By Lucy Phillips
18 October 2010
Labour’s new shadow chancellor set out his alternative deficit reduction plan today, claiming only half of the coalition’s planned spending cuts are needed.
Alan Johnson said cuts to departmental spending would have average at 8% under Labour’s plans, compared with 14% under the government.
Speaking to an audience in the City of London ahead of Wednesday’s Comprehensive Spending Review, Johnson formally endorsed Labour’s ‘balanced’ position to halve the deficit over four years, in contrast to the coalition’s plan to eliminate the entire structural deficit over the same period. He claimed the government’s approach was equivalent to a £27bn additional cut to public services.
Johnson called on the government to ‘re-profile’ its plan to take into account the current fragile economic circumstances.
‘The coalition’s austerity strategy amounts to a huge risk with growth and jobs. By going hell for leather on cuts, at a time when the private sector cannot be expected to pick up the slack, they run the risk of leaving us with higher unemployment, deprived communities and a diminished society,’ he said.
Johnson said ‘targeted tax changes’ should play a greater part in the deficit reduction, pledging to support any government moves that did not affect low and middle income families. This included the rise in Capital Gains Tax announced in June’s Emergency Budget.
There should also be a greater contribution from the banks, he said.
Reiterating his promise ‘not to oppose every cut’, Johnson agreed with the coalition that savings from welfare reform must be part of the plan, and that benefit cheats should be stopped.
But he condemned the government’s recent removal of Child Benefit from higher-rate taxpayers, announced at the Conservative Party conference, claiming there was ‘nothing fair’ about the move.
Johnson branded as ‘nonsense’ assertions that the scale of the deficit was a result of wasteful spending by Labour before the financial crisis.
