David Cameron has just used an interview on Radio 4’s Today programme to reject any big change in Conservative economic policy. Conservative economist Andrew Lilico has led a number of calls for the Tories to offer large but temporary tax cuts in order for the country to be saved from a
serious prolonged recession. Mr Cameron could have used the changed economic environment to change his policy but he has now made it clear that he will not.
If Labour had not spent so recklessly during the boom years, the
Conservative leader continued, Britain could have afforded lower
taxation now but the cupboard is bare. He said that it would be "quite dangerous" for the state to borrow even more because that would make it harder for the Bank of England to cut interest rates.
Mr Cameron has effectively handed over all recession-beating possibilities to the Bank of England’s Monetary Policy Committee.
He questioned Alistair Darling’s talk of accelerating capital projects. It was very difficult to change the timetable for capital projects that required careful planning.
The Conservative leader outlined another measure to help small businesses: a 1p cut in NI contributions for very small firms. Yesterday he advocated a VAT holiday for small firms and faster payments by local authorities. He acknowledged that these were measures that would help businesses cope with the recession; they would not prevent it. The Daily Mail launches its own eight-point plan to help small businesses. The plan includes a 2p cut in small business corporation tax.
He also defended his decision to back Gordon Brown’s recapitalisation plan. Without it, he contended, the recession could have become a slump. On his blog yesterday John Redwood came out against the recapitalisation strand of the Government’s bank rescue plan. The £37bn could be better used, he thought, and he repeated his call for a 2% interest rate cut.