The budget yellow box: Lib Dems lay out alternative fiscal plan in Commons
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Version 0 of 1. Danny Alexander, the Liberal Democrat chief secretary to the Treasury, has taken the unprecedented step of standing at the Commons dispatch box to set out an alternative fiscal plan to George Osborne’s budget. The Lib Dem proposals would allow the next government to reach balance on the current account by 2017-18, and impose higher tax rises and slower cuts in spending than those set out by the Conservatives. The plan also allows for spending to rise faster than the Tories propose between 2017-18 and 2019-2020. Alexander was warned by the Speaker not to abuse the position of the dispatch box to make a party political statement, and Labour accused him of farcically trying to extricate himself from the coalition after endorsing George Osborne’s cuts for four years. Fewer than 20 Liberal Democrats were present in the chamber, with no Tory minister and two Tory backbenchers. The Liberal Democrats admitted the Commons statement, supported by the civil service, was a constitutional innovation, but said it was legitimate for the party to agree with the Tories about specific budget measures, while disagreeing about fiscal plans into the next parliament. Lib Dem spending plans have political importance because they will form a central part of any post-election negotiations with the main parties. Alexander told the Commons that his plan “will deliver on his party’s commitment to balance the books in a fair way. A plan that borrows less than Labour, cuts less than the Conservatives, and enables our country to see light at the end of the tunnel. Not a rollercoaster ride, but a steady path back to prosperity.” Alexander’s plans will see balance on the current account achieved in 2017-18, but spending rise faster than the Tories propose in the remainder of the parliament. It also takes a more relaxed approach to capital spending than the Tories. Alexander said, in common with the Tories, that there needed to be £30bn of cuts in the two years to 2017-18 to reach current account balance. He set out a path to balance through £12bn in departmental cuts, £6bn in higher taxes, £6bn from the proceeds from clamping down on corporate tax evasion and £3.5bn in welfare cuts. The Tories have proposed reaching the same point through no tax rises, £12bn in welfare cuts and £5bn in corporate tax evasion revenues. The higher spending after 2017-18 under the Liberal Democrat plan would leave total government spending in 2019-20 at £833bn, representing an extra £25bn in 2017-18, followed in the two successive years by £36bn more and then £40bn more than the plans set out by George Osborne on Wednesday. Borrowing would be £23.8bn higher in 2019-20 than set out by the chancellor. The Liberal Democrats’ consolidation in the next parliament comes 55.5% from spending cuts and 44.6% from tax rises, a shift by the party towards tax rises as opposed to spending cuts. The Lib Dem tax rises would not include increase in income tax, VAT or national insurance. The alternative fiscal plan would require an extra £1bn in interest payments due to higher borrowing through the parliament. Alexander said: “The fiscal forecast published by the chancellor yesterday would, according to the OBR, return government consumption – the effective spending power of the state – back to the level last seen in 1964. “But the era of Cathy Come Home is not my vision for the future of Britain.” Alexander also used his Commons statement to outline plans to clamp down on tax evasion. Shadow Treasury chief secretary Chris Leslie said the Liberal Democrats could not fool the public that theywere veering away from the Conservatives after four years in alliance. |