George Osborne: No 'quick fix' for debt

 

George Osborne insisted today there was no "quick fix" to Britain's debt problems as he promised to invest for the long-term.

On the eve of his keenly-anticipated Autumn Statement on the economy, the Chancellor said the Government would stick to its deficit reduction strategy and dismissed the idea that it could "borrow a bit more to get us out of debt".

Challenged about the OECD think tank's prediction that the UK is set to slip back into recession, he stressed that the Office of Budget Responsibility would be issuing its own forecasts tomorrow but acknowledged that the wider economic climate was "a challenge for Britain".

"I think the public understand that Britain has huge debts that it has built up. These debts need to be dealt with. The public also understand that the eurozone (debt crisis) makes that more difficult," Mr Osborne said.

"But what they want the Government to do is stick to the plan that will take us safely through the storm and invest for the long-term future.

"They have had enough of politicians who think there is a quick fix solution who say you can borrow a bit more to get us out of debt.

"They know, the public, that this is not the answer for Britain and as a result actually I think the public is behind what the Government is doing."

The Chancellor will tomorrow set out plans for an ambitious £30 billion investment programme in Britain's infrastructure as he tries to breathe new life into the stalled economy.

The decade-long programme is intended to lever in £20 billion of private investment from pension funds to finance the development of roads, railways and the high-speed broadband network.

The Government has now signed a memorandum of understanding with pension funds on the creation of the new "investment platform" - to be owned by the funds - to channel the money into infrastructure projects.

On a visit to Battersea in south London today, Mr Osborne said: "We are finding the resources in difficult times to build the railways, to build the roads. Britain's got to get away from the quick fix debt solutions that got us into this mess.

"We have got to weather the current economic storm and we have got to lay the foundations for a stronger economic future.

"We have got to make sure that British savings in things like pension funds are employed here and British taxpayers' money is well used."

Public funding for the infrastructure programme will come in two blocs: the first £5 billion will cover the current spending review period to 2014-15 and will include investment to rebuild the country's crumbling classrooms.

It is understood that the Chancellor will say that it does not add to the Government's existing public spending envelope and that the money will come from savings to other areas of the budget.

The remaining £5 billion will be allocated to long-term investment projects for the next spending review period starting in 2015-16.

The Chancellor will set out his plans against the backdrop of a worsening economic outlook, with the Office for Budget Responsibility expected to downgrade its official growth forecast for this year for a second time to around 1%.

He will also use the Statement - which replaces the Pre-Budget Report - to launch a new drive to open up access to public service data to improve services for transport and healthcare users and boost new hi-tech companies.

Mr Osborne is expected to announce plans to make valuable information on transport, health, the weather and house prices available for consumers and businesses to use.

The Government is supporting Network Rail in electrifying the Transpennine route between Manchester and Leeds.

The decision to electrify the route starting next year will, in conjunction with the Ordsall Chord, cut journey times between Liverpool and Newcastle by 45 minutes, improve reliability, and attract new private investment in the North of England, the Government said.

Other schemes include a new east-west dual carriageway road linking the M56 at Manchester Airport to the A6 south of Stockport.

The Government said it will significantly improve access to Manchester Airport, and the Airport Enterprise Zone, from the east, including Derbyshire. It will also relieve congestion and support growth in the wider South Manchester corridor.

During a visit to a Northern Rail maintenance depot in Newton Heath, Manchester, Prime Minister David Cameron met some of the engineering apprentices.

The depot employs 180 people, including eight apprentices, and the engineers service a third of the Northern Rail fleet.

Mr Cameron said: "I have fulfilled a boyhood ambition, which is to get into the cab of a train and actually see what the driver does and how all the signals work, and that was absolutely fascinating.

"But the really important thing is, our railway infrastructure is a vital part of our economy. If we modernise it and improve it and make our trains faster and better, we will actually be able to make our economy grow faster. This is about building long-term sustainable, genuine growth in our country."

He said the electrification of the line between Manchester and Leeds would cut journey times and create a modern service.

"It is part of a big infrastructure plan, looking at the infrastructure needs of the whole country. But there is a real focus on improving infrastructure here in the North West of England and across the North of England.

"We are announcing that we will be building a new link road to Manchester Airport to help the whole enterprise zone and the growth of jobs and investment and business in that area too."

He said that, for too many years, the focus had been on financial services and the South of England.

"This Government wants to rebalance growth - not just more manufacturing, more aerospace, more technology, more exports, but also more balanced across the country - so infrastructure improvements, including here in the North West of England, are vitally important."

Shadow chief secretary to the Treasury Rachel Reeves said: "Labour has been calling for long-term infrastructure projects to be genuinely brought forward, as part of our five-point plan for jobs.

"We will find out tomorrow what the Office for Budget Responsibility's independent verdict is on the Government's overall plans and whether or not they boost growth and get people back to work.

"Only genuinely additional or brought-forward investment in projects that are 'shovel ready' would both make an immediate difference to our flat-lining economy now and help strengthen the economy for the future.

"We will need to look closely at the detail of this announcement, how it is funded and how it is accounted for.

"But £1 billion a year paid for by cutting tax credits for working families who are already feeling the squeeze would be neither fair nor help to create the jobs and growth we desperately need right now. It would show how out of touch this Government is with both the cost of living crisis facing families and the scale of the jobs and growth crisis facing our country.

"David Cameron and George Osborne urgently need to realise that without more jobs and strong growth the Government will not succeed in getting the deficit down. That's why they're already set to borrow at least £46 billion more than planned - the price of their failed economic plan and the wasted billions of a growing dole queue. It doesn't make economic sense, which is why we need a change of course tomorrow."

PA

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