Labour cuts pledge was a mistake, says Ed Balls

Ed Balls has opened up new space in the Labour leadership race, pitching to discard the party's pledge that the deficit can be halved in four years while making the party's opposition to coalition financial plans more trenchant. Balls told BBC News the pledge was a "mistake" and that in retrospect he would have opted for a slower plan to bring down the deficit. While he had toed the party line in government and defended their collective decision to cut spending over four years, privately he "didn't think it could have been done". In his last budget before leaving the Treasury, Alistair Darling said a Labour government would halve the deficit by 2014, which would have meant cuts of 20% to those spending areas not protected – policing, schools and hospitals. The timetable is still official party policy and will put pressure on other leadership contenders to defend Darling's strategy. The latest move frees up Balls to mount a more aggressive attack on coalition spending plans when cuts are announced in the autumn's comprehensive spending review. Though the party is now in opposition, Balls's comments indicate that if elected Labour leader in September he will take the party further away from coalition cuts and more in line with those who believe money should not be withdrawn from the economy too soon. Balls was Gordon Brown's chief economic adviser for his 10 years as chancellor and is now challenging rival candidates to debate the economic merits of medium versus slow fiscal consolidation. David Miliband stands firm with Alistair Darling, now shadow chancellor and a supporter of his leadership bid, in backing a ratio of 2:1 spending cuts to tax rises, as opposed to the coalition's 77:23 split. Another leadership candidate, shadow health secretary Andy Burnham, said he believed a Tory pledge to ringfence the NHS and increase its spending in real terms year on year was wrong and offered up ways to cut the health budget. Backing the 2:1 ratio, Balls told the BBC: "Halving the deficit in four years by cutting public spending … I think was a mistake. In government at the time in 2009 I always accepted collective responsibility, but I thought the pace of deficit reduction through spending cuts was not deliverable." He also proposed lowering from £150,000 to £100,000 the threshold at which the higher rate of income tax kicks in instead of increasing the rate of VAT.