Darling: Time and again, Labour called it right on the economy, the Tories called it wrong

April 28, 2010 11:55 am

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DarlingBy Alex Smith / @alexsmith1982

Speaking in Edinburgh this morning, Alistair Darling has given a strong speech, highlighting the danger posed by the Tories’ lack of judgement on economic policy.

Darling said:

“The record shows that I was right about the severity of the problems the global recovery was facing. But right as well, that if we made the correct judgements, our economy would start growing again at the end of last year. As the latest growth figures show, we are continuing to pull out of recession. The latest unemployment figures, while still rising as expected, are half a million below what was forecast. Repossessions almost half the level they were in the recession of the early nineties. Business failures running at a third. None of this happened by accident. It was because of deliberate choices made by this Labour Government.”

Throughout the speech, Darling details how, “on measure after measure”, Labour “called it right”, while the Tories “called it wrong”.

The full speech can be read below:

“It has not, I admit, been an easy time to be Chancellor – here in the UK or anywhere in the world.

Over the last three years, there has been a global storm of unprecedented ferocity, which threatened the entire financial system and world economy.

I didn’t relish having to warn, in August 2008, that we were heading into the deepest recession for over 60 years.

It has been tough, too, knowing that the judgements Gordon and I made, the decisions taken, would have a direct impact on businesses, on families, on jobs and incomes.

Get them right and we had the chance of stopping the economy, here at home and internationally, sliding to disaster.

Get them wrong and the cost would be paid by businesses and families right across our country.

The record shows that I was right about the severity of the problems the global recovery was facing.

But right as well, that if we made the correct judgements, our economy would start growing again at the end of last year.

As the latest growth figures show, we are continuing to pull out of recession.

The latest unemployment figures, while still rising as expected, are half a million below what was forecast.

Repossessions almost half the level they were in the recession of the early nineties. Business failures running at a third.

None of this happened by accident. It was because of deliberate choices made by this Labour Government.

Decisions followed by other countries as they, too, battled to stop recession turning into outright depression.

So I want to talk today about the judgement calls we made and decisions we took to guide our country through this global turmoil and how the Tories opposed us every step of the way.

I want to talk as well about the equally crucial choices our country now faces to secure, rather than threaten, our continued recovery and the risks of choking off the growth vital to create jobs and reduce our debt and borrowing.

For the choices to be made, choices which this election will determine, are just as important as any made over the last couple of years.

Our economy remains balanced between recession and recovery. Continued recovery is not a given. It depends on making the right decisions now and in the future.

And it is judgement which is the issue at the election.

I have no doubt that David Cameron and George Osborne are well-intentioned.

My concern is not over their ambitions. It is over their judgement – shown time and time again in this recession to be badly flawed.

At every stage, they have misunderstood the causes of the crisis, underestimated the need for action, and opposed the measures to limit its impact.

In opposition, this is embarrassing. In government, it would be disastrous. Not for them, but for everyone who lives in this country.

This election is not about my job or Gordon’s.

It is about the jobs and homes across the country put at risk if we had gone down the path the Conservatives were urging – and the risks if we follow their misguided directions now.

For when Northern Rock first ran into trouble, their advice was to let the market take its course and for the bank to fail.

The Tories did not look at the facts or the dangers. They were driven instead by ideology and their deep-rooted belief that government should always do less.

George Osborne said he was “not in favour of nationalisation, full stop”.

We made a different judgement. We recognised it would not be the bankers who would pay the price but the many thousands who saved with them.

We understood, too, that stepping aside and letting a bank fail – as the Tories wanted – would undermine confidence in our financial system.

Banks unable to meet demands from depositors for their cash. Firms unable to get the money to pay their staff.

And yesterday another voice was added to those saying the Tories’ got their judgement badly wrong during the financial crisis.

Ken Clarke admitted we were right to nationalise Northern Rock and George Osborne and David Cameron were wrong to oppose it.

