Ed Balls seeks to restore Labour's economic credibility

On Budget Day in just two years' time the man holding the red box outside No 11 may be Labour's Ed Balls. That will only happen if he can restore Labour's economic credibility.

Today the shadow chancellor came to the City to deliver a speech designed to do just that. His message was the same as ever and yet different.

As always he claimed that the government's austerity economics was failing and forcing ministers to search for another £11bn in cuts they never planned to make.

However, he also acknowledged that Labour would have no choice but to go along with many of those cuts and would treat them as "a starting point" for their policies in government.

In other words he was telling his party, as well as the country, that for all his talk of growth and jobs the next Labour government will find itself having to cut day-to-day spending more and tax more too - albeit according to different priorities.

Those hoping he would spell out Labour's spending plans for 2015 - the first year they might be in office - and set out his so-called fiscal rules - ie how fast he aims to reduce the deficit and Britain's debt - were disappointed. He insists that with the economy so uncertain now is not the time.

However, there was one firm commitment - Labour says that the 600,000 pensioners who earn enough to pay higher or top rate tax should no longer get the annual winter fuel allowance.

This is more symbolically significant than it is economically. After all, the party has always stressed its commitment to universalism - the idea that all get the same benefit regardless of their incomes - as a way of binding society together. Besides, as I pointed out to the shadow chancellor, it saves just £100m, which is not much more than one thousandth of the projected annual deficit in 2015.

A sign of how big a step the party regards this is the fact that Mr Balls insisted that Labour would keep the free pensioners bus pass and free prescriptions. The party remembers all too well how Gordon Brown used the threat to benefits to the elderly as a stick to beat David Cameron with at the last election.

Labour opposed the coalition's cut to child benefit for those on higher and top rate tax and still insists it was unfair. It is projected to raise 23 times more than means testing winter fuel payments. So, either Balls will have to be clear that it is a cut he can't restore, or he will have to come up with a new more affordable lower level of child benefit which all can receive.

In truth, economic credibility depends less on published plans and more on public trust. That is why Ed Balls won't stop reminding voters that the coalition's economic plans are way off course and leading to cuts they never dreamt of making.

However, he - unlike most opposition spokesman - also has a personal record to defend. For years he was Gordon Brown's chief economic adviser - in reality if not always in name. Today he insisted that Labour had not been profligate in those years.

His Tory opponents beg to differ of course and having long memories or, perhaps just access to Google, discovered that 17 years ago another shadow chancellor promised the same "iron discipline". Yes, that was Mr Brown.