Ed Miliband vows to balance books on public spending - but won't say when

Labour leader’s pledge card focused on deficit, but steers clear of details

Cutting the deficit every year will be the first item on Labour’s “pledge card” at next May’s general election, Ed Miliband announced yesterday. The highly symbolic move came as the Labour leader tried to boost his party’s economic credentials by promising to balance the nation’s books while still protecting public services.

In a speech in London, Mr Miliband unveiled the first lines that will appear on his credit card-size pledge card next May. Like the one issued by Tony Blair when he won a landslide victory in 1997, it will have five key promises.

The first will say: “We will build a strong economic foundation and balance the books. We will cut the deficit every year while securing the future of the NHS. And none of our manifesto commitments will require additional borrowing.”

By devoting a speech to the deficit, Mr Miliband tried to draw under a line under his damaging mistake at Labour’s conference in September, when he forgot to mention the “D-word”.

Mr Miliband said Labour would clear the deficit on day-to-day spending on public services “as soon as possible” before 2020. The Conservatives and Liberal Democrats have pledged to do so by the 2017-18 financial year.

He announced that Labour’s “zero-based” review of every pound of public spending had identified £500m of savings in local government, some of which would be made by merging some of the 46 fire and rescue services in England to save up to £83.6m.

But Labour refused to reveal vital details including:

• The year it would clear the deficit;
• Which departments would be protected from cuts;
• How it would set the level of public spending, as a proportion of national income;
• What proportion of deficit-reduction would be found by tax rises.

Mr Miliband argued that it would be wrong to give an “arbitrary date” to balance the books, and said some questions could not be answered until Labour took office. “If we start picking things out of the air without having done this work, without having gone into the departments and found how… we make these reductions in the most sensible way, then they won’t be the most sensible changes for the country,” he said. He argued that growth would also help to clear the deficit.

Ed Balls, the shadow Chancellor, said Labour would cut departmental spending “every year until we get the deficit down”. He confirmed that the NHS and overseas aid budgets would be protected from cuts and hinted that education would also be safeguarded when Labour published its manifesto. “I think education is massively important. Of course there are other areas, defence, social care, local government services, policing – these are all very important areas,” he said.

Carl Emmerson, deputy director of the Institute for Fiscal Studies, said Labour could spend £50bn a year more than the Tories. “George Osborne is aiming for a £23bn overall budget surplus….Mr Miliband has said that a Labour government would be happy to borrow to invest. Investment spending at the end of the next parliament is planned to be £27bn.” So Labour might need cuts of only 2 or 3 per cent in unprotected departments, he said.

Mr Osborne, the Chancellor, warned that Labour would create “economic chaos,” adding: “He [Mr Miliband] is delaying paying off the deficit. What he is really telling the British people is that he would borrow more money and put up taxes. By contrast we have a long-term economic plan; that is, reducing the deficit and delivering economic security for families.”