* Opposition Labour vows to deliver budget surplus ifelected
* Commits to raising top tax rate to 50 pence in pound
* Business groups fear impact on competitiveness
LONDON, Jan 25 (Reuters) - Britain's opposition Labour Partypromised on Saturday to balance the government's books anddeliver a budget surplus in the next parliament if it won the2015 election, aided by reintroducing higher tax rates for thenation's top earners.
Ed Balls, Labour's would-be finance minister, made a bindingcommitment to clear the deficit of nearly 80 billion pounds($132 billion) and deliver a surplus in his budgets, and to putnational debt on a downward path by 2020.
Balls, who is under pressure to improve his party's economiccredibility, said one way Labour would help to achieve this wasby reintroducing a top tax rate of 50 pence in the pound foranyone earning 150,000 pounds or more a year.
"The next Labour government will balance the books anddeliver a surplus on the current budget and falling nationaldebt in the next parliament," Balls said in a speech to theFabian Society in central London on Saturday.
"Reversing this unfair tax cut for the richest 1 percent ofpeople in the country is necessary so we can cut the deficit ina fair way in the next parliament."
The last Labour government raised the upper tax rate to 50percent from 40 percent in 2010 but the Conservative-ledcoalition government cut this to 45 percent in 2013, arguing itwas the highest in the G20 and hurt Britain's competitiveness.
But Balls said figures showed people paid almost 10 billionpounds more in tax in the three years when the 50 pence top ratewas in place.
DEFICIT AND DEBT TARGETS
Labour leads the ruling Conservatives in opinion polls butthe public consistently says it trusts Prime Minister DavidCameron's Conservatives more on the economy, a verdict theleft-leaning party is struggling to reverse at a time wheneconomists are predicting Britain's economic recovery will pickup pace.
Cameron repeatedly reminds voters that the last 1997-2010Labour government left Britain with a budget deficit equivalentto 11 percent of gross domestic product, the country's biggestpeacetime deficit. In March 2013 it was 7.3 percent of GDP.
Labour says its plans were blown off course by the 2007/8global financial crisis and it can deliver "iron discipline" ifre-elected with a credible commitment to eliminate the deficit.
"But without action to deliver investment-led growth andfairer choices about how to get the national debt down whileprotecting vital public services, then fiscal discipline cannotbe delivered by a Labour government or, in my view, by anygovernment," Balls said.
The Confederation of British Industry (CBI) said it wasessential to cut the deficit and national debt but this neededto be accompanied by pro-business, pro-growth policies andcriticised Balls' plan to reintroduce higher tax rates.
"This puts talented people off coming to the UK to investand create jobs," said CBI Chief Policy Director Katja Hall.
Balls' intention of tackling the deficit in the government'scurrent account, which includes spending on things such aswelfare and public services, is less aggressive than a plan byfinance minister George Osborne.
Osborne has pledged to run an absolute surplus and wants towipe out the deficit in overall government spending, includinginvestment spending. In his recent autumn statement, Osbornesaid he expected the UK to run a budget surplus by 2018-19.
Labour is committed to running a current budget surplus bythe end of the next parliament in 2020 and has made increasedinvestment spending a core part of its economics policies,vowing to build more homes and infrastructure.
Balls said Labour would abolish the "discredited idea" ofrolling five-year fiscal targets and push for "tough fiscalrules" within 12 months of the election in May 2015.
He also said a Labour government would use the proceeds fromthe sale of the state's stakes in Lloyds and RBS banks to help repay the national debt.
Lloyds (LLOY)