Osborne calls for action
"We need action and action now".
So said the Shadow Chancellor George Osborne in a speech today designed to counter Labour's repeated assertion that the Conservatives are the "do nothing" party.
The action that should be taken, he argues, should focus on monetary policy (measures to get the banks lending again), not fiscal policy (cuts in taxes and higher spending).
To make his case he seizes on the criticisms of the government's VAT cut from the bosses of Next and M&S. Pointing out that Alistair Darling promised that "by encouraging spending, [the VAT cut] will help stimulate growth", Osborne says "Now it has been in place for more than a month I think the country is entitled to ask: what spending and what growth?" A tad cheeky since no policy known to man can turn recession into growth in the space of a few weeks, as Norman Lamont argued only yesterday.
Osborne goes on to state that the government's policies haven't merely been ineffective, they have been counter-productive as "they have alarmed the public about our soaring national debt, alerted them to the tax rises needed to pay for it if Labour is re-elected, and so undermined confidence in the future"
So what is the Tory alternative ? Action, says Osborne, in three areas:
- revising the terms of the bank recapitalisation;
- introducing a National Loan Guarantee Scheme;
- new liquidity support from the Bank of England for new business lending.
Expect a counter-blast from Gordon Brown next week when he meets the head of the US Federal Reserve, Ben Bernanke, and will no doubt hail Obama's plan for a massive fiscal stimulus. The Prime Minister will later fly to Berlin to meet Angela Merkel - who by then is expected to have abandoned her doubts about a stimulus package and announced one worth almost £50 billion.
Osborne's pre-emptive reply today is that they can afford it whereas we can't. His hope is that he can turn the political debate this year from one on whether government should act into one on how they should act.