'Cut from the banks to tackle deficit, not child benefit' – Johnson

(BBC/PA)

Alan Johnson, the shadow Chancellor, has said that banks should take a more prominent share in plugging Britain's budget deficit, as he attacked the Government for its "perverse" plan to bring public spending under control.

Mr Johnson, who admitted he was "mildly surprised" when he was given the job by Ed Miliband, also revealed that Labour would consider increasing capital gains tax to help to avoid the brutal £83bn spending cuts being lined up by the Chancellor, George Osborne.

In his first major interview in his new role, Mr Johnson conceded Labour would have to be "more specific" about its economic plans, but promised to set out further details on tax policy during a major speech today. "We think tax, on the banks in particular, should play a bigger role in this," Mr Johnson told the BBC One's The Andrew Marr Show.

"It's quite perverse, actually, that more money is coming out of child benefit as a contribution to reducing the fiscal deficit than from the banks, who caused that fiscal deficit." He said that money raised from the banks should be used to fund capital projects to improve Britain's infrastructure, helping the economy grow in the future. However, he hinted that any moves to increase taxes on banks via a levy would have to be done internationally. He also described the Government's programme of cuts as "economic masochism".

"I don't want us to be in a double-dip recession," said Mr Johnson. "What it looks like to me is an L-shaped recession. We're bumping along the bottom. We're not picking up any kind of momentum at all."

Mr Osborne immediately hit back, saying that he would push through the programme of swingeing public spending cuts. "We have to see this through, and the course which I set in the Budget is the one that we have to stick to," he said.

"People in this country know we were on the brink of bankruptcy, and if we are going to have growth and jobs in the future we have got to move this country into a place where people can invest with confidence."

The Chancellor also launched an attack on benefits cheats, comparing them with muggers as he unveiled a plan to introduce a three-year halt to benefit payments for people who repeatedly make bogus claims.