In his last conference speech before next year’s general election, the shadow chancellor is also expected to say that ministerial pay will be slashed by 5 per cent and frozen for the entire parliament.
His main announcement of capping child benefit increases would affect parents across the UK and save the government £400 million.
Currently, child benefit is £20.55 a week for every first child and £13.55 a week for each additional child.
In his speech to the Labour Party conference in Manchester today, Mr Balls will say he hopes to link child benefit to inflation in the same way state pension rises now have a triple-lock guarantee of going up by whichever is the larger of 2.5 per cent, the consumer price index of inflation or the retail price index.
However, he will say that, in the short term, parents will have to feel some of the pain in trying to balance the books of the economy.
He will say: “I want to see child benefit rising again in line with inflation in the next parliament, but we will not spend money we cannot afford. So for the first two years of the next parliament, we will cap the rise in child benefit at one per cent. It will save £400m in the next parliament. And all the savings will go towards reducing the deficit.”
Mr Balls will argue that Chancellor George Osborne’s policies have left borrowing higher by £75 billion than had been planned.
Setting out his task, he will say: “Labour’s economic plan will balance the books. But an economic plan must do much more than that. We also need to change the way our economy works… Because while our economy is growing again, most working people are still not seeing any benefit from the recovery.
“This is our task: not to flinch from the tough decisions we must make and to show the country that there is a better way forward. Labour’s plan for Britain’s future: to build an economy that works for the many, and not just a few – for all working people in every part of our United Kingdom.”
In a bid to give the party economic credibility and show that it is willing to make difficult choices, he will tell delegates that the party must be ready to make painful choices.
He will say: “People know we are the party of jobs, living standards and fairness for working people. But they also need to know that we will balance the books and make the sums add up, and that we won’t duck the difficult decisions we will face if they return us to government.
“Working people have had to balance their own books. And they are clear that the government needs to balance its books too.
“So Labour will balance the books in the next parliament. These will be our tough fiscal rules. We will get the current budget into surplus and the national debt falling as soon as possible in the next parliament.”
He will repeat his promise to have a “zero-based review of public spending”, examining every pound spent by the government.
Among more popular measures with the party faithful, he will pledge to increase the top rate of income tax to 50p for everyone earning £150,000 or more.
He will also promise to stop paying the winter fuel allowance to the top 5 per cent of pensioners with the most money.
Mr Balls will say: “Now cannot be the right time to give the richest one per cent of people in the country a £3 billion tax cut. So as we get the deficit down in the next parliament, the next Labour government will reverse this Tory tax cut for millionaires. Because Labour will balance the books in a fairer way.”
On cutting ministerial pay by 5 per cent and freezing it, he will say: “Ministerial pay will then be frozen each year until we have achieved our promise to balance the nation’s books.
“Because we are all clear that everybody in the next Labour government will be fully focused on that vital task of getting the deficit down.”
Priti Patel MP, Conservative Exchequer Secretary to the Treasury, said: “This speech isn’t a serious plan for the economy – Labour would put the deficit up, not down.
“These savings on ministerial pay only cut a miniscule fraction of the deficit – less than 1 per cent of 1 per cent. And it comes just days after the IFS said Labour’s economic policy means £28bn in extra borrowing.
“For all his bluster, Ed Balls still refuses to admit that Labour spent too much and he’s opposed every decision we’ve taken to cut the deficit. All a Labour government would offer is more inefficient spending, more taxes and more debt than our children could ever hope to repay.”