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Mandelson warns about Tory plans Mandelson warns about Tory plans
(about 3 hours later)
A Conservative government would "strangle the recovery at birth", Lord Mandelson has said.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.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.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 Conservatives have accused Labour of failing to deal with an "albatross of debt". 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.The economy came out of recession during the final quarter of 2009, but grew by just 0.1%, a lower than expected rate.
'Illiteracy''Illiteracy'
The public spending deficit is expected to grow to £178bn this year and is set to be one of the key battlegrounds at the coming general election. 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."
On Sunday, Mr Cameron said there would be cuts within the year if the Conservatives gained power, but these would not be "swingeing". While the party would show that it was "serious" in tackling the deficit, this would be done in a considered way, he insisted.
People want to see a government that is taking decisions on a five-year horizon rather than with this government taking things on a five-week or, some say, even five-minute horizon David Cameron 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".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."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.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.""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.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.""How much is it planning to take out of this year's spending? So far all we see is disarray."
'Serious' '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?"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?"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."Lord Mandelson also said: "Quite simply, the Tories would strangle the recovery at birth."
On Sunday, Mr Cameron said: "Look, if we have an election in May, your year is already under way... we believe, in proving we're serious about getting this deficit down. 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.
"And those who say you're taking money out of the economy, I would say, if you don't do this, even more money could be taken out of the economy in two ways. "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.
"One, because interest rates could go up as they have done in Greece. Secondly, money gets taken out of the economy because there isn't the confidence there and it's confidence we need so badly. "That is what we have always said; that is what we will go on saying."
"People want to see a government that is taking decisions on a five-year horizon rather than with this government taking things on a five-week or, some say, even five-minute horizon." 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."