Vince Cable: Public sector cuts a “fatal blow” to North economy

Sep 17 2009 by William Green, The Journal

CUTS to the public sector could deliver a “fatal blow” to the North East’s economic recovery, it was claimed last night.

The warning comes as the Liberal Democrats admit they want to see cuts to regional development budgets, cash for skills training and a vital export scheme.

Lib Dem shadow chancellor Vince Cable has suggested he would cut money used to support One North East and other regeneration groups while at the same time slashing the budget for the export guarantee credit department.

The export office has been described as having huge importance to the region, which still has a large manufacturing base dependant upon the guarantees offered in case foreign companies fail to pay up.

It effectively safeguards job in the North East by ensuring companies do not have to lay off staff if they do not receive payments.

Dr Cable said he would look to hand some regeneration cash to councils but warned of deep cuts as part of “a radical programme of reform”.

In a speech yesterday Dr Cable said: “Regional development agencies no doubt perform some useful tasks in support of business activity and they will argue that they ‘create jobs', though whether this is the best way to create employment is doubtful.”

Last night minister for the North East Nick Brown warned the cuts could “not be more damaging” to the region.

He said: “From both the Tories and the Lib Dems we would see the development agency closed down. The Lib Dems would cut by at least half the Train to Gain budget and cut the export guarantee scheme. It is almost impossible to imagine a bigger blow to the region’s economy.

“Everything we have heard from the business sector has told us how useful these schemes, and especially the export guarantee, have been. A move like this would wipe out any hopes of an economic recovery in the region.”

His comments came after the Prime Minister admitted on Tuesday for the first time that cuts in public spending loomed, while insisting frontline public services would be protected.

The Prime Minister told the TUC that Labour would “cut costs, cut inefficiencies, cut unnecessary programmes and cut lower priority budgets” to meet its target to half the £175bn state deficit within four years.

A row has also erupted over leaked Treasury documents which the Tories claimed showed the Prime Minister was engaged in a long-term “cover-up” of plans to cut public spending. Internal figures marked “confidential”, obtained by the Opposition, suggested reductions of almost 10% were under discussion as long ago as the Budget in April.

Speaking to The Journal, senior Labour party member Sir Jeremy Beecham said: “There needs to be a distinction between public services and public spending. The two things are not the same.

“For example if we said we are not going to do the ID cards and Trident, that would be a cut in public spending not public services.

“That is the sort of distinction we should be making. The Tories are using it as a cover to cut public services.”

He added: “There is a possibility of cuts in the some public services. I don’t think there will be big cuts. There will be bigger cuts in public spending. The emphasis of a Labour Government would not be cuts in public services it would be cuts in public spending. But it would be wrong to completely rule out any cuts in public services.

“But the emphasis with a Tory Government would be very much cutting public service because that is where they are coming from.”