The Labour Leader challenges Cameron's endless, and wrong, assertion that the Labour Government was to blame for the Global economic collapse.
This article was first published in the Times on Thursday, 6th January.
" This week you will have heard some heated exchanges between Labour and the Conservative-led Government over the decision to impose a permanent increase in VAT.
"Behind all the sound and fury, however, it is important to remember this is not just an argument about whether VAT is fair. A bigger debate has begun over whether the Government’s approach is the right way to support jobs and get back to strong growth. David Cameron and George Osborne are making the wrong judgements about our economy. In their politically motivated desire to propagate a myth about the last Labour Government, they are ignoring the real lessons of the global financial crisis.
"Politics is a rough trade and if all I was doing was to complain about such misrepresentation, I should expect little sympathy from readers of The Times. Instead, my concern is that a great deceit designed to damage Labour has led to profoundly misguided and dangerous economic decisions that I fear will cause deep damage to Britain’s future.
"What is this deceit? It is that the deficit was caused by chronic overspending rather than a global financial crisis that resulted in recession and a calamitous collapse in tax revenues. One pound in every five of corporation tax disappeared in 2009-10. Their deceit ignores the evidence from around the world that a global credit crunch caused deficits to rise on every continent. The US and Japan face deficits of the same scale and for the same reason.
"Their deceit seeks to rewrite history, airbrushing out the fact that Britain’s debt at the outset of this crisis was the second-lowest in the G7; lower than it was under the Tories in 1997. And it forgets that neither of the two parties now in government called for lower spending at the time. It is this deceit about the past that leads Mr Cameron and Mr Osborne to make the wrong judgements now. They want to say that Britain’s difficulties were caused by chronic overspending and, therefore, the right response is simply to cut the deficit as far and as fast as possible.
"That, rather than simply debating myths from the past, is what matters today. The real debate is not about whether or not to cut the deficit: Labour has been clear that we need to reduce borrowing from levels that are far too high. Where we differ is how that is best done in the world as we find it, not as we would like it to be.
"Mr Osborne is gambling on a rapid rebalancing of the economy through a steep rise in VAT and swift cuts to public spending. He is staking much on those steps being matched by increased investment, driven by low interest rates and an export boom on the back of a devalued currency.
"We hope that his gamble pays off. But we take a different view about the balance of risks. We recognise that no other developed country is taking such an extreme approach. That is why we say Mr Osborne is going too far and too fast on the deficit. This is not a political slogan, it is our economic judgement.
"The big question is whether the Tory approach will leave us with low growth and squeezed living standards in the short term, as well as deeper economic problems in the long term.
"On growth, our concern is that conditions are not right for the rapid rebalancing that the Chancellor is hoping for and that Britain will be left without the jobs and growth we need. He is fond of referring to the experience of Canada in the 1990s, where public sector retrenchment was matched by an export-fuelled private sector boom. But exports need a market. Canada had a booming US economy. But the UK’s main export market is Europe where growth remains sluggish.
"New investment relies on business confidence and available credit. But with interest rates at record lows there is little evidence of pent-up demand for investment. And the banks, having just emerged from the worst financial crisis for generations, are not providing the credit that businesses need to grow.
"Rising prices, pushed higher still by the VAT rise, will squeeze living standards for those on middle and low incomes, threatening consumer confidence and undermining demand. Some might shrug and say that low growth and squeezed family budgets are a price worth paying. But we know from Britain’s past how this approach stores up problems for the future.
"Mr Osborne’s failure to have any credible growth strategy means that we will not address the real lesson of the crisis: that we were too reliant on financial services and did not have a broad enough industrial base. His approach risks prolonged unemployment, wasting the talents of future generations, while a strategy based on VAT risks stoking inflation, especially when oil prices are high.
"For all the political noise, these differences of judgement are at the heart of the real choice Britain faces. It is not true we oppose every cut. Labour is clear that spending is not the answer to every problem. But neither is it true that Labour is to blame for the deficit or that the deficit-reduction programme being pursued by this Government is necessary and fair.
"Because this Conservative-led Government is trying to deceive people about the past, it is making the wrong judgements about the future. By misleading you, Mr Cameron and Mr Osborne are leading our country in the wrong direction."
No comments:
Post a Comment