Lord Mandelson, the Business Secretary, today said that aggressive Tory plans to slash the country’s budget deficit were “potentially dangerous nonsense” which risked derailing the economic recovery.
Amid speculation that the peer has been unhappy with Alistair Darling’s Pre-Budget Report last month, Lord Mandelson hailed the Chancellor’s plan to halve the deficit within four years as “credible ... bold and tough”.
Reining in the £178 billion annual deficit will require a combination of spending reductions, tax increases and economic growth, he added.
The peer explained that fostering growth was “the best antidote to debt, both in the short and long term”.
He added: “It has a clear objective — to halve the deficit by 2013-14. It is bold and tough: the equivalent of something approaching an £80 billion turnaround in the public finances.
“This is the sharpest reduction in the budget deficit for any G7 country. This is vital for credibility, vital for attracting inward investment.”
The peer’s comments came as the influential Treasury Select Committee published a report urging the Chancellor to provide more detail about how the Government plans to halve Britain’s £178 billion budget deficit within four years.
The report represents the verdict of the 14-member cross party committee on last month’s PBR.
John McFall, the chairman of the committee, said: “We consider clarity, even if it is clarity about the degree of uncertainty surrounding the forecasts, as essential to strengthening this crucial credibility.”
The Treasury Select Committee report also pointed to comments from all of the expert witnesses whom the committee questioned last month on the PBR, who criticised the Chancellor for failing to provide enough detailed explanation about cutting the deficit.
The world’s three main credit rating agencies have agreed to wait until the next Parliament before deciding whether to cut Britain’s credit rating. The agencies are anxious that the size of Britain’s deficit could affect the Treasury’s ability to meet its debt obligations. Such a downgrade would be disastrous for Britain because it would significantly increase the cost of borrowing new money.
Mr McFall also urged the Treasury Select Committee — and whomever sits on it — in the next Parliament to launch an inquiry into the effectiveness of the new banker bonus tax, announced in the PBR.
The report said that banks should continue to be pushed to rebuild their balance sheets in the wake of the credit crisis, by beefing up their capital reserves.
Tomorrow Lord Mandelson and the Prime Minister will unveil details of their plans to help foster economic growth. The proposals will set out how the Government will actively intervene to invest in industry, create high-tech jobs and turn scientific development and the shift to a low-carbon economy into business opportunities.
From Times Online
Suzy Jagger, Politics & Business Correspondent
Reining in the £178 billion annual deficit will require a combination of spending reductions, tax increases and economic growth, he added.
The peer explained that fostering growth was “the best antidote to debt, both in the short and long term”.
“This is the sharpest reduction in the budget deficit for any G7 country. This is vital for credibility, vital for attracting inward investment.”
The peer’s comments came as the influential Treasury Select Committee published a report urging the Chancellor to provide more detail about how the Government plans to halve Britain’s £178 billion budget deficit within four years.
The report represents the verdict of the 14-member cross party committee on last month’s PBR.
John McFall, the chairman of the committee, said: “We consider clarity, even if it is clarity about the degree of uncertainty surrounding the forecasts, as essential to strengthening this crucial credibility.”
The Treasury Select Committee report also pointed to comments from all of the expert witnesses whom the committee questioned last month on the PBR, who criticised the Chancellor for failing to provide enough detailed explanation about cutting the deficit.
The world’s three main credit rating agencies have agreed to wait until the next Parliament before deciding whether to cut Britain’s credit rating. The agencies are anxious that the size of Britain’s deficit could affect the Treasury’s ability to meet its debt obligations. Such a downgrade would be disastrous for Britain because it would significantly increase the cost of borrowing new money.
Mr McFall also urged the Treasury Select Committee — and whomever sits on it — in the next Parliament to launch an inquiry into the effectiveness of the new banker bonus tax, announced in the PBR.
The report said that banks should continue to be pushed to rebuild their balance sheets in the wake of the credit crisis, by beefing up their capital reserves.
Tomorrow Lord Mandelson and the Prime Minister will unveil details of their plans to help foster economic growth. The proposals will set out how the Government will actively intervene to invest in industry, create high-tech jobs and turn scientific development and the shift to a low-carbon economy into business opportunities.
From Times Online
Suzy Jagger, Politics & Business Correspondent
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