Shadow chancellor Ed Balls has heaped praise on local government leaders who have slashed bureaucracy - not jobs - in response to the coalition government's deep spending cuts.

In his speech to the Labour Party's annual conference in Liverpool today, Mr Balls said it was local authorities that are dealing with the fallout from the public deficit crisis.

Mr Balls, a former education secretary, said cities such as Liverpool were now experiencing rising unemployment following 'the deepest cuts to local services in a generation'.

'But - a far cry from the scuttling taxis carrying redundancy notices in the 1980s - it is a Labour council here in Liverpool which is working day and night to make savings and cut bureaucracy so they can protect jobs and keep services for the most vulnerable.

'I say...to all our leaders in local government facing difficult times across the UK, and to first minister Carwyn Jones in Wales - we pay tribute to your leadership and responsibility and determination that there can be a better way: a credible plan to get our deficit down; but action now - a plan for growth and jobs, and long term reforms to build a stronger, fairer economy,' he said.

Mr Balls admitted to Labour's ' mistakes' on the economy, but criticised as 'reckless' coalition cuts that have impacted on local and regional economies, including axing the Regional Development Agencies, cutting the Future Jobs Fund and slashing the Educational Maintenance Allowance.

Countering criticism that Labour in opposition have produced few alternatives to Chancellor George Osborne's austerity package, Mr Balls called on ministers to implement a five-step plan to kick-start national and local economic growth.

These steps, he said, should be: a new tax on bank bonuses to fund 25,000 affordable homes; bringing forward long-term investment projects such as schools and local roads; reversing the VAT rise for a 'temporary period'; a cut to VAT for home improvement; and a one year national insurance tax break for every small firm that takes on new workers.

He also called on local government ministers to get right their controversial planning reforms to 'make the planning system work to support investment and jobs'.