So we stepped in to rescue Northern Rock. We took the same decisive action to intervene over Royal Bank of Scotland and Lloyds/HBOS.

Decisions again criticised by the Tories but followed by Governments of all colours around the world.

We can see the results today.

Northern Rock and RBS are rebuilding. Lloyds is back trading profitably.

The value of our bank shareholdings are now some £5 billion more than their cost to the tax-payer.

Together with the fees already paid by the banks in return for tax-payers’ support, we will recoup every penny of the bail-outs – and more

And when we sell bank shares that will allow us to pay down debt.

But even more importantly, the decision we made to support the banking system was an essential pre-condition for the recovery now underway.

Without it – if we had listened to the Tories – I believe our economy would still be deep in recession.

Without the international action Gordon helped shape and lead, I believe the global economy would not now be again growing strongly.

We called it right. They called it wrong.

As the financial crisis and loss of confidence fed into the wider economy, we also took the decision to step in to help families and businesses.

It wasn’t an easy decision. It was again a judgement call.

And again it was a decision that the Conservatives opposed. As the financial crisis turned into the deepest global recession since the 1930s, they alone claimed we should do nothing to support the economy.

Well, not quite alone: the Lib-Dems first agreed with them – condemning the use of public spending to support the economy – then changed their mind.

And before he recanted, Vince Cable also claimed that using the Bank of England to support our economy belonged to the “Robert Mugabe school of economics.”

We know he’s a nifty mover. But facing both ways at once is hard for even the best dancer.

I was already facing Boy George. I now had to contend with Karma Chameleon as well.

On measure after measure, the Tories demanded we step aside and leave businesses and families to cope on their own.

The Tories opposed the extra funding that allowed us to give struggling companies more time to meet their tax bills.

They attacked the car scrappage scheme which helped keep a crucial industry afloat and retained skills vital for our manufacturing sector.

They opposed the VAT cut which gave families extra income and put in billions of pounds into the economy to help jump start the recovery.

And they opposed extra help for those who had lost their jobs to stay in their homes.

Nor, when it came to jobs, had the Tories learnt anything from their disastrous handling of the recessions of the 80s and the 90s.

Mistakes which turned temporary job loss into permanent unemployment for hundreds of thousands of people.

So they opposed our extra £5 billion support to help people get back into work quickly and improve skills.

Every job lost is a tragedy for families and a blow to our economy.

But because of the judgement we made and the support we offered, the claimant count is now lower than expected.

And around half the level it reached in both the Tory recessions of the early eighties and nineties.

If we had sat back as the Tories did in the last two recessions – and wanted to do this time – we would have expected four times as many jobs to be lost.

So that’s the difference our decisions made. But if the Tories had been calling the shots, it would have been a very different picture.

1.7 million more jobs lost. Twice as many homes repossessed. Nearly three times as many businesses going bust.

A banking system in crisis. A global recession turning into a long depression here in the UK.

Borrowing and debt not lower but higher as businesses and people stopped earning and paying taxes.

Don’t anyone tell you that it doesn’t make a difference who is in government.

I make no apologies for spending time talkin g about what happened over the last couple of years.

Because it also exposes the impact that poor judgement and unfair, reckless and ruinous Tory policies will have on our economy and country in the future.

For just as the Tories have got it badly wrong about the recession, they are getting it badly wrong now about the recovery.

All the more reason to deal urgently and decisively with the problems in Greece. That’s why it is so important for the IMF and the Euro-group to resolve these problems now. There is no time to lose.

For while our economy is on the right path, we are not yet out of the woods.

In the last few weeks, international experts like the OECD have warned of the fragility of the global recovery and the dangers of withdrawing support too quickly.

And they are right to urge caution. Recovery cannot be taken for granted. Germany’s economic growth has already stalled. Italy has slipped back into recession.

