Ed Balls warns Labour not to flinch on economy

Shadow chancellor Ed Balls has warned Labour not to "flinch" from cutting the deficit and reforming the economy.

He said a Labour government would face "huge challenges" but suggested they could be overcome by spending restraint and different priorities.

Addressing activists at the party's conference he said he would ask the government's spending watchdog to make sure the "sums add up".

Mr Balls said there had been "no recovery" for millions of families.

"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," he told delegates.

'Different choices'

Earlier the shadow chancellor wrote to the Office for Budget Responsibility (OBR) - set up in 2010 by Chancellor George Osborne - to ask if it would review his costings.

The OBR has said it could not do the job under its current remit.

But he warned party members: "There will be no more borrowing for day-to-day spending."

"Of course Labour will always make different choices," he added.

"We will combine iron discipline on spending control with a fairer approach to deficit reduction."

The party had not yet decided whether it would increase capital spending on building and infrastructure projects, but Mr Balls questioned the budget for a new north-south rail link.

"There will be no blank cheque from me as a Labour chancellor for this project or for any project," he said.

Despite signing up to the government's post-election spending plans, the former Labour cabinet minister set out a host of policies he believes show Labour would "do things differently".

He repeated a pledge to reintroduce the 10p tax rate scrapped when he was in government and said Labour would increase a levy on banks to pay for more free childcare for all working parents.

Drawing a direct comparison with the 1945 Labour government, he said: "Let us not be the Labour generation that flinched in the face of hardship.

"Let us show we will not duck the great challenges we will face on spending and the deficit."

'Difficult choices'

Commenting on Mr Balls' proposals to invite the OBR to assess his plans, the watchdog's chairman Robert Chote said: "It is for Parliament to decide what the remit of the OBR should be and it is highly desirable that there should be a cross-party consensus on that.

"If Parliament did want us to undertake this role, then there would be a number of practical issues to address.

"Among them, we would need to ensure that we had adequate internal resources to do the job, as well as guaranteed access to the necessary data and analytical expertise within Whitehall, as we have when scrutinising the government's policies."

Andrew Tyrie, Conservative chairman of the Treasury Select Committee, told the BBC that "thoughtfully done, this can improve the quality of public debate in an election".

But Treasury minister Sajid Javid said Labour's request to the OBR was "just a stunt" to distract people from "the fact that Labour have been found out for making unfunded commitments".