The Tory economic plan isn’t working, but it doesn’t have to be this way – my Daily Mirror article

Yesterday we found out just how badly David Cameron and George Osborne’s gamble with our economy has backfired. After stalling for more than a year, our economy has now gone into reverse.

Hard-pressed families, pensioners and businesses know that it’s hurting, but on jobs, growth and the deficit the evidence is now clear: it’s just not working.

We’ve all heard the excuses. First they blamed the snow. Then they blamed the Royal Wedding. Now they’re blaming the eurozone.

But the UK’s recovery was choked off well before the recent crisis on the continent. Growth in the euro area was actually revised up last year, while our growth was revised down. And it’s only exports to other countries that stopped our economy going into recession last year.

Cameron and Osborne have only themselves to blame for what has happened on their watch.

It was their decision to cut spending and raise taxes too far and too fast which squeezed the life out of the economy.

Of course, after the biggest global financial crisis in a century, fixing the economy and getting the deficit down was never going to be easy for any country or any government. It would have meant difficult decisions on tax, spending and pay if Labour had won the election.

But when the Tories and Lib Dems got into Downing Street they boasted that cutting spending and raising taxes such as VAT much further and faster would make the economy better, not worse.

But what has happened? Since the Chancellor’s spending review in the autumn of 2010 our economy has grown by just 0.3% – a far cry from the 3.0% the Government expected. It actually shrank at the end of last year.

They said cutting public sector jobs would lead to more private sector jobs. But there are now more people out of work than at any time since 1994 – the last time the Tories were in power. And more than one million young people are unemployed.

They claimed we would be “all in this together”. But women are being hit harder than men and the Government’s last econo-mic statement took three times more from families with children than banks.

And the Government told us all the pain would be worthwhile because their plan would get rid of the deficit by the next election. But the Chancellor is now set to borrow a staggering £158billion more than he planned – wasteful extra borrowing to pay for his economic failure and a bigger dole bill.

It doesn’t have to be this way. And it’s not too late for the Government to change course. They should listen to Labour and the independent International Monetary Fund and get a plan for jobs and growth. Because unless we get our economy moving and people off the dole and into work we’ll never get the deficit down.

That’s why Labour has set out a five-point plan for jobs – including a temporary cut in VAT to help our struggling high streets and give an average £450 boost for a couple with children, tax breaks for small firms taking on extra workers and a tax on bankers’ bonuses to fund 100,000 jobs for young people.

Our jobs plan would be a fairer and better way to get the deficit down – investing in jobs for the future rather than borrow-ing to keep more and more people on the dole.

But I have to be honest with Mirror readers. If the Tories plough on regardless, the next Labour government will inherit a really difficult situation. Of course we would be making different choices now. And we will make tough but different choices in the future. But after five years with Cameron and Osborne at the helm we don’t know how bad the economy will be.

That’s why Ed Miliband and I have said Labour cannot make any promises now – more than three years before the next election – to reverse spending cuts or tax rises.

We will have to see where we are in 2015 because, unlike Nick Clegg, we won’t make promises we can’t keep. We’ll have a big job to sort out the deficit, clear up Osborne’s economic mess and deliver social justice in tougher times.

This Government’s economic failure also means tough times are set to continue now. And in tough times the priority must be protecting jobs rather than pay rises – which is why Labour cannot oppose the Government’s decision to cap public sector pay rises at a 1% average. But I’ve told the Chancellor it must be done fairly – tougher on those at the top to give bigger pay rises to those on lower incomes.

If Cameron and Osborne refuse to change course we cannot duck the reality – the next Labour government will have to pick up the pieces and clear up their mess. But as long as this out-of-touch Government gets it wrong, Ed Miliband and I will continue to say so loud and clear.

The Tories’ economic plan is hurting, but it isn’t working. There is a fairer and better Labour way.

George Osborne must act to kick-start our stalling recovery and he needs to do so right now.

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Posted January 26th, 2012 by Ed