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Tax cuts are essential to beat crisis says minister
Paul Waugh, Deputy Political Editor20 Nov 2008
THE recession will be "longer and deeper" without urgent government action to boost the economy with tax cuts and higher borrowing, Treasury chief secretary Yvette Cooper warned today.
In the clearest signal yet of Labour's tactics on the financial crisis, Ms Cooper declared that Tory opposition to a "fiscal stimulus" would lead to more unemployment and turn the downturn into a slump.
Her words, previewing the Chancellor's pre-Budget report on Monday, came as public sector net borrowing was expected to balloon above £40billion when the latest figures are published by the Office of National Statistics today.
Ms Cooper sought to deflect criticism of the sharp rise in public debt by pledging to slash Whitehall spending to help fund tax cuts.
But she stressed that borrowing had to rise to help "reflate" the economy and help businesses and householders cope with the credit crunch.
"The truth is that if we don't act, our economic problems will last longer and run deeper. If we don't act, more people will be out of work for longer, and more businesses will struggle or go under," she said in a speech in Westminster.
Ms Cooper sought to defuse Tory charges of a "borrowing binge" by claiming a new round of government efficiency savings could yield £5billion more than expected.
Whitehall spending on lawyers, IT, and consultants will all be slashed, while changes to back-office and personnel will result in big savings, Ms Cooper said.
Departments will also save "hundreds of millions of pounds" by switching to cheaper energy deals.
The money saved, which would come on top of the £30billion projected by Chancellor Alistair Darling, will be used to help pay for tax cuts.
The move is aimed at countering the Conservatives' charge that the tax cuts will be "unfunded". The efficiency savings will be used to repay money borrowed to get the country through the recession.
Labour hopes that its Whitehall cuts programme will also restrict David Cameron's room for manoeuvre on cutting government spending.
The Tory leader this week announced he would balance the books by seeking cuts across the whole of the public sector.
Ms Cooper said today that Labour was determined not to cut back on essential investment in the recession, but made clear that efficiencies could be found.
"Public services must deliver good value for money. Taxpayers have a right to know that their money is being well spent and is delivering results," she said.
"At a time when families across the country are feeling the pressure, they want be assured that the public sector too is doing its bit and cutting out waste."
Reader views (4)
As a former civil servant, I believe firmly that at least half, and probably much more, of the activities of central and local governtment officials and of quangos is unnecessary and often counter-productive. This is where big savings could and should be made. Whether politicians of any persuasion have the guts to make them is of course another matter.
- Richard, London, London. UK, 20/11/2008 17:24
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Tvette is clearly right. What a shame the Tories have changed their mind about supporting our economic recovery
- Keith Price, Luton, England, 20/11/2008 17:00
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Promises slip off Labour Minister's well oiled tongues like melting snow flakes - never to be heard of again in the form they were issued. The wake of the good ship "Nu Labour UK" is littered with broken promises, lies, innuendo and perhaps even crime. It would seem the recent opinion of Lord Bingham the former Lord Chief Justice of this realm about the illegality of the Iraq War is being shaded by other current news items. However the great British electorate should weigh his words and opinion very carefully. As of course they should those of all politicians.
- Robert El-Cid,, Hull, East Yorks.,, 20/11/2008 15:39
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Labour will never drive through savings in the Civil Service - they are too entrenched in the culture of waste that pervades in SW1. The country needs a new government to enact real change, which will be far wider than sacking a few IT consultants.
- Nobby Clark, Perth, Scotland, 20/11/2008 11:47
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