Brown attacks Tory spending change

Gordon Brown has attacked the Conservative leader for changing his party's plans to match Labour's spending commitments.

The day after David Cameron announced the bold change, Brown used prime minister's questions to suggest that it meant the Tories would do nothing to help stimulate the economy and mitigate the worse effects of the downturn for families and businesses.

Ahead of Monday's pre-Budget statement Cameron suggested that the package would contain dangerous levels of spending paid for by irresponsible borrowing.

He said: "I know the prime minister is desperate to go on this borrowing binge. Everyone wants to know how he is going to pay for it?"

Brown replied: "He is calling for action on all small businesses, that means there will have to be a fiscal expansion to help small businesses.

"The problem is the Conservative Party has set their face against fiscal expansion and why are we proposing a fiscal expansion and why are the Conservatives opposing it?

"The reason is to bring back growth into the economy and the best way to deal with tax issues is to secure growth in the economy and secure tax revenues. They are the do nothing party when it comes to now and they will the country down through their actions."

The Conservative leader said that the eventual outcome of Labour's policy would be long-term tax rises.

Cameron said: "He has made his choice about fiscal policy now he's got to tell us how he's going to pay for it.

"The business secretary, not a man known for his candour, said this: 'you have got to make a structural adjustment later on.' In plain English that means tax rises.

"Now on this side of the House we have made our choice, it's called spending restraint. Isn't it clear that the prime minister favours tax rises?"

The prime minister answered: "The leader of the Opposition on September 30 said: 'The light-weight thing to do would be to make unrealistic promises about slashing Labour's spending plans.' A light-weight response to the problems we have at the moment."

Cameron retorted with a quote of his own, saying: "Let me use some words that the prime minister might be very familiar with and they are these: 'Unfunded tax promises simply do not add up.

"They mean tax cuts before an election leading to tax rises after an election.' That is what he said as chancellor just a few years ago."

Spending

Brown then focused on the Conservatives' policy change regarding the spending commitments.

"The issue will come down to this: Do we want to help people through difficult times, a downturn that every country faces, a downturn that, by the way, even the Americans agree started in America, do we want to help people through difficult times or do we want to take the advice that was followed in the 1980s and the 1990s by the then the Conservative government and to do absolutely nothing to help people in time of need.

"We are going to be the party that helps people through this difficult downturn, the Conservative Party have changed their policy yet again and now they are unable to help people and as the deputy chairman of the Conservative Party said, only two days ago: 'the recession must take its course.' We would act they would refuse to act," the prime minister concluded. 

Later Liberal Democrat leader Nick Clegg also called for action to support small businesses.

He said that his party had supported the recapitalisation of the banks "because we were told there would be strings attached, forcing the banks to lend".

However he added that every MP had since heard from small firms in their constituency facing funding problems.

The prime minister replied that, facing the financial crisis, "the first thing to do was to provide liquidity" to the sector.

"The second thing to do was to recapitalise the banks," he added, while "the next thing to do is to secure the funding that is necessary for small businesses".

He said that the government had already expanded small firms loan guarantee scheme and that ministers are "meeting almost every day" with the banks and business leaders.

However Clegg claimed that was a "complacent reaction when thousands of jobs are at risk".

While Brown has been busy designing economic recovery plans abroad, "his plan isn't working where it counts, here at home", the Lib Dem leader argued.

He questioned whether Brown was "too weak to get tough on the banks" and called on him to consider ways of lending "serious money" to small businesses directly, bypassing the banks.

The prime minister insisted that "every country in the world is facing this problem".

Due to the downturn banks are now "averse to risk and we have got to turn that round", he added.

And he pledged that the government would do all it can to "build confidence in the financial system".