14 March 2011
Labour has called on the government to cut VAT on petrol and introduce a fresh tax on bank bonuses in next week’s Budget.
Labour leader Ed Miliband and shadow chancellor Ed Balls set out their alternative economic plan at a press conference this morning, accusing the coalition of cutting too fast and too deep, ‘choking off growth’ and increasing unemployment.
They urged Chancellor George Osborne to lower the VAT on petrol, reducing it back to 17.5% from the 20% imposed in January. They will be tabling a motion on the matter in the Commons on Wednesday.
Osborne should also repeat the bonus tax levied on banks last year by the Labour government, the pair said ahead of the March 23 Budget. This would raise £2bn for the Exchequer.
Miliband said: ‘Our alternative isn’t just about the pace of deficit reduction, it’s also about having a real plan for growth.
‘We are under no illusions that at this stage this government will abandon their deficit reduction plan – they are too dug in for that.
‘But at least they should take some steps to deal with faltering growth in our economy.’
Under Labour’s plans, some of the extra money from the bonus tax would pay for the VAT cut on fuel, helping hard-pressed families with rising costs of living, while the rest could be used to create 110,000 jobs.
Some £1.2bn would fund the construction of more than 25,000 homes across the country, generating more than 20,000 jobs; £600m would be used to establish a fund to boost youth unemployment, creating 90,000 jobs for young people; and £200m could be added to the government’s Regional Growth Fund, which they claimed was ‘over-subscribed several times over’.
Balls said: ‘Since George Osborne abandoned Labour’s plan to halve the deficit over four years in favour of a reckless experiment to cut too deep and too fast, the economy has taken a turn for the worse.
‘Unemployment is now rising again and the recovery ground to a halt at the end of last year. We need a plan that puts jobs and growth first because getting more people into work and the economy strongly again is the best way to get the deficit down’.
But the Conservatives questioned the credibility of Labour’s plans. They said all of Balls’ pledges over recent weeks meant he had already spent the proposed proceeds from the bank levy ten times over.
Tory MP Matthew Hancock said: ‘[Balls is] promising unfunded tax cuts with money he's already spent. No wonder Labour couldn't live within their means, and their message now is they would max out the nation's credit card all over again.’
