Rival chancellors agree on cuts but clash on taxes

The three men who would be chancellor after the next election clashed tonight over how quickly the public deficit should be paid off, taxation policy and regulation of banking. But they all agreed that big cuts in public spending would be needed whoever was elected.

Viewers of the Channel 4 debate Ask the Chancellors who took part in our interactive vote decided that Liberal Democrat spokesman Vince Cable came out top, with support for the Chancellor Alistair Darling and his Shadow George Osborne.

You are spending nearly £30 billion over a Parliament and you can’t identify the credible way with which you can pay for that. Alistair Darling

The debate, chaired by Krishnan Guru-Murthy, featured questions from the studio audience on areas such as tax, spending, pensions and banking reform.

Osborne was put on the defensive early on when the other two participants ganged up on him over this morning’s announcement that the Conservatives would 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.”

The chancellor’s main theme of the evening 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 Krishnan asked the three men whether public spending would have to be cut more deeply than under Margaret Thatcher – as Darling said recently – all three agreed.

When you have a debt problem like this you need to get down to dealing with it. George Osborne

Consensus calls
The debate was generally good-natured, with some jockeying over the merits of cross-party consensus. 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 evening, 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”.

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 contnue to do so in the future.

A Labour government got us into this mess … 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. Vince Cable

Visitors to the website were invited to vote througout 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.

Ask the Chancellors