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Chancellors clash over deficit and tax plans

By Channel 4 News

Updated on 30 March 2010

One point eight million television views tune in to watch the three men vying to be chancellor after the next election clash over the public deficit, taxation policy and spending cuts.

Ask the Chancellors

Viewers of the Channel 4 debate Ask the Chancellors who voted in an interactive poll for Channel 4 News decided that Liberal Democrat spokesman Vince Cable narrowly came out top, although there was also strong support for the Chancellor Alistair Darling and his shadow George Osborne.

The debate, chaired by Krishnan Guru-Murthy, featured questions from the studio audience on areas such as tax, spending, pensions and how to fund future social care.

Figures released this morning showed the Ask the Chancellors programme was watched by 1.8m viewers.

Osborne was put on the defensive early on when the other two participants ganged up on him over his pledge to cancel part of the government's planned rise in national insurance contributions.   

Darling accused him of being "irresponsible" and "taking a terrible risk with the economy", saying: "You are spending nearly £30 billion over a Parliament and you can't identify the credible way with which you can pay for that."

His point was echoed by Cable, who called Osborne's proposal "utterly incredible".  

Pointing out that the shadow chancellor had last week denounced government projections on efficiency savings as "complete fiction", he added:  "You are now using these fictional savings to finance your tax cut. That is utterly incredible."

But Osborne said that the government's planned tax increase was "the wrong priority when this country needs to recover, when we need jobs, when people's incomes are being squeezed."

Click on the image to see a larger version

More on Channel 4's Ask the Chancellors debate
- Ask the Chancellors: economists’ reactions
- Ask the Chancellors: internet reaction
- Ask the Chancellors: audience reaction
- Ask the Chancellors: live blog
- Ask the Chancellors: FactCheck
- Gary Gibbon: Cable man of the match
- Gary Gibbon: Cable wins, but nobody ganged up on him

The chancellor's main theme during the debate was judgment - defending his own, and accusing his Conservative opponent of lacking it at every opportunity.

In his opening statement, he warned that Tory plans for "premature" spending cuts risked "tipping us back into recession".

Asked why the government should start cutting the deficit right away, Osborne said it came down to common sense - "when you have a debt problem like this you need to get down to dealing with it".

But when the three were asked whether public spending would have to be cut more deeply than under Margaret Thatcher - as Darling said recently - they all agreed.

Analysis: Professor John Van Reenen from London School of Economics
I was mainly struck by the main similarities between the three parties: the basic refrain was "we're broke, it's miserable and it's going to get worse - get used to it".

Vince Cable was the most depressingly realistic and emerged as more of an honest broker because of it. The other parties still largely sidestepped the issues of exactly which spending areas would feel the axe swinging.

To give the main parties their due, even the Lib Dems only showed a bit of leg on the spending cuts – a trident not being renewed here and tax credits scrapped for the better off there.

Everyone signed up to how big the fiscal position was and the need to reduce the deficit, the priority of the NHS, the scandal of bank bonuses (although not much clarity over what to do about it), cutting back excessive public pensions (but no mention of the necessity to rapidly increase the retirement age), etc.

Cable called for a cross-party approach to dealing with the financial crisis. But Darling turned the issue around to Osborne's judgement once more,  saying "there is actually an international consensus, it's just not one you share, George".

Cable got the biggest applause of the programme, with forthright criticism of the banks, and ended his pitch with a more trenchant attack on the Conservatives than his Labour opposite number.

"A Labour government got us into this mess", he said, "and the Tories presided over two big recessions.. and now want another term to get their noses in the trough and reward their rich backers".

Osborne lambasted the Labour government for leaving the country after 13 years "one of the weakest economies in Europe and the last out of recession", and said that the Conservatives under David Cameron had "the ideas, energy and vision to make the economy work for everyone".

Analysis: Nigel Stanley from the Trades Union Congress
While it was an entertaining exchange, it was as interesting to note what was not said, rather than what was.

There was little real debate about whether tax rises or spending cuts should do most to plug the structural deficit.

None of them came out for Robin Hood transaction taxes as a progressive indirect tax that can provide real revenue even when introduced unilaterally.

No-one really wanted to set out where the cuts will hit, and we had diversionary tactics such as talking about public sector pensions for the few very well paid public sector staff that won't make any real contribution to reducing the deficit.

Wrapping up his case, Darling said the government had made the right judgment calls over the last two to three years with regard to the economy and the banking sector, and would continue to do so in the future.

Visitors to the website were invited to vote throughout the debate for the candidate who performed best.

Cable won the vote with 36 per cent to 32 per cent each for Darling and Osborne.

The clock was stopped at 2100 precisely - an initial putting Darling one point ahead was taken at two seconds past, but the recount put them level.

Analysis: Andrew Simms from the New Economics Foundation
None fully sees the big win-win opportunity for major, productive, counter-cyclical public investment in a green new deal.

It's the one vision that could create jobs, and build a national housing, energy, food and transport infrastructure fit to flourish in a world of energy shortages and climate change.

So, my vote for next chancellor goes to Adair Turner, former head of the Confederation of British Industry, chair of the official Committee on Climate Change and now leading the Financial Services Authoriry.

He knows the market is often invisibly underwritten by the public realm, sees through the City's attempts to defend the indefensible and understands the need and benefits of the great economic transition we have to make.

The debate was the first between the main candidates for Chancellor since 1997, when then Shadow chancellor Gordon Brown went head to head with incumbent Ken Clarke and the Lib Dem spokesman Malcolm Bruce.

Questions were selected from those put forward by members of the audience, with each of the speakers given a chance to reply before the debate was opened out.

But unlike the leaders' debates to be staged between now and the general election, the audience were not required to sit the debate out in silence.

A Yougov/Channel 4 poll carried out on the eve of the debate found that Mr Cable was the popular choice for Chancellor among voters of all parties, with 26 per cent - almost half of those expressing a preference - against 17 per cent for Mr Darling and 13 per cent for Mr Osborne.

But the poll found support for Conservative policy on the deficit. Asked whether the next government should hold off cutting the deficit this year "as it could put the recovery at risk" - current government policy, backed by the Lib Dems - only 26 per cent agreed.

But twice as many, 52 per cent, backed the alternative view - that of the Conservatives - that the next government should start cutting the deficit this year as "the longer they leave it, the worse it will get".

Channel 4 News chancellor poll
- Click here to download the poll results (.xls)

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