Ed Balls accuses the government of "economic failure"

"The Chancellor's fiscal strategy has been completely derailed"

The Chancellor has missed his economic growth targets, Ed Balls said today.

Official forecasts by the Office for Budget Responsibility predicted the economy would shrink by 0.1% this year and 2013 would see the economy grow by 1.2%.

This is in stark contrast to predictions made by George Osborne during his Budget speech in March, where the equivalent figures were +0.8% and +2.0%.

Full coverage of chancellor George Osborne's Autumn Statement 2012

The forecasts revealed the "true scale of this government's economic failure", claimed Balls.

The Shadow Chancellor said: "Today, after two and a half years, we can see, people can feel in the country, the true scale of this government's economic failure.

"Our economy this year is contracting, the Chancellor has confirmed government borrowing is revised up this year, next year and every year.

"It is people who are already struggling to make ends meet, middle and lower income families and pensioners who are paying the price, while millionaires get a tax cut - a £3 billion welfare handout to the people who need it least."

[Related link: George Osborne's 2012 Autumn Statement in full]

The poor growth figures mean austerity measures will be extended until 2018 and Osborne will miss his target to reduce the national debt.

Balls seized on the poor growth forecasts in his attack on the Autumn Statement today.

He added: "The Chancellor's fiscal strategy has been completely derailed.

"The defined purpose of the government, the cornerstone of the coalition, the one test they set themselves - to balance the books and get the debt falling by 2015 - is now in tatters."

[Related link: The key points of the 2012 Autumn Statement]

Balls attacked the Chancellor for returning a growth rate after two and a half years of just one tenth that of the G20.

He said growth in Britain had been even slower than that in the eurozone.

Balls congratulated the government for cancelling January's fuel duty increase.

He claimed MPs had been whipped to vote against the policy just weeks ago - but backbenchers shouted the planned rise had been created by Labour's fuel escalator.

Balls claimed the government plans to raise £1 billion from pension tax relief at the top end of the pay spectrum raised less than £1.6 billion given away in Mr Osborne's first budget on the same reliefs.

He added: "And it is just a fraction of the top rate tax cut - £3 billion top rate tax cut while at the same time the Chancellor is cutting tax credits for working families, cutting child benefit for middle income families, raising taxes on pensioners in April and cutting benefits for the employed."

The Shadow Chancellor agreed with Osborne's philosophy that those who can work, should. However, he criticised the Chancellor, claiming it was impossible to try to get people into jobs when there were none available.

He added: "The Chancellor claims he would cut the welfare bill but high inflation and long-term unemployment means that the benefits bill is forecast to be billions higher in this Parliament than the Chancellor boasted.

"Let me help him. Welfare to Work - the clue is in the name. You can't have a successful welfare-to-work programme without work. And we know that the work programme has totally failed, with only two people in every 100 going into jobs."

He said the Chancellor should not be cutting Jobseeker's Allowance when he was cutting the top rate of tax. Someone earning £228,000 a year would get a top rate tax cut of £75 a week in April, more than the £71 an unemployed person would live on with the JSA.

Mr Balls added: "What sort of government believes that you can only make low-paid working people work harder by cutting their tax credits but you only make millionaires work harder by cutting their taxes. I tell you, certainly not a One Nation government. They must really believe that if you cut taxes at the top the wealth will trickle down."

He said Mr Osborne's promise at the Conservative Party conference in 2009 that they would not cut the top rate of tax while at the same time making a public sector pay freeze was a "con".

"What's changed? Nothing has changed. It was all a con and the mask has slipped. We now know this Chancellor can say we are all in this together without a smirk on his face.

"They wanted us to think they are compassionate Conservatives but now find out they are the same old Conservatives and the Liberal Democrats have gone along with it yet again."

Balls accused the government of being "unfair, incompetent and completely out of touch".

He referred to Tory MP turned I'm A Celebrity.... Get Me Out Of Here! star Nadine Dorries' assessment of Mr Osborne and David Cameron as "two arrogant posh boys who don't know the price of milk".

Balls said: "No wonder this Prime Minister keeps losing his temper, because his worst nightmare is coming true.

"Not snakes and spiders in the jungle, but their fiscal rule broken, their economic credibility in tatters, exposed now as incompetent and unfair.

"Yes, he's the Chancellor... can't someone get him out of here?"