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For most Labour activists, the Christmas break will be the last chance to rest and recharge batteries before the general election campaign begins. In 2010, we face the fight of our lives – a fight we must win.

Last week’s Pre-Budget Report gives us a platform to do so. It sets out a clear and responsible economic plan: to go for growth, rebuild the public finances in a fair way and protect frontline services. It also sets out a different set of choices and values to the Conservatives.

First, it is Labour which will grow our way, not cut our way out of the recession. The only way to secure our economic recovery is to keep investing in our economy and new industries, create jobs and make sure we do not abandon a generation of young people, as happened in the past.

That’s why this week’s white paper on jobs sets out how we will guarantee a job for all young people out of work for six months. It’s also why our school leavers guarantee is ensuring every 16 and 17-year-old has a place in education, training or an apprenticeship – with funding now available for over 140,000 extra places next year.

The Tories refuse to match these guarantees. And, just as they opposed all our measures to support the economy over the past year, so they now want to put the recovery at risk with immediate spending cuts while we are still in recession.

Second, we will protect frontline services such as schools, Sure Start, hospitals and the police while getting better value for money and making efficiency savings across government.

However, instead of protecting these vital services millions of families rely on, the Conservatives are still prioritising an inheritance tax cut giveaway for the 3,000 richest estates. That’s why the Tories have refused to protect schools, Sure Start or the police – and have made clear they would cut these budgets within 50 days if they are elected.

Third, we will rebuild the public finances in a fair way and, as the economy begins to grow again, halve the deficit over four years. This has meant some tough choices, including the decision to raise national insurance for those with incomes above £20,000.

But our values demand that those with the biggest shoulders should carry the heaviest burden. That’s why half the money we need to raise will come from the wealthiest 2 per cent in our country, including through the new 50p top rate and the tax on bank bonuses.

The Tories won’t back these tax rises and they want to cut the deficit faster. That leaves them with a revenue gap of billions of pounds each year, which can only be filled by across the board cuts to public services, a massive rise in VAT or most likely a combination of the two.

Of course, raising VAT is an option Ministers have been advised to consider in the past. In 2001, when we needed to raise billions of pounds to transform the National Health Service, there were some who favoured putting up VAT rather than National Insurance.

But, in 2001, Gordon Brown and I rejected that advice. We said if you put up VAT, it’s going to hit people’s bills for clothes, petrol, household goods and other essentials. It’s going to affect millions of pensioners and people who are out of work and, because VAT is the only tax which everyone pays, the poorest people in society will end up paying the most as a proportion of their income.

We said the fair thing to do is to increase National Insurance, so that only people who are in work will pay, and the people who can afford the most will pay the most. That’s the same choice the government made last week.

The truth is it’s the Tories who are the party of VAT. They doubled it to 15 per cent in 1979, raised it again when they abolished the poll tax in 1991, then tried to charge the full rate of VAT on domestic fuel and power in 1993.

And that’s why they’ve gone around the country for the last year saying our 2009 VAT cut was a waste of money which didn’t affect people’s incomes.

Thus it was no surprise last weekend to hear George Osborne refusing to rule out another Tory VAT rise.

We know that’s what he’s planning. We can hear him saying people didn’t notice the VAT cut in 2009, so they won’t notice a VAT rise in 2010.

He wants to make everyone in Britain pay hundreds of pounds more in VAT every year, including the poorest pensioners, the unemployed, the single mums, and the families struggling to make ends meet.

And why? So he can spend billions on his inheritance tax cut for millionaires and reverse our taxes on the wealthiest few.

So that’s the choice at the election: a debate about what’s fair on tax and a debate about protecting frontline public services. And that’s an election we can win.

Ed Balls is Secretary of State for Children, Schools and Families, and Labour and Co-operative MP for Normanton