Letter: Labour breaks the Golden Rule

Sir: It is difficult to reconcile what Labour is now saying about using asset sales and privatisation receipts to fill the alleged pounds 1.2 bn "black hole" in its budgetary pans and what Labour said only last week in its manifesto about the rule it will follow in making budgetary judgements.

Labour, like the Liberal Democrats, says it will follow the "Golden Rule" of public finance, that over the the economic cycle the government should not borrow for current expenditure but should limit borrowing to investment purposes.

That should mean the end of the practice of counting privatisation receipts as free money to spend on current projects. Only the difference between the return of assets before privatisation and the return on the proceeds of privatisation should count as available for current spending.

But Labour seems to be saying that it will count all the proceeds of its asset sales and privatisations against a shortfall in current income.

Labour's commitment to financial rectitude seems to have lasted about as long as its policies on devolution and the single currency.

DAVID HOWARTH

Liberal Democrat Candidate

for Peterborough

Clare College,

Cambridge