The economic alternative
Ever since George Osborne followed me into the Treasury he, and his Lib Dem colleagues, have been trumpeting the virtues of Draconian cuts in spending. They use the deficit as an excuse for excessive public sector cuts. There must be cuts but in the current climate any government’s priority should be growth, as I said and my colleague and successor Alan Johnson set out yesterday. The Labour government made growth and jobs a priority. We stopped the recession turning into a depression, and kept people in jobs and in homes. The Tories cite the example of Greece and the threat of downgrading from credit rating agencies to scare people. Parallels should not be drawn between the UK and Greek economies and they know it. The Coalition inherited a triple-A rated economy and in the months since Labour left office growth has risen faster than I predicted and borrowing is lower. The Government’s austerity plans threaten to derail recovery. – Alistair Darling, The Mirror
He did say that “Ed Miliband and I are clear” that halving the deficit over four years is the correct policy. “Our policy remains to halve the deficit by 2013, ’14”. But he immediately added that tax must “do more of the work” to balance the budget. He emphasised that “public services matter”, calling for an approach that “values public services” not one that “relishes curtailing them”. He said the approach must be flexible enough to react to changing circumstances — reminded his City audience of the Irish reversion into recession. And he highlighted the “biggest difference” between the Labour and Government positions as “the need to return to growth”, pointing out that “a rising dole queue means a bigger dole queue”. – The New Statesman
Accusing the Coalition of basing its timetable of cuts on the 2015 General Election rather than the economic needs of the country, Mr Johnson used his first speech in his new role to announce Labour would sting the banks for more money – an extra £3.5 billion on top of the UK Government’s already announced £2.4bn bank levy. “The banking sector is contributing £2.4bn whilst child benefit freezes and cuts will raise substantially more, so families take the strain while bankers grab the bonuses,” insisted Mr Johnson. “There’s no justification for such an unfair sharing of the burden, so we will ask the Government to think again and come forward with proposals for the banks to make a greater contribution.” While Labour would not increase personal taxation any further than planned, Mr Johnson said he accepted the Lib-Cons’ freezing of the basic rate limit for income tax from 2013. – The Herald