Ed Balls has proposed a series of tax cuts as part of a five point plan to kick start the economy.
The shadow chancellor has called for a reversal of January's rise in VAT (from 17.5 per cent to 20 per cent), an immediate one year cut in VAT of 5 per cent on home improvements and a national insurance holiday for small companies that take on extra workers.
He also said the bank bonus tax should be repeated this year in order to build 25,000 affordable homes and "guarantee a job for 100,000 young people".
And he called for long-term investment projects – schools, roads and transport – to be brought forward in order to create more jobs.
In his speech to the Labour Party conference in Liverpool on Monday, Balls admitted Labour "made mistakes" over banking regulation, the 10p tax rate and immigration. But he said the previous government was not to blame for the economic crisis.
"Don't let anyone tell you that Labour in government was profligate with public money - when we went into the crisis with lower national debt than we inherited in 1997 and lower than America, France, Germany and Japan," he said.
But while Balls attacked the coalition's austerity program, he said Labour would set out "tough fiscal rules" in advance of the next election.
"No matter how much we dislike particular Tory spending cuts or tax rises, we cannot make promises now to reverse them," he said. "I won’t do that and neither will any of my shadow cabinet colleagues."
And he announced any windfall gained from selling-off publicly owned shares in RBS and Lloyds would be used to pay off the national debt rather than offer "pre-election giveaway" spending on public services.
"We will commit instead in our manifesto to do the responsible thing and use any windfall gain from the sale of bank shares to repay the national debt," Balls said.
But Treasury minister Justine Greening said Balls was "dangerously addicted to debt" and had failed to set out a realistic plan to tackle the deficit.
"He committed Labour to almost £22 billion of new borrowing this year, taking the deficit back into double digits, and threatening economic stability with higher interest rates and a loss of market confidence," she said.
“This speech failed the credibility test. Everyone can now see that Ed Balls is dangerously addicted to debt. Instead of trying to rebuild Labour’s shattered economic credibility he has committed them to another £21bn of borrowing this year. That would just make the debt crisis even worse, putting our economic stability and jobs at risk."
Balls' speech also appeared to receive a lukewarm reaction from the union Unite. The union's general secretary Len McCluskey warned that Labour "cannot simply be the party that cuts a little less than the Tories".
“Labour must offer a vision of hope with policies that will deliver growth, jobs and fair taxation. It needs to tell the voters straight – Labour will improve your living standards, no more must you fear your children will be worse off than you," he told a fringe meeting at the conference.
The Confederation of British Industry (CBI) said that Balls' proposals for stimulating growth were "worth considering" but questioned their affordability.
“Given that public spending cuts are vital to eradicating the deficit and protecting our triple A credit rating, it is right that Ed Balls commits to new fiscal rules. Labour has not got this right in the past,” said John Cridland, CBI director-general.
“If affordable, some of Mr Balls’ proposals for stimulating growth are worth considering, but they must pass the affordability test. In my view, a VAT cut is not affordable."
i want to apologise but im not goig nto apologise for things i dont belie were mistakes.