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* Ed Balls says recovery not working for ordinary voters
* Balls says to raise bank levy, tax on banker bonuses
* Labour seeks to win back trust for economic management
By William James
BRIGHTON, England, Sept 23 (Reuters) - Britain's oppositionLabour party sought on Monday to convince voters that it can betrusted with the economy by promising iron discipline onspending and pitching higher taxes on bankers as a way to payfor welfare if it wins the 2015 election.
Ed Balls, the man who could be finance minister if Labourwins, attacked Prime Minister David Cameron's economic record,arguing that millions of voters faced soaring prices in what hesaid was a cost of living crisis.
To cheers from party activists, Balls said finance ministerGeorge Osborne had choked off growth for three years and was nowpresiding over a recovery that helped millionaires and hedgefund managers but not ordinary families.
"After three wasted years, David Cameron and George Osbornenow try to claim their plan has worked after all," Balls said ina speech to the party's annual conference in the seaside resortof Brighton on England's south coast.
"Worked? It may have worked for a privileged few at the top,but for the million young people trapped out of work this Toryplan isn't working."
By focusing on the cost of living, Balls and his boss,Labour leader Ed Miliband, are attempting to blunt Cameron'smessage of prudence as the economy starts to recover from itsworst crisis since World War Two.
Although Labour has a small lead in most opinion polls, theparty has struggled to establish economic credibility withvoters since its 2010 electoral defeat ended 13 years of Labourrule. Labour handed over Britain's biggest ever peacetime budgetdeficit when it left power.
Speaking below a giant screen which read "One NationEconomy", Balls said he understood that more needed to be doneto win back the trust of voters.
"We will combine iron discipline on spending control with afairer approach to deficit reduction," Balls said in a speechwhich mixed economic policy with jokes about Cameron's choice ofswimming towels and even a comparison of his and Cameron'swaistlines.
BANKS AND BONUSES
Balls, who helped craft economic policies in the 1997-2010Labour governments, said that banks would have to pay more tofund childcare and job guarantees.
Labour would increase the existing tax on banks' balancesheets - the bank levy - to raise an extra 800 million pounds($1.28 billion) and repeat a levy on bankers' bonuses, he said.
"It is right that the banks make a greater contribution,"the 46-year-old economist educated at Oxford and Harvard said,adding that pension tax relief would be restricted for thehighest earners.
Bankers are deeply unpopular in Britain where they areblamed by politicians, voters and church leaders for the 2008crisis. The financial sector contributed 11.6 percent ofBritain's tax receipts in 2012.
Shadowing the tax and spending arguments that are likely todominate the 2015 election campaign, the Conservative party said the banking tax changes would cover only a fraction of the newpolicies unveiled by Labour, leaving a shortfall of more than 25billion pounds.
"It's the same old Labour. They still want more spending,more borrowing and more debt - exactly what got us into a messin the first place," Economic Secretary for the Treasury SajidJavid said.
In an attempt to deflect Conservative criticism that aLabour government would ruin Britain's public finances, Ballstook the unprecedented step of inviting the government-fundedfiscal watchdog to examine Labour's election pledges.
Robert Chote, chairman of the Office for BudgetResponsibility, told Reuters that it was up to parliament todecide its remit and that if tasked to look at Labour's pledgesit would need resources and guaranteed access to data.
