Ed Balls plans 'symbolic' child benefit cut to balance books

The Labour Party is due to announce plans for a real-term cut to child benefit if it wins the next general election in a bid to persuade voters that it can be as tough as the Tories when it comes to austerity.

At the party's conference in Manchester today, shadow chancellor Ed Ball is expected to announce that child benefit will only rise by one per cent in the first two years of an incoming Labour government.

The Independent says the cap, which is less than the current retail price index of 2.4 per cent, risks a "backlash" from women voters.

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"The highly symbolic move on child benefit is designed to persuade voters that Labour could be as tough as the Tories in making sensitive cuts," it adds.

The BBC notes that the move is essentially an extension of a cap already put in place by the coalition government. The current limit of one per cent for child benefit rises is due to expire in 2016, but Labour's move would see it continue for another year. The £400m saved would be used to help cut the deficit.

Child benefit is currently £20.50 a week for a first child, plus £13.55 a week for each other child.

Balls is expected to warn that all sections of society will have to make sacrifices to balance the nation's books and that Labour's task is "not to flinch from the tough decisions we must make and to show the country that there is a better way forward".

The shadow chancellor will also announce plans to cut the salaries of government ministers by five per cent, starting in May 2015. Ministerial pay would be frozen until the nation's books are balanced, which Labour predicts will be done by 2020, saving around £300,000 each year.

The Conservatives have pointed out that this saving amounts to just 0.003 per cent of the deficit.

Labour sources have also told The Guardian that Labour is likely to commit extra funding for the NHS, possibly by reintroducing the 50p top rate of tax.

Balls's speech comes after the party's announcement that the national minimum wage would rise from £6.50 an hour to £8 an hour by 2020.