Cut VAT to boost economy, says Miliband

Ed Miliband urged the Government to "change course" on the economy today as he declared the coalition's austerity measures were "not working".

The Labour leader accused the coalition of failing to meet their deficit reduction plans and called for a temporary cut in VAT to help boost the economy.

On the opening day of Labour's annual conference in Liverpool, Mr Miliband told BBC1's Andrew Marr Show that he acknowledged that the deficit had to be cut.

But he insisted the best way of achieving that was by growing the economy to ensure that people were in work, paying taxes and off benefits.

"The problem with the Government's strategy is that they don't understand that," he said.

He went on: "I think we've seen a big change over the last year, which is a year ago there was a contested argument about whether the Government strategy should work.

"It's not working, it's not working for Britain because unemployment is going up, and it's not working even to cut the deficit because unless you grow the economy you can't cut your deficit."

Mr Miliband also said Prime Minister David Cameron needed to show "international leadership" on the continuing economic crises.

"There is an absence of leadership and I say to the Prime Minister 'put the politics aside, start showing some leadership'," he said.

He admitted that he would be making cuts himself if he were prime minister, but said growth was the "absolute missing ingredient" in the Government's plans.

"Don't stand aside, put our young people back to work, that's what would make the difference," Mr Miliband added.

Mr Miliband said it was time to "put an end to the fast buck era" and called on the Government to "do the right thing for the country".

He added: "The Prime Minister has nothing to say about what's going to be different in the next year from the last year and over the last year his plan hasn't worked.

"As Keynes said, as the conditions change you change course and he should change course.

"That's what he has got to do. As a first step we say cut VAT. Keep to a plan to cut the deficit over four years but do it with growth because that's the only way you are going to achieve what you need to achieve.

"You can't leave an economy flat on its back."

He added: "In the end we do need the world economy to grow and that is not happening at the moment. The problem is that government tipped the balance in the world towards austerity. What we need is America growing, Germany taking its share, we need Britain growing. We need to change the balance in the world so there is growth.

"Each country is just looking at its own problems and its own issues and I'm afraid it is a collective problem and it is got to have a collective solution."

Asked about his proposals to reduce tuition fees from £9,000 to £6,000 he called on the Government to invest in the next generation.

He added: "I think we have got to put an end to the fast buck era. I don't think the priority for Britain is to cut taxes for financial services."

Mr Miliband insisted Labour's plan to slash university fees by £3,000 was fully costed and ruled out cutting them further because "I'm only going to do what I can afford to do".

He told the Murnaghan programme on Sky News: "I think we see in Britain today the wrong people being hit as a result of the cuts being made.

"I've said let's not go ahead with the bank tax cut that the Government is planning. Let us use that money instead to cut tuition fees from £9,000 to £6,000."

He added: "This is a credible costed policy. I'm making a clear and costed and credible plan for how we can change things."

Mr Miliband's high-profile pledge on capping tuition fees may not form part of the party's manifesto at the 2015 general election but was "an important first step".

He told the Andrew Marr Show: "What it is, is a policy we would do now if we were at an election."

Mr Miliband added: "We are very committed to it, the election's three-and-a-half years away, if we can do more by the time of the election we will. But this is an important first step."

He admitted that Labour got things wrong on immigration, particularly the accession of Poland and the other Eastern European states to the European Union.

He said: "I don't think we did get it right, no. I think we got some things wrong."

Mr Miliband admitted Labour "didn't do enough to change the ethic of our economy. We have got a fast buck economy, we've got to move to a different sort of economy".

While "financial services is going to be very important for us in the years to come" the Government has got to demonstrate a commitment to other industries.

He condemned the Government's decision to award a lucrative train building contract to the German firm Siemens instead of Bombardier, which has a factory in Derby.

"The latest failure of Government is on the part of Bombardier, where they have cruelly sold that company down the river," Mr Miliband said.

He acknowledged that Labour's record on financial discipline in government included "some things" which "we should not be happy about at all".

But he said the party must show "zero tolerance of waste" of taxpayers' money.

Asked about the welfare system, he said: "I'm happy to say that people who cheat the welfare system are doing the wrong thing, and there are a minority who cheat the welfare system."

But he continued: "The problem I have about the Government's welfare changes, they are not actually taking action most of all against the people who are abusing they system, they are taking action against people who have paid in all their lives, who've done the right thing and are then finding out the safety net is being eaten away even further from them."

Urging the Government to take steps to boost growth, he said: "It is absolutely essential. In the end, the policy levers are there, the question is will. Does the Government have the political will? Are they more interested in protecting the integrity of their own plan or the integrity of the British economy?

"I say they should care more about the integrity of the British economy."

Mr Miliband acknowledged he had a "long way to go" to convince people to vote Labour at the next election.

He told the Andrew Marr Show: "When you lose an election, and we had our second worst result since we were founded in 2010, it takes time for people to tune back in to you."

But he insisted: "We are a party on the way back. There's a long way to go and I, more than anyone, know the scale of task.

"But, you know what's most important? I know who I am and I know where I want to take this country and that's what I'm going to be talking about this week."

The conference will vote on a package of internal reforms championed by the leader and approved yesterday by Labour's ruling National Executive Committee.

The changes include giving non-member "registered supporters" voting rights in future leadership elections, if they reach 50,000 in number.

Their votes will be 10% in the electoral college, rather than diluting the union section as initially proposed.

Also agreed by the NEC today was a review of conference voting arrangements and the weight given to union votes - proposals will be brought forward by next March.

Mr Miliband said the union vote was a "complicated set of issues" but the registered supporters move showed a commitment to "open up as a party".

Economic Secretary to the Treasury Justine Greening said: "Ed Miliband says he has a plan to cut the deficit and then suggests a VAT cut costing £12 billion and a cut in tuition fees paid for with bank taxes he has already spent.

"He has completely abandoned the Darling plan which was judged by the markets to be insufficiently credible.

"His total lack of answers on the economy shows how weak a leader he is."

PA