Davis pledge on tax cuts is madness, says his rival

DAVID Davis was accused of ‘ economic madness’ last night after saying he would borrow to fund massive tax cuts if there was a recession.

The Tory leadership contender, who has set out plans for £38billion worth of tax cuts, insisted he would press ahead even in an economic downturn.

He would borrow money to pay for the cuts, and repay the debt at the end of the slump, he said.

But the idea came under immediate fire from his rival David Cameron and independent economists.

In a clear sign that tempers are fraying, a spokesman for Mr C a m e r o n c a l l e d s u c h a n approach ‘ irresponsible’ and ‘economically illiterate’. He said: ‘ You can’t spend money you haven’t got. It’s economic madness.’ Peter Spencer, economic adviser to the respected independent forecaster, the Ernst & Young Item Club, said: ‘David Davis’s idea is largely discredited. He would come a cropper for all sorts of reasons. That sort of policy tends to push up interest rates.’ Mr Cameron turned up the heat on Mr Davis by warning that the Tories would lose the next election if he became leader.

He said the party faced a clear choice and if it got it wrong, Labour would stay in power for a fourth term.

Both men have previously insisted the Tories could win the next election whoever emerged victorious. But in a speech last night, Mr Cameron asked: ‘ Do we move to the right or fight for the centre ground? Do we stick to our core vote comfort zone, or do we reach out? If we get it wrong, the Blair era stays.’ A senior source in Mr Davis’s camp insisted: ‘ It is clear that David Cameron himself would be Blair Mark II and we won’t end the Blair era by aping Blair.’ Mr Cameron won more support yesterday from former minister Tim Yeo, Alastair Burt, a former Parliamentary aide to Iain Duncan Smith and Michael Howard, and Gerald Howarth, chairman of the Right-wing 92 Group of MPs.

Westminster sources said former leadership contender John Redwood would also endorse him today.