enough, and that Labour must also overcome the electorate's doubts over its economic credentials.