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'Austerity-lite' Balls vows further cuts

Labour shadow ministers to draw up budget slash plans

Labour shadow chancellor Ed Balls ploughed on with his austerity-lite vision yesterday in an interview where he vowed "tough but necessary savings."

His plan will see a list of departmental cuts drawn up by every shadow minister - on top of the billions already slashed by the Tories.

Economically conservative Mr Balls claimed it was required because Chancellor George Osborne would fail to reduce the country's deficit quickly enough.

But his overall goal was strikingly similar.

"We're going to have to find savings," said Mr Balls.

"The prudent thing to do is to aim to overachieve - we'd want to get the budget back to surplus."

Labour ex-minister Michael Meacher MP said his party's refusal to pose an economic alternative was "exasperating."

"The overriding need is to reduce the deficit, but cuts are the last way to do this," he said.

"Not only in terms of the pain and anguish and impoverishment but because it hardly works.

"In 2011 the budget deficit was £118 billion, in 2012 £115bn, and this year it is estimated to be £111bn."

Mr Meacher said that to speed up the "glacial" recovery public cash must be pumped into the system to get a million people to work.

"Private investment is flat on its back and this year is still going down," he warned.

"The obvious answer is public investment - it will reduce the deficit far quicker because you don't have to pay people to be unemployed - they pay income tax, national insurance and VAT."

Falling wages, low exports and plummeting private investment present a "national crisis" which could be solved by a 28 per cent windfall tax on the 1,000 ultra-rich individuals who have increased their wealth by £190bn since 2008-9.

A "national crisis economic council" involving major industries and unions should be established to deploy the cash.

Quantitative easing pumped into the real economy or a harder line on state-owned banks would also be more effective than cuts, he added.

Rail, Maritime and Transport union general secretary Bob Crow said Mr Balls's return to "old-school, Blairite ground" should fuel a movement debate around the call for a new party of labour "that puts working people first."

He said: "Ed Balls's message that he is planning to cut harder and faster than even this rotten, right-wing Con-Dem government sends out the signal to Labour's core voters that they count for nothing."


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