Page last updated at 10:39 GMT, Friday, 26 March 2010

Byrne confirms Labour cuts 'tougher than Thatcher's'


Liam Byrne confirms cuts will be worse than Thatcher era

Chief secretary to the Treasury Liam Byrne has confirmed a re-elected Labour government would make bigger public spending cuts than Margaret Thatcher.

Asked on the BBC's Question Time if cuts would be "tougher and deeper" than those of the 1980s, Mr Byrne replied: "Yes they will."

"But we will do it in a way that protects our priorities," he added, citing health, education and policing.

The Tories have said they would cut spending more quickly than Labour.

Chancellor Alistair Darling was asked on Thursday if he accepted that deficit-reduction plans outlined in the Budget would require bigger cuts than those made under Mrs Thatcher.

Mr Darling replied: "They will be deeper and tougher... where we make the precise comparison, I think, is secondary to the fact that there is an acknowledgement that these reductions will be tough".

He added: "There may be things that we don't do, that we cut in the future. We will have to decide what precisely we can do within the [spending] envelope I set.

"What is non-negotiable is that borrowing is coming down by half over a four-year period."

'Back on its feet'

Agreeing with the chancellor, Mr Byrne said: "We will do one thing first which is we will not cut spending too soon before our economy is back on its feet and growing again.

"We have said that we will protect spending on schools and the health service and police, and yes, that does mean there will be difficult decisions elsewhere and we can't flinch from those decisions.

"We have got to front up to them.

"But we don't think the process of cutting back on public spending should start now before our economy is back on its feet."

If unemployment comes down as we think it might there will be a windfall from lower benefit bills of £14bn
Liam Byrne
Chief Secretary to the Treasury

Asked whether public sector cuts would put jobs at risk, Mr Byrne said: "We think it's the private sector that creates jobs, not just the public sector, which is why we've said we want to give tax breaks to small business."

The independent think tank, the Institute for Fiscal Studies (IFS), said on Thursday that areas like transport, defence, housing and universities could be facing a real-terms reduction of 25% to their budgets by 2014/15.

But Mr Byrne said: "We don't think they can know that yet because they don't know how fast unemployment is going to come down.

"If unemployment comes down as we think it might there will be a windfall from lower benefit bills of £14bn.

"Now other costs may go up, like debt interest, but the point is you cannot know right now what that outlook will look like."

'Blown apart'

The IFS said total public spending increased by an average of 1.1% a year in real terms over the Thatcher era, at a time when inflation was higher than it is today.

This is almost three times the increase of 0.4% a year that Mr Darling has pencilled in for the next Parliament.

The IFS went on to observe that "if we subtract spending on welfare and debt interest then we estimate that the rest of public spending would be cut in real terms by an average of 1.4% a year compared to an average increase of 0.7% in the Thatcher era".

Shadow chancellor George Osborne said: "Gordon Brown is basing his election campaign on the claim that Labour can go on spending. That is completely blown apart by Alistair Darling's admission, under pressure, that Labour's own Budget numbers imply deep cuts."

Lib Dem leader Nick Clegg said the government was being "utterly dishonest".

"Yesterday we had a Budget in complete denial about the difficult decisions ahead. Today AD frightens people up and down the country by saying the cuts are going to be even worse than under Margaret Thatcher."

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