Ed Balls: 'Labour Must Win Economic Argument'

Ed Balls has told Labour supporters he will not promise to reverse spending cuts or tax rises brought in by the coalition in a bid to restore his party's economic credibility.

The shadow chancellor told delegates at Labour's conference he would restore public confidence in Labour by showing he can take difficult decisions.

He said although he believes the Chancellor's policies - such as the VAT rise - are wrong, he cannot pledge to undo them.

Mr Balls said this is because the circumstances will change between now and the next election.

But he called on the Chancellor to change course and focus more on growth.

"George Osborne's economic plan is hurting, but Conference - it's just not working," he said.

Mr Balls accused Prime Minister David Cameron and Mr Osborne of "getting the economy badly wrong" and choking off a fragile recovery by cutting too hard and too fast since the coalition Government came to power last year.

In a defiant passage, he said: "Don't let anyone tell you that Labour in government was profligate with public money.

"When we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan.

"And don't let anyone say it was public spending on public services here in Britain which caused the global financial crisis.

"It wasn't too many police officers or nurses or teachers here in Britain that bankrupted Lehman Brothers in New York."

But he also acknowledged: "We didn't get everything right. We made mistakes."

In addition to praising leader Ed Miliband as "courageous", he used his speech to allay voters' fears a future Labour Government might drive the deficit back up.

He promised to submit the party to tough new rules to keep debt down, which would bar a future Labour chancellor from allowing the national deficit to swell as it did under Gordon Brown .

They will be included in Labour's manifesto for the next general election and will be subject to monitoring by the independent Office For Budget Responsibility, Mr Balls said.

"Fiscal responsibility in the national interest," he pledged.

Mr Balls also promised to use any profits from the sale of the state share in RBS and Lloyds to pay down Britain's debts, rather than to fund a pre-election give-away, as he says Conservatives and Liberal Democrats would do.

The move would echo Mr Brown's decision in 2000 to use £22.5bn from the sale of third-generation mobile phone licenses to pay off debt.

Mr Balls' refusal to give in to activists' demands to reverse public sector spending cuts may anger some rank-and-file members and unions.

Despite consistently leading the Conservatives by as much as 11 points in the polls this year, Labour regularly trails Tories badly when voters are asked which party they trust to run the economy.

With the economy certain to dominate voters' concerns over the run-up to the election scheduled for 2015, party strategists know they must reassure the electorate that Labour can be trusted on debt and spending.

Speaking to conference for the first time as shadow chancellor, Mr Balls painted a gloomy picture of Britain's prospects, warning of a "lost decade of economic stagnation" unless growth is revived.

Speaking before the speech, shadow foreign secretary Douglas Alexander described the Government's decision to cut the deficit so fast was a "political calculation".

He told Sky News the public was ready to listen to Labour again.

"I'm not saying people are instantly going to support the Labour Party," he said.

"But I would say even if they are not willing to give us their support, my sense at this conference is they're now willing to give us a hearing," Mr Alexander added.

Investors are watching markets carefully this morning after the FTSE 100 suffered its second worst weekly fall on Friday, losing £78bn from its value.

:: More from the Labour Party Conference:

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Worries Ahead For Ed After Uneasy Anniversary

Darling: Action On Euro Crisis 'Imperative'

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