“Government must think again” – Johnson lays out Labour’s alternative

The Shadow Chancellor Alan Johnson today attacked the Coalition Government’s plan, arguing that it risked jobs and growth, and set out Labour's alternative.

The shadow chancellor Alan Johnson today attacked the coalition government’s deficit reduction plan, arguing that it risked jobs and growth, and set out the Labour party’s approach to halving the deficit in four years as well as raising new taxes on bankers.

Mr Johnson said that the coalition government’s plan to eliminate the deficit in five years was being driven by dogma and that it was “relishing the opportunity” to make cuts to public services. The shadow chancellor outlined Labour’s plan to raise more through taxation – particular via the banks, who Mr Johnson said should be forced to contribute more than the existing £2.4bn banking levy.

Speaking before an audience in the City of London, he suggested that a tax on bonuses, through which Alistair Darling recouped £3.5bn last year, should be maintained alongside increases to the banking levy. Additionally, he said that Labour would support the rise in capital gains tax.

Mr Johnson said:

“Taking a slower, less damaging route as we propose provides a credible plan, securing growth and protecting public services. Requiring a greater contribution from the banks. And tough choices on spending and welfare. So there is another way. The Government must think again.”

Mr Johnson accused the coalition government of resurrecting “Tina” from the Thatcher era, by wrongly arguing that “There Is No Alternative”. Instead, the shadow chancellor outlined that many public sector jobs would be saved by Labour’s alternative plan. New taxation and a slower timetable would mean Labour’s deficit reduction plan would leave £27bn more for public services, which represents eight per cent cuts at departmental level (as opposed to the 14 per cent being proposed by the Coalition).

In addition, Mr Johnson announced that capital spending cuts would be “almost half” the 33 per cent proposed by the coalition – a u-turn on a policy announced by Gordon Brown. He said Labour’s approach of halving the deficit by 2014 could save vital infrastructure projects and the Future Jobs Fund.

He told the audience:

“An approach that is fair. That recognises that growth and jobs are central to our economic strategy – not a side issue. An approach that values our public services, rather than relishing the opportunity to curtail them. That treats the public as intelligent enough to understand that bringing the world economy back from the brink of catastrophe is not the same as paying off a credit card bill.”

17 Responses to ““Government must think again” – Johnson lays out Labour’s alternative”

  1. Paul Kenny

    RT @leftfootfwd: The Shadow Chancellor Alan Johnson today outlined Labour's alternative to the Coalition's proposed spending cuts. //bit.ly/aJtgu9

  2. Andrew Dodgshon

    RT @leftfootfwd: "Government must think again" – Johnson lays out Labour's alternative: //bit.ly/aJtgu9

  3. Deborah Segalini

    RT @leftfootfwd: "Government must think again" – Johnson lays out Labour's alternative: //bit.ly/aJtgu9

  4. Mike Naylor

    ‘Half the deficit in four years’; still waiting to hear how. Cut spending where, increase tax where and how do you promote growth?

  5. Chris

    @Mike Naylor

    “still waiting to hear how. Cut spending where, increase tax where and how do you promote growth?”

    Go read the speech – //bit.ly/bNqi6x

    He states clearly elements of Labour’s plan to cut the deficit. But remember, Labour are not in government they don’t have the civil servants to complete a full shadow CSR.

  6. Bryan Cooper

    The detail at this point in time does not really matter. The undisputable FACT is that the measures being introduced by the current Government are far more dangerous than the deficit itself.
    The Country needs growth. The Country needs Jobs. …The Country needs hope. The Country needs fairness.
    If all the above items exist then Alan Johnson is TOTALLY right, it wil naturally help reduce the deficit. It is right that the Banks/Bankers should make a bigger contribution to getting us out of the crisis that THEY created.
    The best way to get Britain out of ANY crisis, is to allow the British to Work there way out of any crisis. NOT consign millions to the dole, poverty & misery.

