Our pledge on the deficit - that a Labour government will build a strong economic foundation and balance the books to secure the future of the NHS – is one that we will honour so that we can transform our economy, build a prosperous Britain and protect public services.
The Tories’ economic plan has failed. Yet they’ve committed themselves to slashing public services to a level not seen since the 1930s. They are doing it because they want to, not because they have to.
They are ideologically committed to an approach which will result in a permanent cost of living crisis of low skills and low quality jobs which won’t raise the tax revenues needed to tackle the deficit.
Unless we tackle the deficit in a tough but balanced way we face a simple choice between spending more money on debt interest payments or more money on vital public services like our NHS.
That’s why Labour will deal with the deficit by taking a tough and balanced approach based on five principles (see box).
By following this approach we will cut the deficit, create the strong economic foundations needed to build a prosperous Britain for working people and protect the public services we all value and rely on.
LABOUR PRINCIPLES FOR DEALING WITH THE DEFICIT
Setting a credible and sensible goal to balance the books
- We will get current budget into surplus and national debt falling as soon as possible within the next Parliament.
- We reject the Tory plan which sets a target of a 35 per cent state, putting the NHS and productive investment in skills and education at risk.
- The Tories have allowed welfare spending to rise further than planned and tax revenues to fall because of low wages, insecure jobs, housing shortages and social failure.
- Labour’s plan to tackle the cost of living crisis includes increasing the minimum wage, building homes, reforming the banks and transforming vocational education.
- Our agenda for economic change is about big reform not big spending
- Ed Balls has written to the Shadow Cabinet to say that, except for a limited number of priority areas, they should plan for departmental budgets to be cut each year until we have balanced the books.
- Instead of spending less doing the same things we must use money better by devolving power, breaking down old bureaucracies, and rebuilding public services around early
Protecting everyday working people by ensuring those with the broadest shoulders bear the greatest burden.
- Because those at the top should contribute the most Labour has set out plans for reversing the 50p millionaires’ tax cut and a mansion tax.
- In contrast the Tories have refused to rule out cutting the top rate again, and put up VAT in this parliament.
Promising new policies only when they are fully funded and do not require any additional borrowing
- All our manifesto commitments will be fully funded. For example our £2.5 billion Time to Care Fund for the NHS is funded by a mansion tax on homes worth over £2m.
- The Tories however have announced £7bn unfunded tax cuts which would be paid for by bigger cuts to public services or increases in VAT.