BRIGHTON, England (Reuters) - Britain's opposition Labour party sought on Monday to convince voters that it can be trusted with the economy by promising iron discipline on spending and pitching higher taxes on bankers as a way to pay for welfare if it wins the 2015 election.
Ed Balls, the man who could be finance minister if Labour wins, attacked Prime Minister David Cameron's economic record, arguing that millions of voters faced soaring prices in what he said was a cost of living crisis.
To cheers from party activists, Balls said finance minister George Osborne had choked off growth for three years and was now presiding over a recovery that helped millionaires and hedge fund managers but not ordinary families.
"After three wasted years, David Cameron and George Osborne now try to claim their plan has worked after all," Balls said in a speech to the party's annual conference in the seaside resort of Brighton on England's south coast.
"Worked? It may have worked for a privileged few at the top, but for the million young people trapped out of work this Tory plan isn't working."
By focusing on the cost of living, Balls and his boss, Labour leader Ed Miliband, are attempting to blunt Cameron's message of prudence as the economy starts to recover from its worst crisis since World War Two.
Although Labour has a small lead in most opinion polls, the party has struggled to establish economic credibility with voters since its 2010 electoral defeat ended 13 years of Labour rule. Labour handed over Britain's biggest ever peacetime budget deficit when it left power.
Speaking below a giant screen which read "One Nation Economy", Balls said he understood that more needed to be done to win back the trust of voters.
"We will combine iron discipline on spending control with a fairer approach to deficit reduction," Balls said in a speech which mixed economic policy with jokes about Cameron's choice of swimming towels and even a comparison of his and Cameron's waistlines.
BANKS AND BONUSES
Balls, who helped craft economic policies in the 1997-2010 Labour governments, said that banks would have to pay more to fund childcare and job guarantees.
Labour would increase the existing tax on banks' balance sheets - the bank levy - to raise an extra 800 million pounds ($1.28 billion) and repeat a levy on bankers' bonuses, he said.
"It is right that the banks make a greater contribution," the 46-year-old economist educated at Oxford and Harvard said, adding that pension tax relief would be restricted for the highest earners.
Bankers are deeply unpopular in Britain where they are blamed by politicians, voters and church leaders for the 2008 crisis. The financial sector contributed 11.6 percent of Britain's tax receipts in 2012.
Shadowing the tax and spending arguments that are likely to dominate the 2015 election campaign, the Conservative party said the banking tax changes would cover only a fraction of the new policies unveiled by Labour, leaving a shortfall of more than 25 billion pounds.
"It's the same old Labour. They still want more spending, more borrowing and more debt - exactly what got us into a mess in the first place," Economic Secretary for the Treasury Sajid Javid said.
In an attempt to deflect Conservative criticism that a Labour government would ruin Britain's public finances, Balls took the unprecedented step of inviting the government-funded fiscal watchdog to examine Labour's election pledges.
Robert Chote, chairman of the Office for Budget Responsibility, told Reuters that it was up to parliament to decide its remit and that if tasked to look at Labour's pledges it would need resources and guaranteed access to data.
(Additional reporting by David Milliken, Editing by Guy Faulconbridge and Toby Chopra)