'There is a better way' insist union leaders in campaign against cuts

UNION leaders have launched a campaign aimed at convincing the UK government that cuts are not the way to turn round the economy.

The "There is a Better Way" campaign advocates fairer taxes, a living wage and the protection of jobs and services as the best way of coming to terms with the economic crisis. The campaign, which is being promoted by the Scottish Trades Union Congress, wants to encourage the use of stimulus measures to grow the economy as an alternative to the coalition government's diet of severe cuts, being administered to claw back the record 155 billion deficit.

At the campaign's launch in Glasgow yesterday, Grahame Smith, general secretary of the STUC, said: "It is avoidable, it is unfair and it could tip the economy back into recession.

"We believe there needs to be measures immediately to stimulate the economy. If the government does not invest, our economy is in trouble. The economy is not going to grow in the way it needs to grow to generate enough employment. That is not acceptable. There has not been a real debate about alternatives."

Mr Smith said the options could include a tax on financial transactions, a lever that could curb risky speculation by banks and provide cash for future bail-outs.

The tax model favoured by the STUC would be the so-called Tobin Tax, named after the US Nobel Prize-winning economist James Tobin, who was the first to propose it in the 1970s. The Tobin Tax would see a levy on transactions in shares, derivatives and currencies carried out by a bank.

Academics have estimated that a levy of 5 on every 10,000 of transactions would raise 415bn a year.

City analysts have argued that a Tobin tax would damage the money markets. Another long-standing criticism of the tax has been that, unless it was levied across the world, it would result in financial institutions relocating to countries where it was not enforced.

The STUC also wants to close the tax gap, the estimated 40bn that has been lost to the Exchequer from tax evasion and tax avoidance.

"We are not necessarily talking about raising taxes before the economy recovers, but we are talking about what we are due," said Stephen Boyd, STUC assistant secretary.

The coalition has set out plans to cut spending and raise taxes by more than 100bn over four years, to cut the deficit.

Yesterday Chancellor George Osborne signalled a renewed crackdown on the "out of control" welfare budget - announcing that further cuts of 4bn would be made in the spending review this autumn.

In Scotland, Alex Salmond has faced calls to publish plans for an estimated 1.7bn of spending cuts next year. The First Minister has refused to do so until George Osborne's Comprehensive Spending Review is published next month.

Yesterday Mr Salmond met with his Council of Economic Advisers, the team of 11 eminent economists led by Sir George Mathewson, the former RBS chief.

Mr Salmond said Scotland was facing the "worst outlook for public spending since the aftermath of the Second World War".

After the meeting at Stirling University, Sir George said the council discussed the competitiveness of the banking industry in Scotland following the financial crisis and the impact of this on Scotland's banks.

Sir George added: "Members were in agreement that the government should seek to obtain full fiscal responsibility including borrowing powers, in order to be able to influence economic growth and employment in the years ahead."