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Tories attack bid to reduce deficit

Source PA News

Updated on 20 January 2010

The Conservatives have stepped up their attack on the Government's plans to balance the nation's books.

The Fiscal Responsibility Bill, which enshrines in law the Government's aim of halving the massive £178 billion budget deficit within four years, is "conceptually flawed", shadow Treasury minister David Gauke said.

Ministers were warned the legislation would put a "straitjacket" on a future government's ability to cope with a recession by constraining public borrowing.

The Tories instead called for the Bill to be used to tackle the structural element of the deficit.

At the Bill's committee stage in the Commons, Mr Gauke said: "It is pretty clear that this is a pretty lousy Bill, it is conceptually flawed.

"It is worth noting that nobody from the Labour backbenches spoke in favour of the Bill during the course of the entire second reading debate. The Government appears to have set itself a target that doesn't really get to the heart of the issue, which is the structural deficit."

He reiterated the Tory view that the deficit should be cut faster than under the Government's plans.

At second reading debate earlier this month Chancellor Alistair Darling said cutting the UK's borrowing burden from its present 12.6% of GDP to 5.5% by 2013-14 was a "reasonable rate" and anything faster could damage the economy.

But Mr Gauke said: "We believe that the structural deficit must be brought down. We think a significant part of that structural deficit must be brought down very quickly. We want to go further and faster than the Government does as far as bringing down the deficit and we would move earlier."

Liberal Democrat spokesman Jeremy Browne said the Bill was "inherently flawed" and imposed a "straitjacket" which would prevent increased state borrowing as a way of coping with a downturn.

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