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Monday, January 11, 2010

Too early for savage cuts say Liberal Democrats

The Liberal Democrats sought to distance themselves last night from the Labour-Tory competition to see who was prepared to cut the most from public spending.

Responding to comments by David Cameron on the BBC's Andrew Marr Show that he remained committed to starting to cut the £178bn deficit this year and intended to reduce it by more than Labour's plan to bring it down to £96bn by 2013-14, Vince Cable said: "Rushing into expenditure cuts in 2010-11 would carry a greater risk of precipitating a deeper recession."

He also suggested he did not agree with Cameron's claim that spending should be cut more deeply than the government proposes. Cable told MPs: "My party takes the view that the government's eight-year plan, with a four-year halving of the deficit, is a reasonable starting point.

"My judgment is that we will probably discover that it is not enough, but we have to start somewhere and it is a reasonable working assumption."

The Guardian says that in a statement today, Cable tried to give his party some room for manoeuvre, even though he again condemned the Tory leader's plan to cut the deficit earlier and deeper than Labour. He said: "This tired repetition of the Tory line leads us into a very undesirable debate in which the speed and the extent of deficit reduction is being decided not on the basis of how the economy is looking and performing, but on the basis of political soundbites and dogma.

"The time to start cutting the budget deficit and its speed must be decided by a series of objective tests which include the rate of recovery, the level of unemployment, the availability of credit to businesses and the government's ability to borrow in international markets on good terms.

"The sooner we get this debate on to a rational footing, the better the prospects for Britain's recovery."

Cable has sided with the CBI in saying that the policy of deficit cutting known as fiscal consolidation is unlikely to start this year, and has said it will be a near-miracle if growth reaches the levels the Treasury is forecasting for 2011-12, and beyond. He pointed out that Treasury growth forecasts are dependent on exports, a relatively small part of the economy. He also says that a new government would have to give more details of a deficit ­reduction plan to give it greater credibility with the markets.

Nick Clegg is also set to give a major speech today in which he will say: "People know that the country faces one of the greatest crises in our public finances in generations. They know that difficult decisions must be taken," he will say. "So they want politicians to spell out their priorities, spell out the choices, rather than live in denial about the dilemmas we face."

He will say the Lib Dems have gone further than any other party in spelling out how to cut the deficit: a 10% levy on banks' profits as long as the banks are underwritten by the taxpayer; no to the like-for-like replacement of Trident; an end to tax credits for families on above-average incomes; cancelling the government's baby bonds; and a £400 cap on all public sector pay increases.

He will add: "Shopping lists of pledges don't wash any more. The politics of plenty are over. Voters will have no time for implausible promises. But neither are they interested in relentless prophecies of doom and despair. The party that will win the argument this year is the party which finds a way of marrying credibility and hope, restraint and generosity, discipline and compassion."

Once more the Liberal Democrats have positioned themselves as the party of economic competence who understand the importance of maintaining important frontline public services.
That'll be on the fence then.
On the contrary there is a very clear agenda there.
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