Balls To Freeze Child Benefit To Balance Books

Real-terms cuts in child benefit will form part of Labour's plan to balance the country's books, shadow chancellor Ed Balls will say at the party's conference.

Mr Balls will present a 1% cap on rises for the first two years of a Labour government as one of the "tough decisions" necessary to deal with the deficit if the party takes power next year.

In a speech in Manchester today, Mr Balls will pledge to "change the way our economy works" and to "not flinch from the tough decisions we must make".

He will say: "Three years of lost growth at the start of this parliament means we will have to deal with a deficit of £75bn  - not the balanced budget George Osborne promised by 2015. And that will make the task of governing hugely difficult.

"People know we are the party of jobs, living standards and fairness for working people. But they also need to know that we will balance the books and make the sums add up and that we won't duck the difficult decisions we will face if they return us to government.

"Working people have had to balance their own books. And they are clear that the Government needs to balance its books too."

Mr Balls will say a cap in child benefit rises will save £400m

Under austerity measures introduced by the coalition, child benefit was frozen from 2010 to this year.

It rose by 1% in April and is due to rise by the same amount in 2015/16, but Mr Balls will commit to extending below-inflation hikes for at least one more year.

He will tell delegates: "We will not spend money we cannot afford. So for the first two years of the next parliament we will cap the rise in child benefit at 1%.

"It will save £400m in the next parliament. And all the savings will go towards reducing the deficit."

Other elements of the Labour party's plans for the economy include cutting pay for ministers by 5%, reintroducing the 50p top rate of income tax for those earning more than £150,000, and ending the winter fuel allowance for the richest 5% of pensioners.

A 5% cut in ministerial salaries is also on the cards

The party also has plans to raise the minimum wage to £8 an hour, and introduce a jobs guarantee for young people and the long-term unemployed funded by a tax on bank bonuses and limiting pensions tax relief for the highest earners. 

Treasury Exchequer Secretary Priti Patel poured scorn on Mr Balls' plan for the economy, claiming Labour would put the deficit up, not down.

"These savings on ministerial pay only cut a miniscule fraction of the deficit - less than 1% of 1&. And it comes just days after the Institute for Fiscal Studies said Labour's economic policy means £28bn extra borrowing," he said.

"For all his bluster, Ed Balls still refuses to admit that Labour spent too much and he's opposed every decision we've taken to cut the deficit. All a Labour government would offer is more inefficient spending, more taxes and more debt than our children could ever hope to repay.'

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