We have set out how we will bring down borrowing and debt including through fair tax rises. But we will continue to support the economy, families and business to ensure the recovery is secure and strong.

But the Tories want to withdraw support now, to take billions of pounds out of the economy just when it is needed to continue stimulating growth.

You can’t accuse them of inconsistency. This time last year, before the recession reached its worst, they demanded big spending cuts.

Now when recovery is just beginning, they want to take money out of the economy as well.

No matter what the challenge, the Tory answer is always the same. Governments should stand aside and public spending should be slashed.

It would be cuts that threaten the front-line services on which millions of families depend.

Cuts, too, which would sabotage our ambition to build a strong economy for our future.

We have set out an ambitious programme to ensure th e genius and drive which makes this country so special can flourish, creating jobs and spreading prosperity to every corner.

It is not, of course, the job of Government to pick winners, design world-beating products or create new jobs.

It is the role of Government to give our world-leading scientists, engineers and companies the strong platform they need to succeed.

Investing in education, key skills and science. Providing the right infrastructure.

Supporting world-beating R&D in advanced manufacturing and the green industries of the future.

Encouraging innovation and start-up companies through targeted tax relief and investment support.

Support Governments across the world are providing. Support the Tories want to remove.

Under their plans, spending on education and skills is under threat.

Vital projects to keep people and goods moving like Crossrail are at risk.

The funding to roll-out super-fas t broadband across the country would not be provided

As the world economy starts to grow, we need to be ready to seize the opportunities that comes with it.

But that again won’t happen by chance.

As we have shown over the last two years, the choices Governments make can limit the length and severity of a recession.

They will also decide the speed and strength of our recovery and whether the benefits will be spread across the country.

Spending will inevitably be tighter in the years ahead as we bring borrowing down.

But that makes it more important, not less, that the right decisions are taken.

We have set out clearly how we will halve borrowing over the next four years in a way which will not threaten the recovery and protect the improvements in our front-line services we are determined to provide.

In contrast, the Tories are threatening the guarantees we offer on health, schools and policing.

And at the same time, they they are promising to spend more on priorities that are just wrong for our country.

They have made tax promises amounting to £38bn without saying how they can pay for them. That’s reckless and irresponsible.

Cutting inheritance tax to hand the richest 3000 families £200,000 each while taking away the Child Trust Fund from families with below average incomes.

Handing money to a minority of married couples while offering nothing to widows left looking after their children – and nothing for married couples where both partners choose to work.

The Tories boast that some married couples will gain £3 a week.

But they hide the fact that the bill will be met by taking away over £500 from middle income families by cutting their child tax credits.

They are happy to talk about their list of giveaway sweeteners for the election.

But they won’t tell people the price tag attached. The £1500 bill for eve ry family if they vote Conservative.

At a time when cutting the deficit is essential, to make giveaways you can’t afford is irresponsible.

And the Liberal Democrats are no better – a £17 billion giveaway -that relies on funding from hugely optimistic claims about avoidance measures.

When I said the recession would be the most serious for sixty years, I was criticised by the Tories.

When I said if we took action, we would see growth again by the end of the year, I was attacked by the Tories.

But when you look at what happened, events have proved my judgements right.

And I can tell you, I’ve looked at what the Tories say and the judgement they’ve shown, and they are dangerous.

* Risking the recovery

* Unfunded tax giveaways

* More pressure on public finances – a huge risk to us all

It’s not their youth and inexperience that worries me about the Tory leadership.

It is their values, their instincts and their lack of judgement.

It’s why I feel so strongly of the risks ahead; the damage that can be done by following Tory policies which are misguided, unfair and put ideology above our country’s needs.

Policies which will put at risk the recovery the country has worked so hard to deliver.

Policies which will threaten your job, your living standards and the public services on which millions of families depend.

Throughout the recession, the Tories got it consistently wrong.

On May 6, we must stop them making the same mistakes with the recovery.

Our future depends on it.”

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