Labour would justify every penny of public spending in government

The Shadow Chancellor Ed Balls has pledged to examine each line of budget item in public spending if Labour wins power in 2015.

The comprehensive spending review would be completed within the first 12 months of a Labour government taking office, Balls told the Guardian in an interview published today. 

The aim of the review would be to build up the budget of each department from zero rather than extrapolating current spending plans.

"The public want to know that we are going to be ruthless and disciplined in how we go about public spending,” he said. “For a Labour government in 2015, it is quite right, and the public I think would expect this, to have a proper zero-based spending review where we say we have to justify every penny and make sure we are spending in the right way."

But he insisted the process would not just be about cost cutting instead spending would be examined based on “whether it meets your priorities".

However, the Shadow Chancellor said there were some areas where continued investment would be Labour’s policy in government such as International Development.

"We will need to make decisions in our manifesto on our big strategy on taxation and spending, as well as our fiscal rules. As in past parliaments, that could mean we make overall commitments on some items of spending,” the Shadow Chancellor added. "For example there is a cross-party consensus on spending on international development. But that does not mean the Department for International Development budget is taken out of the zero budget review - you still need to know the money is being spent wisely."

Interestingly, the Shadow Chancellor now regrets that a similar spending review during Tony Blair’s first few months in office was stopped by the then Chancellor Gordon Brown and his team at the Treasury.  Mr Balls was Gordon Brown’s right hand man at the time.

Tory Economic Secretary to the Treasury Sajid Javid said this announcement from the Shadow Chancellor was a “transparent attempt to distract from Labour's total lack of credibility on spending.”