Page last updated at 14:27 GMT, Monday, 1 February 2010

Tories would strangle economic recovery - Mandelson

Lord Mandelson: Tories "would pull the rug from under the recovery"

A Conservative government would "strangle the recovery at birth", Lord Mandelson has said.

The business secretary claimed Tory plans for spending cuts would take £11bn out of the economy this year.

He likened party leader David Cameron and shadow chancellor George Osborne to "Laurel and Hardy", who had "not done the work needed" for government.

The Tories said they had consistently called for a start to be made on cutting spending this year.

They insisted their position had not changed, pointing out that £1bn could be saved immediately after the election by axing child tax credits for better-off families and cutting child trust funds.

The Lib Dems said the debate over the deficit must be driven by the state of the economy not political rhetoric.

With the public spending deficit expected to grow to £178bn this year, it is set to be one of the key battlegrounds at the coming general election.

The economy came out of recession during the final quarter of 2009, but grew by just 0.1%, a lower than expected rate.

'Illiteracy'

On Sunday, Mr Cameron said there would be cuts within the year if the Conservatives gained power, but added: "We're not talking about swingeing cuts. We're talking about making a start in reducing our deficit."

While the party would show that it was "serious" in tackling the deficit, this would be done in a considered way, he insisted.

Labour said the opposition leader was now backtracking, having recently called for the government's 2010 spending plans to be "torn up".

We are very clear that a newly-elected government has to send a credible signal about its plans to eliminate the great bulk of that fiscal deficit over the lifetime of the parliament and to start immediately in 2010
Philip Hammond, Shadow Chief Secretary to the Treasury

At a Labour event in central London, Lord Mandelson accused the Tories of economic "illiteracy" and appearing "confused".

He said: "This is the paradox of government thrift. We learned about it in the 1930s. It seems to be totally lost on the Conservative Party."

Lord Mandelson said the Tories would take "£11bn out of the economy in the coming financial year.

"That's the equivalent of more than halving the budget of my department... or cutting investment in health or schools."

He added: "The challenge for the Conservative Party is to be clear about its intended plans.

"How much is it planning to take out of this year's spending? So far all we see is disarray."

'Credible signal'

Lord Mandelson added: "Mr Cameron appeared to back down. He appeared to say that the spending cuts would be 'not extensive'. But what does 'not extensive' mean exactly?"

He said: "He said 'we need to make a start, we are not talking about swingeing cuts'... So what's the truth? What's the Tories' policy?"

Lord Mandelson also said: "Quite simply, the Tories would strangle the recovery at birth."

For the Conservatives, shadow chief secretary to the Treasury Philip Hammond said it was the government which was "all over the place" on the issue, with some departments being guaranteed budget increases this year and others facing sharp cuts.

"We are very clear that a newly-elected government has to send a credible signal about its plans to eliminate the great bulk of that fiscal deficit over the lifetime of the parliament and to start immediately in 2010," he said.

"That is what we have always said; that is what we will go on saying."

The Lib Dems argue that the process of tackling the deficit cannot begin until the economy is on a stronger footing and premature spending cuts could push the country back into recession.

"The optimum timing has to be governed by the state of the economy, which is currently very fragile," Treasury spokesman Vince Cable said.

"It is foolish to have political dogma dominating this debate."



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SEE ALSO
No early swingeing cuts - Cameron
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