David Cameron used an interview with the Today programme to say that he sometimes wanted to shake the Prime Minister because he believes he is wasting money on the VAT cut and should be guaranteeing bank lending to small businesses that are starved of credit.

Mr Cameron said Britain was facing two big problems (not verbatim):

  • A debt crisis: Britain is spending more as a percentage of our national income than when Denis Healey was Chancellor and Britain went bust. The answer to a debt crisis cannot be more borrowing and that is why the VAT cut was such a "criminal" waste of money. Every shop in the real world is cutting prices by 10%, 20%, sometimes even more. The £12bn Labour spent on the VAT cut might as well have been burnt, Mr Cameron said. Mr Brown gives the impression of not caring what mess he leaves behind.
  • A credit crunch: Over Christmas I met business after business who cannot get credit from their banks.- That is why we need the guarantee scheme that Conservatives proposed some time ago.

During the interview the Conservative leader resisted Labour’s attack line that the Conservatives are the do nothing party:

  • We just want the right things done, he protested. We want monetary activism.
  • In the long-term the British economy needs more saving, more green industries and more manufacturing capacity relative to finance.
  • He said that the Conservatives were not anti the state. We believe in an expanded NHS, he said, and in state education but we don’t want to be constantly expanding the state. By having a focused state we can be better at the things that we do do.

In a speech at noon Mr Cameron is expected to announce help for savers.  This morning’s FT also reports that the Conservatives are planning a range of measures to help green businesses.  Under a ‘green incubators’ scheme every £150,000 of private sector investment in environmental business could win up to four times as much public sector subsidy.