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Labour MPs rubbish Darling’s ‘optimistic’ recovery forecasts
Joe Murphy06.05.09
Alistair Darling's confident forecast of a return to economic growth next year was blasted as “optimistic” in a cross-party report today.
The stinging verdict of the Treasury Select Committee was all the more shocking because it came from a group dominated by Labour MPs and chaired by Gordon Brown loyalist John McFall.
The committee warned: “We question the decision to assume that the economy will begin registering positive growth as early as the fourth quarter of 2009, and that the economy will register such strong growth in 2011.”
In other highlights of the report, the committee:
● Dismissed Lord Mandelson's £300 million “scrappage” scheme to increase sales of new cars, estimating that it would result in just 12,600 extra British car sales. This would cost taxpayers £23,809 for each British-built car sold, although the committee said nearly 90,000 extra sales of imported cars would contain British-made components.
● Warned of “considerable uncertainties” about the extra revenue from the 50p top rate of income tax on people earning more than £150,000.
● Expressed “dismay” that despite repeated warnings the Treasury was failing “by a significant margin” to meet targets to reduce child poverty.
● Doubted the stamp duty holiday for some
homebuyers would have “any marked effect”.
In a 51-page special report on last month's Budget, the committee said it was “very concerned about the state of the public finances”, following
Mr Darling's plan to borrow £703 billion over five years.
“It is now critically important that the public, and crucially the markets, believe that the Chancellor is working to an adequate plan to restore the public finances to good health,” it said.
Mr Darling forecast a growth rate of 3.5 per cent by 2011 but the committee was concerned he “might be too optimistic”. If so, it said, the borrowing would go on for years longer.
The committee said Mr Darling had to consider spending cuts and tax increases as well as higher borrowing to help balance the books when he delivers his autumn pre-Budget report. It said “uncomfortable choices” had to be taken.
In a worrying warning, it said that the gilt markets could lose faith in the Government and “the cost of financing that debt could climb to perilous levels”.
Liberal Democrat treasury spokesman Vince Cable said: “The only person who believes that Britain will soon return to rapid growth is the Chancellor himself.”
Colette Marshall, of Save the Children, said: “Given that the Government seems to have given up on its target to halve child poverty by 2010, we are at least encouraged that the Treasury Select Committee has reacted with dismay at the lack of action in the recent budget.”
Reader views (7)
A bed time story - "In a land far away, there was a very nice chap who said he could see some Green Shoots....!" So we all followed that nice man along the Yellow Brick Road. This nice man was called Gordon. I have pet rabbit called Gordon.
Another nice man called Alistair said that he too could see.... "Green Shoots!" But he did not have a bunny rabbit called Gordon......! My Da says that we must trust the nice man called Alistair, as one day he will be very important in the land!
- Uncle Vanya, East Anglia Area UK
Oh! Dear!! Keith Price really does live on Planet X.
Still, I suppose the Labour Party will be grateful for the one and only vote they get in their favour on 4th June 2009.
- Reuben Camara, Morecambe UK
Keith Price, always in step with Brown and Darling, who are way out of step from everyone else, and the facts.
Darling wishes to protect his voter base, the public sector at the cost of the majority. Bring on the revolution (election) if he/they are convinced they are right. If wrong then be sacked with loss of all benefits. That is a forlorn hope as they wish to continue receiving their unmerited salary and pension contributions, whilst supping mightily on the expenses trough!
- Hugh, Middx
Good for you Keith Price - and you'll see that at least five other people in the UK agree with you that the government is doing such a great job when we vote in a month's time in the local elections. See you then.
- Daveb, Manchester
To Keith Price, what are the shoots of success you see, that nobody not even the experts can see? Do you realise income tax will have to rise after the next election by 10p in the pound to pay for Labour's gross mishandling of the economy. Do you realise that people will not be able to retire at 65 but 70 at the earliest to pay for Labour's mishandling of the economy, do you realise that we will still be paying back the mountain of debt they have racked up for the next 15 years minimum. Come on Keith what are the shoots you talk about, please don't say housing because the Hlifax today shot that hope down with a 1.7% fall in April alone.
- Richard K, Nottingham
Most of us labour constituents accept that what darling and the PM are doing is already showing the shoots of success, especially as President Obama is copying Britain's measures
- Keith Price, Luton, England
If your own side rubbish what you have done then there is really no hope for any of us mere plebs, is there!!!!
- Al, Kingstown UK
