Ed Balls reveals Labour plans to cut government deficit
22/09/2014
Ed Balls has revealed that Labour will continue to cut costs if they win at the next general election.
The shadow chancellor said that the Labour party is serious about “balancing the books”, but claimed that they do this in a “fair way”.
The cost cutting measures include a one year extension to the current government policy on child benefits. This means that those receiving the benefit would receive less in real terms when inflation is taken into account.
Under the current government, child benefit payments will increase by a fixed rate of 1% a year until 2016, which is considerably less than the Bank of England’s target rate of inflation. However, this would be extended until 2017 under a Labour government.
Other plans that he said will be introduced include:
- The abolishment of winter fuel allowance for the richest 5% of pensioners.
- Government minister’s wages would be cut by 5% and then frozen until the deficit is completely eliminated.
- The 50% tax rate for higher earners would be reinstated.
Reducing the government deficit
At the moment, the government’s annual deficit stands at £95.5bn this year, although this is expected to fall to £75bn in the next tax year.
The government deficit is the shortfall between what the government generates in annual revenue, versus what it spends.
It has been forecast by the Independent Office for Budget Responsibility that the deficit will continue to fall over the next few years, before turning into a small surplus by the end of the 2018/19 tax year.
However, Ed Balls claimed that a Labour government would achieve this in a “fairer” way than the coalition government is planning to do.
He said that decisions will need to be made that “will not be popular with everyone”, but any cuts would be made in a way that is fair.
Balls continued to say: "At a time when the public services that pensioners rely on are under such pressure, we will stop paying the winter fuel allowance to the richest 5% of pensioners.
"I want to see child benefit rising again in line with inflation in the next parliament, but 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."
However, Mr Balls was accused by the conservatives of making unfunded spending commitments, whilst his plan to cut ministers wages was mocked as it would only amount to 0.003% of the deficit.
John Redwood, an MP for the Conservative party said: "I don't know whether that is the best thing to do, it's a rather small sum of money compared to the £70bn odd deficit they have got to get rid of. But I guess every little helps."
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.
Share this..
Related stories
Manufacturing sector looking positive into summer
Productivity in the UK manufacturing sector is showing signs of improvement following a muted first quarter, figures show.The Office for National Statistics (ONS) revealed today that output in UK manufacturing industries rose by 0.3 per cent between March and April. All industries showed growth, with the transport equipment sector leading the way on 0.9 per cent growth.These figures mean overall o...
Read MoreUnemployment falls in the US
The unemployment rate in the US fell to 9.7% last month which was lower than the 10% expectations of many analysts. In this tipsy topsy world of very different economic performances it now appears as though the US is starting to form some kind of solid base from which the economy can start to build. However, we are not out of the woods as yet! More and more it looks as though investors and anal...
Read MoreJob prospects for young people looking brighter
11/08/2015 UK firms are looking to fill skills gaps by hiring young people, which will hopefully help with the tough jobs market young people are faced with. Statistics from the Chartered Institute of Personnel Development suggest that more firms are planning to hire school leavers and apprentices this year. They survey of more than 1000 companies found that half are putting measures in pla...
Read MoreIs Labours Summer Of Discontent On The Way?
As the number of strike ballots planned in the UK over the next few months continues to rise there are fears that we may be heading towards a summer of discontent in the UK. This week sees the balloting of 800,000 public sector workers after a 2% pay offer from the government was firmly rejected by the unions. This is on top of the proposed strike by education workers over their working climate...
Read MoreRevised government statistics dampen recovery hopes
With news that the Office for National Statistics has today revised the fall in construction output for the first quarter of 2009, there are real concerns of the UK economy is performing worse than previously thought. The construction output figure for the first quarter of 2009 has been revised from fall of 2.4% to a fall of 9% which in itself would knock a further 0.3 percentage points off GDP fo...
Read More