Alistair Darling caught in clash over spending cutbacks

Published on Wednesday 17 March 2010 20:03

BUSINESS and union leaders will today make last-minute appeals to the Chancellor ahead of the Budget next week, with differing views on how to lead the country out of recession.

• Alistair Darling: TUC warning. Picture: TSPL

The TUC warns Alistair Darling the economy was too fragile to withstand spending cuts, while the British Chambers of Commerce (BCC) calls for a clear deficit reduction plan.

The TUC will say there is still a huge risk of a double-dip recession, suggesting a 5 billion investment institution able to take long-term equity stakes in companies.

The union umbrella organisation argues strongly against cutting pay or jobs in the public sector this year.

TUC general secretary Brendan Barber said: "This needs to be a serious and strategic Budget that meets three challenges. It has to do everything possible in the short-term to build on the very weak signs of recovery and avoid policies that will hasten a double dip.

"For the medium-term the Budget needs policies that will address the structural deficit once growth is established by making those who caused it in the first place bear the burden of putting it right – and that means taxing the super-rich.

"It has to help bring about a long-term rebalancing of the economy away from finance to a productive low-carbon future. Above all the Budget has to balance sound economics with policies for jobs and social justice that can undo the damage done by the recession to ordinary people."

The BCC will counter that a freeze in the public-sector wage bill and reform of public-sector pensions should form part of a plan to cut the UK's deficit.

The business group, which is holding its annual conference in London today, also urges the government to cancel a planned 1 per cent rise in employer National Insurance contributions, dubbing it a "tax on jobs".

A report published by the BCC claims that new employment legislation and tax over the next four years will cost business more than 25bn.

In his conference speech, BCC director general David Frost will outline a five-point plan for the UK's economic future, saying: "Without a successful and profitable business base of some scale we are going to find it hard to climb out of the economic mess we are in.

"A new government will need a radical first 90 days in office that allows the flourishing of a new industrial renaissance in this country.

"Here is my five point plan: no new taxes on businesses; a reduction in the burdens on business; more successful, growing companies; turn the vision of an export-led recovery into a reality; and underpin all of this with a credible plan and timetable to reduce the country's deficit – without spending cuts to vital infrastructure."