Daily Mirror article: today we find out that the government’s reckless gamble with our economy has backfired

Today is judgement day for David Cameron and George Osborne.

It is the day when we will find out that their reckless gamble with our economy has backfired. Families, pensioners, young people and businesses are already paying the price.

A year and a half ago the new Tory-led government told the country that cutting spending and raising taxes further and faster would help the economy, create private sector jobs and get our deficit down. Many people believed and hoped that it would work, even if it hurt.

Mirror readers certainly know that the plan is hurting: the price of everything is going up and up, one million young people can’t find work, unemployment is at its highest level for 17 years and the economy has now flatlined for a year.

But today’s judgement from the government’s independent budget watchdog will tell us whether or not it’s working to fix the economy and get the deficit down.

I’m afraid the signs aren’t good. The OECD said yesterday that our economy will continue to flatline, or worse, well into next year. And the government is already set to borrow £46 billion more than they planned – the bill for the economic failure and extra unemployment they have created. If that figure rises even further today – and we see billions more borrowing than expected – it will be a huge blow to the government’s credibility.

And after blaming the snow and even the Royal Wedding, the Chancellor’s latest excuse is to blame the rest of Europe.

Of course if the eurozone continues failing to sort out their problems, it will have an impact here. But Britain’s economic recovery was choked off over a year ago – well before this recent crisis. And out of 27 countries in the European Union, only Greece, Portugal and Cyprus have grown more slowly than us in the last year.

Like every other country we’ve got to get our deficit down and that means tough decisions on tax and spending cuts. Everyone is agreed on that. The question is not if you do it, but how you do it. As Labour and others warned a year ago, if you try and cut spending and raise taxes too far and too fast you risk making things worse not better.

If you throw hundreds of thousands of people on the dole – claiming benefits rather than paying taxes – you just end up wasting billions of pounds on a rising benefits bill. That doesn’t make economic sense.

Ed Miliband and I are determined to show there is a better way – to get our economy moving again, create jobs now, build a better economy for the future and so get the deficit down.

We know that isn’t an easy task. Labour has a big job of work to do to regain people’s trust on the economy. The biggest global financial crisis since the 1930s happened on the last Labour government’s watch. It’s only a year since the British people decided to give a new government a chance.

And while Labour did many good things in government – getting NHS waiting lists down, improving school standards and cutting crime – we made some mistakes too. We didn’t spend every pound of public money well. We should have adopted tougher controls on migration from Eastern Europe. And we weren’t tough enough on the banks here in Britain and around the world.

I also know that many people still hope and think that the government’s plan will work. But when the evidence is piling up that the government’s plan is not working, the country can’t afford to have out of touch Ministers sitting on their hands and saying that we’re a ‘safe haven’.

Businesses are crying out for a plan for growth. Even Tory MPs are now saying Labour is right to call for tax cuts to help hard-pressed families. And the independent International Monetary Fund said earlier this year that if things got worse the government should change course.

The time to change course is now. Labour’s five point plan for jobs would not fix things overnight – but it is a better way to help hard-pressed families, create jobs and support small businesses.

And by getting our economy moving again, it will also help to get the deficit down – and do so in a fair way. Because it cannot be right to borrow tens of billions of pounds to keep people on the dole, when we could be investing to get people back to work.

George Osborne needs to get his head out of the sand. Instead of excuses or waiting for things to get even worse, we need action and a new plan. And we need it now.

Labour’s five point plan for jobs and growth

1. Jobs for young people

One in five young people are now out of work – a record high. If we don’t do something we risk creating another lost generation like we saw in the 1980s. That’s why Labour says we need a £2 billion tax on bank bonuses to fund 100,000 jobs for young people – which they would be required to take-up – and build 25,000 more affordable homes.

2. Get building again

Let’s genuinely bring forward long-term investment projects – like the hundreds of new school buildings cruelly cancelled last year – to get construction workers back to work and strengthen our economy for the future. It’s what businesses want and it’s good for our economy too.

3. A tax cut for families and pensioners

January’s VAT rise has been a disaster – sucking money out of the economy just at the wrong time and hitting families hard. We should reverse it now for a temporary period: a £450 boost for a couple with children and around a £275 a year for a pensioner couple. It would give the economy a shot in the arm and help our struggling high streets too.

4. Help for home owners

A one year cut in VAT to 5% on home improvements, repairs and maintenance will help homeowners who can’t afford to move and help struggling small businesses too. It will create jobs and clamp down on the black market economy. This plan is backed by organisations from the National Trust to the Federation of Small Businesses.

5. Support for small businesses

Small firms are the life-blood of our economy. A one year national insurance tax break for every small firm which takes on extra workers would help small businesses to grow and create the jobs we desperately need. And it could be paid for using almost £1 billion of money left over from one of the government’s failed schemes.

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Posted November 29th, 2011 by Ed's team