  7. Bryan Cooper

    The banks “borrowed”, a litle bit of a benign term. They extorted it, otherwise personal bankruptcy would have hit Sunami proportions. The Tories try to re-write history, (nothing new there then), The Government of the day (Labour), had NO alternative but to bale out these arrogant bankers, who show NO remorse.

  8. Mike Naylor

    Go read the speech – //bit.ly/bNqi6x

    He states clearly elements of Labour’s plan to cut the deficit. But remember, Labour are not in government they don’t have the civil servants to complete a full shadow CSR.

    a; Can you show me the bit where it says which taxes will rise and how the Bankers tax works.
    b; After 13 years in Government a detailed plan does not need civil servants to write it. Can’t even remember any plans during the election, apart from ‘halve the deficit in 4 years’

  9. Chris

    @Mike Naylor

    Yawn, can’t you read? He advocates re-introducing the banker bonus tax, supports the CGT rise, etc, etc.

    Oh please, grow up buddy, to carry out a CSR you need to have an army of civil servants to research the effects of any cuts. When your trying to grow the economy after a massive financial crash do you really think it would have been wise to immediately announce detailed spending cuts. It would have immediately sucked demand out of the economy as both public and private sector workers realised the true extent of the cuts. And where were the tories detailed spending plans? The only party to set out anything like a detailed plan was the LibDems and they changed their minds more quickly, dumping the entire plan in the process, than it took to write the thing.

  10. Mike Naylor

    Still none the wiser about how the deficit will be halved in 4 years

  11. John Woods

    Ed Miliband shows he knows his economics. Anyone can repay a debt if they earn more than they need to repay. The deficit is only 11% of our GDP and yet the Tories claim we are bankrupt and need to demonstrate our willingness to sacrifice ourselves to redeem our credit. Labour need to keep plugging away at the fact that the Tory Manifesto promised to introduce a Tobin Tax on bank transactions. No doubt they will delay this as long as possible but they should not be allowed to get away with it.The banks caused much of the deficit and encouraged much of the over borrowing by households that caused the remainder and should be made to pay for those failures.

  12. Mike Naylor

    Deficit = difference between tax receipts and spending in a year.
    Debt = deficits added up.
    Reduce the deficit, but the debt remains, only larger.

  13. John McArdle

    And screw the disabled!Eh? RE:ALAN JOHNSON-FAIRNESS: “So it’s stuff the disabled! Moral outrage is feigned on taking child benefit money from those on over £44k but an emphatic YES taking £25 a week from disabled people with no hope of a job and then their DLA next! Thank you for showing us your true colours you immoral, spineless NEW LABOUR SCAB!” Signed JOHN!!!

  14. Mike Thomas

    How does doubling the tax component of Labour’s deficit reduction plan compared to the Tory plan actually promote economic growth?

    Or are we back to government creating it out of running up massive debts again from the party that wrecked the economy?

    How much growth will higher interest payments leech out of the economy?

    Hence the deafening silence from political commentators, one wonder no-one was allowed to field questions. It has all the credibility more Mugabean economics.

  15. adrian

    funny, there’s 2.7 million people on incapacity benefits. i’ve met hundreds of them and not one was disabled. i know 2 disabled people and they both work. wouldn’t dream of sitting at home on benefits. what’s going on?

  16. Mr. Sensible

    Mike, Jonson gave an example of increasing tax; increasing the bank levy and keeping the bonus tax.

    And on growth, if you keep things like Building Schools for the Future, the LONE to Forgemasters, and scrap the increase in VAT then that is a good way to keep people spending, jobs being created and the economy growing and the deficit down.

    I pretty much support this, with the exception that I think Jonson should do what the Lib Dems said they were going to do and then didn’t; bring the top rate of CGT much closer to, and possibly inline with the top rate of Income Tax.

    And there’s a lot of things to be concerned about with the government’s welfair reforms.

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