Labour’s Shadow Chancellor Ed Balls will tomorrow (Saturday) announce a binding fiscal commitment that the next Labour government will balance the books, deliver a surplus on the current budget and get the national debt falling in the next Parliament.   In a speech to the Fabian Society Annual Conference, Ed Balls will say that Labour will get the current budget into surplus as soon as possible in the next Parliament and that how fast this can be achieved will depend on the state of the economy and the public finances.     Labour will legislate for tough fiscal rules within 12 months of the general election and abolish the discredited idea of rolling five year targets.   Ed Balls will say that Labour will finish the job where this government has failed. After three years of flatlining David Cameron and George Osborne are set to break their promise to balance the books and are instead forecast to borrow £79 billion in 2015.   And he will call on the government to support reforms which would allow the Office for Budget Responsibility to independently audit the spending and tax commitments made by the main political parties in next year’s general election manifestos.   On the recovery and the cost-of-living crisis, Ed Balls is expected to say   “This government promised strong and balanced growth, rising living standards and the budget deficit gone by 2015.   “The Tories and their supporters are now working hard to persuade the public that any growth in our economy is a vindication of their economic policies and disproves our critique that the Budget and Spending Reviews of 2010 choked off the recovery and flatlined the economy.   “But the Tories have delivered the slowest recovery for over 100 years, real wages down by an average of £1600 for working people, and painful public spending cuts extended well into the next parliament because three years of flatlining means that government borrowing has been £200bn higher than planned.   “Simply to catch up all the lost ground since 2010 we need 1.5 per cent growth each quarter between now and the general election. And Tory claims their plan is working are not going to wash with working people who are seeing their living standards falling and for whom this is no recovery at all.   “Because the current cost-of-living crisis is not just about people on tax credits, zero-hours contracts and the minimum wage. It’s also about millions of middle-class families who never thought that life would be such a struggle.   “And in the last 24 hours David Cameron has gone from not wanting to talk about the cost-of-living crisis to effectively telling people they’ve never had it so good.   “A desperate attempt to use highly misleading and selective statistics to tell people they are better off when they feel worse off. It makes the Tories look even more out of touch than before.   “As the IFS has made clear, household incomes will be substantially lower in 2015 than in 2010. No amount of smoke-and-mirrors can allow David Cameron to wriggle out of this basic fact: hard working people are worse off under the Tories.   “… We can only reduce the fiscal deficit if our recovery is balanced, long-term and doesn’t sow the seeds of problems ahead.   “The challenge is to deliver stronger, investment-led growth which helps reduce the deficit in a sustainable way. And with business investment still weak, housing demand once again outstripping housing supply and the IMF forecasting that UK growth will slow down again next year, it’s clear that this is not yet a recovery that is built to last. “On housing, we support Help to Buy. But we have called on the government to allow the Bank of England to urgently review how the scheme is working and to target its impact. As we have said before, it cannot make sense for taxpayers to guarantee mortgages on homes worth as much £600,000.   “And we have consistently warned, as have the CBI and the IMF, that action to support housing demand must be matched by action to increase housing supply. But none of these things have happened.”   On the fiscal challenge for Labour in 2015, he is expected to say:   “After three years of economic stagnation and with the sustainability of the recovery still uncertain, we stand to inherit a very difficult fiscal situation in 2015.   “As Ed Miliband said last week, deficit reduction alone does not make for a successful economic policy. But both of us know it is a necessary and important part of it.   “With the deficit we inherit currently set to be nearly £80 billion and the national debt still rising, it will be up to the next Labour government to finish the job.   “This means that delivering change - on living standards, on skills and innovation and on jobs for young people, while safeguarding our NHS and vital public services - will be more difficult than at any time in living memory.   “We are determined to deliver the change we need to make our economy work over the long-term and to build a fairer society that rewards hard work and protects the vulnerable. But we must make sure the sums add up. We cannot and will not duck the hard choices ahead.   “Without fiscal discipline and a credible commitment to eliminate the deficit, we cannot achieve the stability we need. But without action to deliver investment-led growth and fairer choices about how to get the national debt down while protecting vital public services, then fiscal discipline cannot be delivered by a Labour government – or, in my view, by any government   “Last year, I set out how we will deal with the very difficult fiscal situation we will inherit in 2015. We won’t be able to reverse all the spending cuts and tax rises that the Tories have pushed through. We will have to govern with less money, which means the next Labour government will have to make cuts too.   “No responsible Opposition can make detailed commitments and difficult judgments about what will happen in two or three years time without knowing the state of the economy and public finances that we will inherit.   “But we know we will face difficult choices. The government’s day-to-day spending totals for 2015/16 will be our starting point. There will be no more borrowing for day-to-day spending.  Any changes to the current spending plans for that year will be fully-funded and set out in advance in our manifesto.   “And we will insist that all the proceeds from the sale of our stakes in Lloyds and RBS are used to repay the national debt.   “Alongside these commitments, Chris Leslie, the Shadow Chief Secretary to the Treasury, has already begun our zero-based review of public spending. By examining every pound spent by government from the bottom up, we will root out waste and inefficiency.   “And we will look at new ways of delivering public services suited to tougher times - while ensuring that they continue to make a huge contribution to the strength of our economy and the fairness and stability of our society.   “Even those departments or areas of government spending which we chose to ring-fence will still be subject to this review because it is vital that we get maximum value for money for every pound spent.    “So we have already gone further than any Opposition has at this stage in setting out a clear and disciplined approach.   “But I want to go further still. So I am today announcing a binding fiscal commitment. The next Labour government will balance the books and deliver a surplus on the current budget and falling national debt in the next Parliament. So my message to my party and the country is this: where this government has failed, we will finish the job.   “We will abolish the discredited idea of rolling five year targets and legislate for our tough fiscal rules within 12 months of the general election. Tough fiscal rules which will be independently audited by the Office for Budget Responsibility.   “We will get the current budget into surplus as soon as possible in the next Parliament. How fast we can go will depend on the state of the economy and public finances we inherit.   “And because we will need an iron commitment to fiscal discipline, I have also asked the Office for Budget Responsibility to independently audit the costing of every individual spending and tax measure in Labour’s manifesto.
“I urge the Chancellor to work with us to make this happen ahead of the next general election.  This would be the first time this kind of independent audit has ever happened – and I believe it is essential to restore public trust in politics and improve the nature of the political debate.”   ENDS