Shadow chancellor Ed Balls will today announce a planned £1 billion reduction in pensions tax relief for high earners to fund a job creation programme for the long-term unemployed.

The proposal would mean those earning above £150,000 would receive the same relief on their pensions pots as basic-rate taxpayers.

Balls' proposal is one of Labour’s first concrete policy ideas as it limbers up for the 2015 election and attempts to close the gap between the party and the rival Conservatives on economic trust.

While the party has polled around 10% ahead of the Tories over the past year, it has yet to close the gap public perceptions of economic competence, which remains tarnished by the last government.

‘When times are tough it cannot be right that we subsidise the pension contributions of the top 2% of earners at more than double the rate of people on average incomes paying the basic rate of tax,’ said Balls.

The money saved would be used to fund minimum wage jobs for anyone out of work for more than two years. Former Labour chancellor Alistair Darling had announced a similar plan in 2009, which was dropped under the coalition, in favour of a tighter cap on contributions eligible for relief.