ED BALLS will today announce his party will bring in a real-terms cut in child benefit, as he sets out what Labour austerity after the next election will look like.

But the shadow chancellor will add an "in it together" emphasis as he sets out plans to cut ministers' salaries by five per cent.

Over the weekend Ed Miliband announced plans to raise the national minimum wage to £8 an hour. Labour insists the move would save the Government money as the Treasury is currently "subsidising" low-paying employers with working tax credits.

But the Conservatives claim that Labour will ruin the economy if they are elected in 2015.

Echoing Labour leader Mr Miliband, Mr Balls 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." He will insist that Labour will not "flinch" from tough financial decisions.

Under a Labour government rises in child benefit will be capped at one per cent for the first two years of the next Parliament, expected to be far below the rate of inflation. "We will have to make other decisions which I know will not be popular with everyone," he will say, "but we will not spend money we cannot afford."

The child benefit cuts will save the government around £400 million over the next four years.

Campaigners will question whether the saving is enough to justify the impact it could have on those on very low incomes.

Business leaders said the minimum wage had already reached "the highest rate it can be without putting job creation at risk".

And the Tories accused Labour of making low-paid workers £455 a year poorer by "crashing the economy".

The planned increase, which would affect about 1.4 million jobs, would be introduced in annual stages by the Low Pay Commission before October 2019.