Ed Balls has pegged Labour to the coalition’s spending plans for 2015-16 as he seeks to restore his party’s credibility on the economy.
The shadow chancellor said his colleagues should expect to work within tough departmental settlements due to be unveiled this month.
Mr Balls, however, suggested capital budgets could still be increased to boost the UK economy, and floated axing police commissioners, free schools and ‘titan’ prisons to free up money for Labour priorities.
He also provoked protests from the party and unions by confirming plans to strip wealthy OAPs of winter fuel payments.
In a speech in London’s Docklands, Mr Balls said the coalition’s impending spending review would be Labour’s “starting point” if it won the election.
“With the Chancellor refusing to change course, Labour must start planning for what will be a very tough inheritance,” he said.
“It will require us to govern in a very different way with much less money around. We will need an iron discipline and a relentless focus on our priorities.”
Signalling a shift away from Labour’s call for a temporary VAT cut, the shadow chancellor said although that remained the “right prescription”, if the economy began to recover over the next year “the balance of advantage will shift from temporary tax cuts to long-term capital investment”.
He dismissed demands for the Opposition to flesh out its spending plans now, insisting that would be “irresponsible” and play into George Osborne’s hands.