PM’S deficit boast is misleading, says Tory
DAVID Cameron is ‘misleading’ the public by bragging about having slashed the nation’s budget deficit, a former Conservative Cabinet minister said yesterday.
John Redwood said the boast – repeated in the PM’s New Year message – risked fooling people into thinking that the nation’s debt was coming under control at a time when borrowing is still running at more than £100billion a year, because many voters did not know the difference between the debt and the deficit.
It came as business leaders warned the economy was in danger of reaching a ‘point of no return’ unless ministers slashed red tape and fast-tracked infrastructure projects to boost growth.
And Labour warned that the Government was on course to miss the target set by former chancellor Alistair Darling to halve the deficit – the amount by which the Government’s expenditure exceeds its revenue – by next year.
Mr Redwood, who was an economic adviser to Mr Cameron in opposition, has persistently called for deeper cuts to both taxes and spending in order to boost the economy.
Ministers now routinely trot out the statistic that they have cut the huge deficit left by Labour by a quarter. While this is accurate, Mr Redwood said it could ‘mislead’ people into thinking the national debt is falling, when it is still rising fast.
‘Polling shows that many think there have been big spending cuts in the UK and that the debt is now falling,’ he said.
‘The truth is all too different. The UK is still running a deficit of over £100billion a year.
‘Current public spending has been increased by this Government. That means that the UK state is still adding to our debts by more than £100billion again this year, or by nearly £1,700 for every man, woman and child in the country.
‘ Meanwhile total state debt exceeds £1,000billion, excluding the state banks’ debts, Private Finance Initiatives, Public Private Partnerships and various pension items. That’s nearly £17,000 per person of debt already racked up. All these debts have to be repaid one day.
‘This generation is building up debt to live beyond our means, in the hope that our children will come along and be able to pay it back, or be able to refinance it at sensible interest rates.’
Yesterday, John Longworth, director general of the British Chambers of Commerce, said dramatic ‘once-in-a-century’ measures were needed to head off the threat of terminal decline, adding: ‘Support those businesses that are looking to venture into new markets by improving access to finance and reducing red tape, and focus on the businessmen and women of the future. Otherwise it could be a case of too little, much too late.’
A Treasury spokesman insisted the economic programme was ‘on the right track’, with more than a million jobs created since 2010. He added the Chancellor had outlined a growth package, including tax cuts for 24million basic-rate payers.