New government measures a way to reduce debt?

Many Britons suffering with debt problems and a financial squeeze could be much better off if some new stimulus measures were adopted by the government to bolster the economy, shadow chancellor Ed Balls has argued.

In his speech to the Labour Party Conference in Liverpool, Mr Balls repeated the party's familiar line that the coalition is cutting the deficit "too far, too fast" and claimed this is combining with international problems to create a "flatlining" economy.

He suggested a range of measures could create renewed growth, including a call for a "temporary" suspension of the VAT increase, which he said would make the typical family £450 better off a year.

His other calls included trimming VAT to five per cent for home repairs and maintenance, a 12-month national insurance break for employers to take on new staff and a repeat of the one-off banking bonus Labour imposed while in power.

"Our country – the whole of the world – is facing a threat that most of us have only ever read about in the history books – a lost decade of economic stagnation," Mr Balls claimed.

Commenting on Mr Balls' proposals, Confederation of British Industry director general John Cridland said some of the ideas are "worth considering", provided they are affordable – arguing that he thought the VAT rise is not.

Last week, business secretary Vince Cable used his Liberal Democrat conference speech to argue Mr Balls was an advocate of policies that would "repeat the disaster" of the past, when both the government and consumers got too deep into debt.

By James Francis