Alistair Darling urges George Osborne to 'act now' on economy

 
Alistair Darling and George Osborne Mr Darling said Mr Osborne and the Bank of England had "given up" on growth

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Chancellor George Osborne must change course on the economy now or cause "immeasurable damage", his predecessor Alistair Darling has warned.

In an open letter, published in the Sunday People, the Labour MP claims both Mr Osborne and the Bank of England have "given up on any plan for growth".

He suggests more spending on homes, the railways and a third Heathrow runway.

The government says that Mr Darling presided over the UK's biggest post-war deficit as chancellor.

It also says he failed to regulate the banks effectively.

Mr Darling's open letter to his Tory successor calls for "urgent action to promote growth".

Start Quote

Most parts of the country are short of homes so we could do with tens of thousands more”

End Quote Alistair Darling

"Your policies since 2010 simply haven't worked, you need another plan - call it plan B, call it whatever you like," he adds.

"But unless you do something now it will be years before we recover."

Mr Darling says low interest rates mean it is "just the time to kick-start some major spending projects".

These should include replacing ageing power stations, investment in rail and Heathrow's third runway.

"And George, you must build more houses - it helped get Britain out of depression in the 1930s," he adds.

"Most parts of the country are short of homes so we could do with tens of thousands more."

And he says the Bank of England should halt its programme of quantitative easing - the process by which more money is pumped into the economy - until it is clear that banks are passing more cash on to businesses through increased lending.

"This money is simply not finding its way out of the bank vaults. So the Bank of England should use its powers to make it less attractive for banks to sit on money," he says.

Unhelpful timing

Mr Darling ends the letter by quoting advice from economist Maynard Keynes that "when the facts change, you change your mind".

"The facts have changed, George. And you must change your mind," Mr Darling adds.

BBC political correspondent Iain Watson said Mr Darling's tone was less partisan than that of shadow chancellor Ed Balls.

For example, Mr Darling says he is sure "Labour is keen to work with you on social care issues and welfare reform".

But with Mr Osborne under pressure from some of his own backbenchers, the timing of the intervention was not helpful, our correspondent added.

 

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  • rate this
    +3

    Comment number 729.

    Well the system has not worked for years, it is down to fraud, cheats and criminals that we are now in this mess. Both parties are to blame, so no point in trying to blame one or the other. Maybe we need totake a chance and at the next election we should vote for a non mainstream party. New ideas are what we need.

  • rate this
    +8

    Comment number 409.

    In any economy, if producers pay workers just enough to buy what's produced the system's sustainable (ignore pensions for simplicty). If that equation is not maintained then we have boom and bust. The idea that growth somehow solves this is false, growth's a boom leading to the bust. How many times does it take to learn that lesson?

  • rate this
    +25

    Comment number 405.

    We want the banks to lend, but we also want them to hold more capital in case the EU explodes.

    We want people to borrow but they have no confidence or job security.

    We want businesses to borrow but they won't take the risk with all this uncertainty.

    We want to export but we can't because who we export to are also broke.

    It's still a world problem it needs a world wide solution.

  • rate this
    +12

    Comment number 372.

    How much more is it going to take before the Tories admit that their policies aren't working?

    So far they have tried laying the blame for the current recession on everyone and everything (including us the electorate) except themselves and their policies.

    Don’t print more money and give it to banks, use it to build social housing, and other infrastructure, THAT WOULD stimulate the economy.

  • rate this
    +8

    Comment number 356.

    In the quest for a new improved system you need to acknowledge the main faults of the current one. So we can ignore external factors such as low global economic growth.

    I think Britain's worst inherent problem is that its investment capital has been internationalised and has, quite simply, gone elsewhere.

    Few other countries have been quite so generous.

 

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