David Cameron’s speech: Danny Alexander responds

Here’s what Danny has to say (and interesting to note that he’s being deployed as the Lib Dem person to attack the other parties, not Nick Clegg or Vince Cable):

This speech demonstrates the huge gulf between the sunny rhetoric of David Cameron and the grim reality of Tory policy.

The Tories claim to be honest on spending, but their proposals barely scratch the surface.

They claim they can fix the country’s finances, but their plans are economically illiterate. Cutting spending now would plunge us back into recession.

They claim to care about the poorest, but will only slash taxes for millionaires.

They expect to have the keys to Downing Street handed to them, but at a time of crisis they have the wrong solutions and the wrong priorities.

And here is some of the substance behind the point about the gap between Cameron’s rhetoric and the Conservative reality:

DEFICIT

David Cameron: “We must pay down this deficit. The longer we leave it, the worse it will get.”

Reality: Six unfunded pledges leave a black hole of £53bn in Tory plans according to Treasury estimates. By contrast, Cameron’s recent ‘salad’ speech on cutting costs set out just £120m of savings.

Opinion on cutting now is stacked against Cameron and Osborne:

  • Paul Krugman (Economics Nobel Laureate): “Renouncing a fiscal stimulus when private spending is contracting is strange. Governments have very few tools at their disposal, and Cameron wants to not use them.” [asked if our recession will be much worse if we follow Cameron’s advice] “Yes. For sure.” (Independent, 30/01/09)
  • David Blanchflower (former member of the Bank of England’s MPC): “It is not hard to work out that, with unemployment rising fast, it isn’t the right time to cut public sector jobs, wages or public spending for that matter. These are automatic stabilisers. Mr Osborne, I really don’t know which economists are advising you on this brilliant strategy to increase unemployment…” (New Statesman, 24/09/09)
  • Dominique Strauss-Kahn (MD of the IMF): “Unwinding the stimulus too soon runs a real risk of derailing the recovery, with potentially significant implications for growth and unemployment […] Exit policies should only be launched once there are clear indications that the recovery has taken hold and that unemployment is set to decline.” (Times, 4/09/09)
  • Richard Lambert (CBI Director General): “One thing is clear. Rapid moves to cut spending or raise taxes would be a big mistake – the economy is still much too weak for strong medicine.” (Speech to CBI summit, 16/06/09)
  • Angela Merkel: “We must do everything to avoid repeating what the Americans did at the end of the 30s – namely to wreck the small upturn then visible by retrenching too soon.” (Telegraph, 28/09/09)

TAXES

Cameron: “Today I want us to show even more anger about 96 per cent tax rates on the poorest.”

Reality: When the Conservatives left government in 1997 the number of people facing a tax rate of over 90% was 130,000, more than double what it is now in 2009-10 (60,000) (Source)

There are no Tory plans to reduce marginal tax rates for the least well off; the only concrete plans they have are inheritance tax proposals which would benefit the richest 3000 people in the country. By contrast, the Liberal Democrats’ pledge to raise the income tax threshold to £10,000 would lift 4m of the lowest earners out of paying income tax altogether.

EXPENSES

Cameron: “We paid back the money that shouldn’t have been claimed.”

Reality: George Osborne made £55,000 from ‘flipping’ his second home, avoiding Capital Gains Tax. Cameron and Osborne have ignored calls from the Liberal Democrats that it should be paid back.

EU TRANSPARENCY

Cameron: “If there is one political institution that needs decentralisation, transparency, and accountability, it is the EU.”

Reality: Cameron has refused to release the text of the letter he wrote to Czech President Vaclav Klaus as part of a desperate attempt to stall the Lisbon Treaty.

PENSIONS

Cameron: “Because of the difficult choice we’ve made on the pension age we’ll be able not just to deal with our debt but to raise the basic state pension in line with earnings.”

Reality: With an average weekly pension of around £100 and less than 400,000 men turning 65 each year, raising the pension age for men from 65 to 66 will only reduce state expenditure on pensions by £2bn per year.

The Tories’ claim that they will save £13bn a year through their pensions reform is based on a macroeconomic model produced by the National Institute for Economic and Social Research (NIESR), which estimates the long-term effect of adding a year to working lives for the whole population. £13bn is not the annual public expenditure saving in the first year and is subject to high margin of uncertainty.

The Tories have also refused to specify in which year they would reintroduce the earnings link – if they leave it to 2015, as has been reported in some sources, then 3m pensioners will have died, one in five of them in poverty.

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9 Comments

  • “Cutting spending now would plunge us back into recession.”

    Could you please remind me which leader pledged to make “savage” spending cuts? No wait, I think I know the anser…

  • Tom Papworth 9th Oct '09 - 12:58pm

    “their plans are economically illiterate”

    Danny has clearly been sitting at Viince’s knee.

  • Greetings Phil, if you wish to defend this piece of breath takign hypocrisy please do so. It is absurd of the Lib Dems to criticise the Tories for planning to cut spending when, gosh darnit, they plan to do so too. Savage cuts no less. I have no problem with criticism of the Tory party, I just dislike the sanctimonious tone and hypocrisy of the response.

    Also that’s £100 billion over twenty years isn’t it? Given the scale of the current crisis £2 billion a year isn’t going to be savage enough enough, so what else will be cut? Oh and will the money being saved from scrapping ID cards help fill the black hole in the budget (like Vince says) or pay for 10,000 new police officers (like Chris says? I’m having difficulty deciding which is Lib Dem policy. So it seems are they.

  • Apologies for the typo, the criticisms are breath taking hypocrisy, not breath takign hypocrisy.

  • Have noticed more typos, should be £5 billion and there are two many enoughs. I got back from conference yesterday and am very, very tired. Bed soon I think.

  • Bill le Breton 10th Oct '09 - 9:14am

    To borrow from the famous EM Forster title: Two cheers for Mr Alexander.

    He (and therefore the high command) have woken up to the fact that majoring on the need for cuts throughout our conference was the wrong and derelict tactic.

    Politics is played in black and white.

    Cameron and Osborne have occupied the black squares since this time a year ago when they opposed the nationalisation of Northern Rock and when they began their tactical use of the very powerful emotional ‘debt fear’ located deep in all of us as individuals – the C21st version of playing the Orange Card, to mix my games metaphors.

    Mandelson and Darling pushed Brown off the white square into the grey scale of indecisive political stances. This has meant that for days now the great position of playing ‘white’ on our own on the key political issue has been vacant. It was the disaster of Bournemouth to huddle onto the black square (in Cameron’s top pocket) with talk of the need for savage cuts. We just warmed the audience for Cameron, like a third rate comedian before the main act.

    That, Mark, is why they had to use Alexander for this statement because our leader and the man more people still (just) want to see as Chancellor than any other were compromised.

    It is tempting to ask, “Where the hell are we now Leader?”, but the more important task is for him to say how he and Cable have had a long look at the latest economic data on aggregate demand, money supply etc and come to the conclusion that the present situation is so bad that a National Programme for Economic Recovery etc. is needed immediately and that Tory economic progress will plunge the country into the worst slump since the 1930’s with mass unemployment, destruction of economic capacity on an unimaginable scale, social misery and community strife that will tear our country apart.

    By taking the position as the only opposition to the Tories we can align our political strategy to winning at least 100 seats from a busted Labour party and strengthen our chances of retaining those of our MPs who are fending off the Tory challenge.

    With six months of campaigning on these lines it is possible to drive Labour into third place. That should be our aim. It is now or never.

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