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January 24, 2014 10:02 pm
Ed Balls, UK shadow chancellor, will on Saturday attempt to reassert Labour’s claim to fiscal discipline, promising he would balance Britain’s books in the lifetime of the next parliament were his party to be in power.
Mr Balls will commit to running a surplus on the current budget and to put national debt on a downward path by 2020 at the latest, although he said he would deliver on his promise “as soon as possible”.
He said he would scrap George Osborne’s “discredited” rolling five-year plan to eliminate the deficit and would legislate for “tough new fiscal rules” within 12 months of the general election.
The shadow chancellor is under pressure to improve his economic credibility, with polls showing the Conservatives have opened a significant lead over Labour on questions of fiscal competence.
Labour’s proposed new fiscal mandate broadly tracks Mr Osborne’s timetable for eliminating the deficit in the next parliament and for bringing down the national debt, but appears looser in several respects.
The framework could allow the party more time to achieve a balanced budget and also provides for a Labour chancellor to borrow more than Mr Osborne to fund capital investment.
Mr Osborne has pledged to run an absolute surplus – including capital and day-to-day current spending – by 2019. Mr Balls is talking of only running a current budget surplus by the end of the next parliament.
Mr Balls’s speech to the Fabian Society will also commit the Labour party to bringing down national debt as a share of GDP by 2020, while Mr Osborne’s plans would achieve that objective by 2017.
However, much depends on the timetable set by Mr Balls for achieving his objectives in the next parliament.
He will claim that his new fiscal rules will be “binding” but aides said they would take the form of a political commitment rather than legal obligation.
Mr Osborne is likely to counter that Mr Balls is still not setting out a firm timetable for eliminating the deficit, nor giving any more detail of what spending cuts and tax rises he would implement to achieve his objectives.
One key plank of Labour’s fiscal mandate will be a statement on firm target dates for scrapping the deficit; Mr Balls will abolish Mr Osborne’s rolling five-year target which moves on another year at the time of every Budget.
Labour has already committed to matching the coalition’s day-to-day spending totals in 2015-16, as Mr Balls attempts to neutralise the key Tory attack line at the next election: “We’re on the right track; don’t turn back.”
Mr Balls adopted similar tactics ahead of the 1997 general election when, as Gordon Brown’s chief adviser, he advocated matching Tory spending plans for the first two years of the next parliament.
Additional reporting by Sarah O’Connor
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