LABOUR have been warned their plans to cut billions from government budgets are “Liz Truss levels of economic vandalism”.
In a letter to Rachel Reeves, the SNP have urged the Chancellor to back down from plans to trim up to 10% from departmental budgets.
Dave Doogan, the party’s economy spokesperson, said: “The scale of such cuts would not only amount to a blatant betrayal of the ‘change’ the Labour Party promised voters a matter of months ago – they would also amount to Liz Truss levels of economic vandalism.”
It follows a report in The Guardian that Reeves (below) has demanded her Cabinet colleagues find as much as 10% of capital spending in their departments to be axed as part of this month’s spending review.
It comes despite her previous pledges to invest more public money to grow the economy.
Cuts could involve cancelling or delaying hospital improvements, road building and defence projects, the paper reported.
Labour have claimed they inherited a £22 billion spending black hole from the Tories, which would force them to borrow more.
Darren Jones (below), the Treasury Chief Secretary, is said to have recently set out “indicative budgets” to give departments a sense of the scale of the cuts they will be required to make this financial year and next.
Experts have warned against making cuts on the scale expected and have called on the Government to ditch its “absurd” fiscal rules requiring ministers to get debt falling.
Crossbench peer Gus O'Donnell, a former senior civil servant and economist and Glasgow University, wrote in the Financial Times last week that “borrowing should also be part of the answer” to the Government’s desire to boost economic growth.
He said: “One problem with the current debt definition is that it doesn’t recognise the assets that might be purchased or created through investment.
“If the new National Wealth Fund leverages its balance sheet to buy a stake in a green energy start-up, the current rule counts the debt but not the value of the financial asset.
“Nor does the current debt rule reflect the value of any new transport infrastructure produced by government investment.”
It has previously been reported that Reeves is looking at ways to fiddle the fiscal rules to wipe some debt off the government’s books by re-defining it.
Doogan (above) said: “For Scotland and our devolved budget, which has already had its capital budget slashed by 9%, these additional Westminster austerity cuts are a direct attack on our ability to grow our economy and invest in key capital projects – whether that's housing, hospitals, schools, green energy or transport infrastructure.
“The UK Labour Government's austerity plans also fly in the face of the prevailing economic wisdom.”
He pointed to the comments from Lord O'Donnell and to remarks from Andy Haldane, the former chief economist at the Bank of England, who argued the Government should pay down its debt by “growing your economy, and that requires investment”.
Doogan added: “It’s time for the Labour Party to listen to some expert advice instead of copying and pasting Tory policy.”
The SNP argued that Labour’s “miserable” message which saw Keir Starmer promise voters “pain” in the upcoming Budget was depressing consumer confidence.
Doogan highlighted reports from Labour conference, where it was suggested Reeves could alter the fiscal rules and added: “It's time to stop the damaging mixed messaging, put the austerity axe down, finally ditch the Tory fiscal rules and deliver on the promises of investment you made to voters at the general election.”
Labour were approached for comment.
