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Osborne defends deficit reduction plans

By Channel 4 News

Updated on 17 August 2010

The Chancellor George Osborne is expected to attack deficit deniers today who will lead Britain to "economic ruin" as he says public spending will be refocused on delivering growth.

George Osborne attacks deficit deniers as he insists public spending will be refocused on delivering economic growth (Reuters)

As the government attempts to tackle Britain's record £155bn deficit the chancellor will say that public spending will be refocused without sacrificing economic growth or making society unfair. 

Hinting at what the public service landscape could look like after autumn's comprehensive spending review, Osborne will suggest the future "is not about how much the government spends but about what the government actually does with the money".

In a speech to city analysts Osborne will also defend plans to reduce the deficit and attack Labour's legacy.

His speech comes as official data released today showed inflation slowed to 3.1 per cent in July - from June's 3.2 per cent - the lowest since February and the eighth consecutive month inflation has exceeded the BoE's 2 per cent target.

Attacking the Deficit Deniers
The Chancellor has chosen to make an important intervention today, writes Channel 4 News Economics Editor Faisal Islam.

It does seem that the Treasury has been a little stung by suggestions that the George Osborne's harsh austerity message has hit consumer and business confidence, like Nick Clegg yesterday who is trying to show a little "light at the end of the tunnel".

He will attack the "Deficit Deniers" that he sees in Labour's leadership campaign. He may hear the echo of some support for this from his predecessor Alistair Darling's speech tonight - and as former city minister Lord Myners has argued: "There's nothing progressive about a deficit".

The chancellor however has yet to prove that the new measures he took in June are indeed better for the poor than for the rich - as the IFS concluded that they were "somewhat regressive".

Osborne's message today: more fairness, less fear. The jury is still out on both matters though.

"We are shaping the economy of the future by promoting a pro-growth agenda," Osborne is expected to say.

"We are shaping the big society of the future by decentralising power and empowering people. We are shaping the public services of the future by reforming the public sector so it delivers value for money. And we are shaping Britain's future role in the world through our review of defence and security."

The speech comes after warning from analysts that Britain could be heading for a double-dip recession. Earlier this week Sir Alan Budd, the outgoing head of the government's tax and spending watchdog, said he was "not confident" the UK would escape a double-dip recession.

Osborne will insist today that the government's spending measures are not a gamble while attacking Labour's plans for £44bn in cuts. The chancellor is expected to tell city analysts at Bloomberg's London offices that Labour's plans were unspecified. 

"What was [Labour's] plan to deliver these cuts? Well, I've searched for it and I can tell you - there was no plan. Out of that £44bn, not a single penny had been allocated to any significant public spending programme.

"To say we must deal with the deficit, but refuse to say how, is simply taking the British people for fools."

He will add: "People are debating these issues up and down the country. Anyone who is serious about tackling the nation's debts needs to come forward with an alternative plan.

"Both those who deny the need to cut the deficit and those who refuse to say how to do it are placing themselves outside of the domestic and international debate.

"And in becoming deficit deniers they are saying that they would set the economy on a road to economic ruin."

The coalition is set to tighten public finances by £113bn by 2014/15, with £30bn from tax measures, £11bn from welfare reforms announced in the budget, £10bn from lower debt interest costs and £61bn in cuts to departmental spending.

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