Ed Balls targets bank bonuses and VAT as he sets out plan to get economy moving again

SHADOW chancellor Ed Balls has promised to slash VAT and impose a bank bonus tax as part of a five-point plan to “get the economy moving again” and “end the vicious circle” over the UK’s deficit.

He set out the package during his speech to the Labour conference, where he issued a stark warning that Britain’s economy faced a “global growth crisis” that was becoming “more dangerous by the day”.

The raft of measures announced by Mr Balls included an immediate one-year cut in VAT of five percentage points on home improvements, repairs and maintenance, along with a one-year national insurance tax break “for every small firm which takes on extra workers”.

He said that if the Tory-Lib Dem coalition government adopted the proposals, Labour would back it in introducing the measures at Westminster.

Mr Balls also warned delegates that Labour would not reverse all the coalition’s controversial cuts.

He signed the party up to tough spending rules and vowed any windfall from the sale of bank shares would be spent paying off the national debt. “But I have to level with you all – and the country,” he said. “A plan for growth now will help get the economy moving again and stop the vicious circle on the deficit – but by itself it won’t magic the deficit away.

“A steadier, more balanced, medium-term plan to get the deficit down will still mean difficult decisions and tough choices in the years ahead that any government will face.

“Tough choices on tax and spending – like the cuts to welfare, education and Home Office budgets that we set out before the election. Discipline in public and private sector pay. And no matter how much we dislike Tory spending cuts or tax rises, we cannot make promises to reverse them.”

Mr Balls said the money raised from the bank bonus would be used to build 25,000 affordable homes and guarantee a job for 100,000 young people. Other measures in the five-point plan to revive the economy would include bringing forward long-term investment projects, such as schools, roads and transport, to create jobs.

Mr Balls said: “These are the darkest, most dangerous times for the global economy in my lifetime. Our country, the whole of the world, is facing a threat that most of us have only ever read about in the history books – a lost decade of economic stagnation.

“The government must adopt a steadier, more balanced plan to get our deficit down.”

Mr Balls said David Cameron and George Osborne had “the wrong prescription” for the current economic crisis.