Chancellor refuses to rule out benefits cuts

30 Mar 10
Chancellor Alistair Darling declined to rule out real-terms cuts to benefits payments this morning after pressure from MPs to explain how he plans to bring down the fiscal deficit
By David Williams

30 March 2010

Chancellor Alistair Darling declined to rule out real-terms cuts to benefits payments this morning after pressure from MPs to explain how he plans to bring down the fiscal deficit.

Giving evidence to the Commons’ Treasury select committee on last week’s Budget, Darling was asked to guarantee that benefit and pension payments would continue to rise in line with inflation.

‘We have got to be conscious of the fact that there are some people in this country living on pretty modest means and it would be wrong to penalise them,’ he said.

But, pressed on whether he would rule out increasing benefits by less than inflation, he would only respond: ‘I have made absolutely no proposal of cutting back – thereby disadvantaging people – at all.’

He emphasised that when inflation – as measured by the retail price index – dipped into negative figures last year, he ‘went to some length to ensure that people on benefits did not lose out’.

Darling also argued the case for public sector investment in large-scale projects such as offshore wind farms and high-speed rail links.

He said a return to 1970s-style interventionism would be a ‘profound mistake’, but argued that the £2bn green investment bank announced in the Budget would be required to ensure essential infrastructure projects were carried out.

The session took place as official figures revealed that the British economy’s recovery from recession was stronger in the final quarter of 2009 than at first thought.

Growth figures were revised up from 0.3% to 0.4%. Darling attributed the growth to the fiscal stimulus he put in place early last year, particularly a temporary cut in VAT from 17.5% to 15%.

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