Balls: Coalition cuts 'unfair and unnecessary'

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Ed Balls has warned the coalition risks tipping the country into a double dip recession as a result of its "heartless and wrong-headed" program of cuts.

In a speech in the City of London this morning the Labour leadership candidate said it was time to challenge the idea that there is no alternative to the government's austerity measures which it argues are necessary to tackle the deficit.

"For the most part, the political and media consensus has dictated that the deficit is the only issue that matters in economic policy, that the measures set out in the Budget to reduce it are unavoidable, and that there is no alternative to the timetable the Budget set out," Balls said.

And he said Labour should not “sit back” and let the government do as it wished simply because the public appeared to support their cuts agenda at the present time. “Leadership is about changing and leading public opinion rather than being driven by it,” he said.

Labour must persuade people "in their heads as well as their hearts" to come back to the party again he said.

"And by comparison, we must expose the Coalition’s plans as heartless and wrong-headed."

He added: "It is vital that we first show that the Tory cuts are not just unfair, but both unnecessary and economically-unsafe."

And he called for a "credible and medium-term" plan to reduce the deficit and level of national debt based on a careful balance between employment, spending and taxation

But he said this should be done "only once growth is fully secured and over a markedly longer period than the government is currently planning".

He said: "I believe that – by ripping away the foundations of growth and jobs in Britain – David Cameron, Nick Clegg and George Osborne are not only leaving us badly-exposed to the new economic storm that is coming, but are undermining the very goals of market stability and deficit reduction which their policies are designed to achieve."

As well as criticising Osborne, Balls used his speech to draw a dividing line between him and rival leadership contender David Miliband.

He said: "The chancellor says that there is no alternative to his timetable for deficit reduction, and that anyone who argued for a slower, less steep plan for reducing the deficit was a deficit-denier, someone who wanted to “wreck the economy” and condemn it to “ruin [and] disaster".

"George Osborne includes in his charge Alistair Darling and David Miliband, who have suggested the lesser plan of halving the deficit over four years.

"I told Gordon Brown and Alistair Darling in 2009 that – whatever the media clamour at the time – even trying to halve the deficit in four years was a mistake."

He added: "Our economies were saved from catastrophe only by government intervention to nationalise banks and to absorb huge financial liabilities from the private financial sector.

"To attempt to repair the damage of such an event and return the national debt to its previous level in just a few years is not only dangerously incredible in the eyes of financial markets but places an intolerable burden on current users of public services."

The shadow education secretary's speech comes as the leadership battle increasingly resembles a two horse race between the Miliband brothers.

At midday today Ed Miliband will tell an audience in central London that he is the "change candidate".

He will say: "We must have the courage to change, the confidence to know that our values, when applied to the challenges of Britain in the modern world, can reconnect with those who have turned their backs on New Labour."

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