Osborne takes on Brown on spending
Gordon Brown’s attempt to “spend his way out of a recession” will only lead to massive debt, shadow chancellor George Osborne has said.
Mr Osborne launched a sustained attack on the prime minister in a series of media interviews this morning, followed by a keynote speech at the London School of Economics.
The Tories want to replace “heavy public spending” with council and business tax freezes as a means of stimulating the economy.
“We left the old Keynesian world behind when we adopted a fundamentally different approach,” Mr Osborne said.
“This approach learned from the failures of big state solutions.”
Mr Osborne argued that in increased government spending would result in more borrowing, and that tax cuts are a preferable alternative.
But some analysts believe both policies will require further government borrowing.
“Let the Bank of England do its job, by cutting interest rates, and offer targeted help by freezing the council tax, but also keeping people in work by, for example, cutting payroll taxes for small businesses,” Mr Osborne said.
“And don’t end up in a position where, because you have spent beyond control, borrowed without limit, you have saddled this economy with so much debt, that we spend a decade trying to get out from under the mountain of debt the government has left us with.”
The speech marks a new attempt by the Tories to take a strong position on the financial crisis, which has seen the party scrambling for a coherent and popular narrative.
Labour’s poll ratings, on the other hand, have shown signs of sustained improvement.
Angela Eagle, Labour’s Exchequer secretary, said: “George Osborne has again shown today that the Tories do not have a coherent answer to the global financial turmoil.
“The Tories remain totally confused on borrowing: first calling for borrowing to fall, then they said it was right to rise, now George Osborne says he wants a limit but cannot say what that limit would be.”
Liberal Democrat economics spokesman Vince Cable said: “George Osborne is clearly way out of his depth.
“His arguments on how to get us out of recession are entirely incoherent.
“Throughout the economic crisis George Osborne has consistently shown poor judgement, from opposing the nationalisation of Northern Rock, to advocating continued short selling and supporting further deregulation of the City.”
