Tories' economist criticises party's plan for cuts

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Indy Politics

A senior adviser to the Conservatives will today warn that the party could plunge Britain back into recession if it brings in big public spending cuts immediately after winning the general election.

Sir Alan Budd, who would head a new independent Office of Budget Responsibility to enforce financial discipline under a Tory government, will say: "If you go too quickly then there is a risk that the recovery will be snuffed out and we will go back into a recession. I mean what the Americans say, 'Remember 1937'."

His remarks will be seized on by Labour, which would delay spending cuts until 2011 in order to stimulate the economy this year. It has rejected Tory calls for immediate action.

Sir Alan, a former chief economic adviser at the Treasury, will make his remarks in a Channel 4 Dispatches programme tonight about David Cameron.

He warns that the next government will inherit the "the biggest peacetime deficit in our entire recorded history" and would have to raise taxes as well as cut spending. He doubts that the Tories would be able to protect frontline services by limiting cuts to efficiency savings. "Everybody will get rid of waste but in the end people notice that there aren't the services they previously had," he will say.

Tory officials denied that Sir Alan's remarks were at odds with the policy of David Cameron and George Osborne, insisting they had said only that Britain needed to "make a start" on cuts this year. The Tories claimed their stance was vindicated by separate reports published today by the two main employers' bodies, the Confederation of British Industry and the Institute of Directors, who both call on the Government to balance the nation's books more quickly.

Mr Osborne said: "The voices of British business are now saying what we Conservatives have been saying: earlier action on the deficit is a key to securing the recovery."

But the Tories will come under fire today when Nick Clegg, the Liberal Democrat leader, accuses them of trying to "blackmail" the voters into supporting them by stoking up fears in the financial markets about a hung parliament. In a speech to Liberal Democrat party workers, he will say Mr Cameron and Mr Osborne are "threatening economic meltdown", adding: "It's like a protection racket: vote for us or our friends in the City will lay waste to your economy, your savings and your job."

Yesterday the Tories accused Labour of "rank hypocrisy" over its attacks on Lord Ashcroft, the deputy chairman of the Conservative Party, who admitted last week that he was a "non-domicile", which allows him to avoid paying tax in Britain on his overseas income.

Eric Pickles, the Tory chairman, said Labour's deputy leader Harriet Harman had changed the party's tune since it called for Lord Ashcroft's tax status to be revealed by demanding secrecy for the "non-doms" who had donated £10m to Labour. "People in glass houses shouldn't throw stones," he said.

Doubts about the success of Lord Ashcroft's operation in key marginals surfaced in a BPIX poll for the Mail on Sunday, which suggested it might yield only an extra 13 seats for the Tories at the election. It suggested the party was seven points ahead of Labour in 92 marginals, compared to two points nationally.

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