BROWN AND TUC CLASH ON CUTS
PRIME Minister Gordon Brown will tomorrow pave the way for a much tougher stance on public spending in a key speech to trade unionists. He will warn increasingly angry trade unionists to support him or face what he claims would be even tougher cuts from the Tories.
The speech comes as tension between Labour and the unions mount over exactly where cuts should come from to reduce the UK’s huge fiscal deficit. The unions – who provide 70 per cent of Labour funding – are warning of crippling strikes if spending is cut.
Brendan Barber, leader of the Trade Union Congress (TUC) , said that cuts in public spending would cause a second wave of recession and the type of industrial action and riots last seen in the 1980s.
“Unemployment could exceed four million and it would take years before there was a return to anything like full employment,” he said. “That would scar for life a generation of young people.”
The prime minister’s speech signals a change in Labour’s pre-election stance on public spending, as Brown has until now been unwilling to admit Labour will need to make cuts.
Business secretary Peter Mandelson is set to push the new party line even further in a speech today, saying Labour should not “allow itself to be painted as the party oblivious to economic conditions” and reminding the party it can not “solve problems simply by throwing money at them”.
In his speech to the unions, Brown will say: “Today we are on a road towards recovery – but things are still fragile not automatic and the recovery needs to be nurtured.
“People’s livelihoods and homes and savings are still hanging in the balance, and so today I say to you: don’t put the recovery at risk…
“We have to make tough choices in public spending and we will need the support of the labour movement in protecting the front line first.”
Labour has been forced to rethink its policy in the face of spiralling public spending and UK borrowing. The Treasury predicts borrowing will peak at £175bn, or 12.4 per cent of GDP, in 2009-2010.
In an apparent contradiction of the new mood, Treasury minister Paul Myners said yesterday public spending should not be stopped until the recovery was in place.
He said bond markets would continue their support, provided public finances were returned to sustainability once recovery was established.
He added that taxpayer money used to bail out banks would eventually return a profit.
Meanwhile, Tory Treasury spokesman Philip Hammond said: “Every programme, every project has to be looked at for value for money – can we afford it.”