Labour accuses cabinet office minister of highlighting 'crisis of government's own making' in evidence to select committee
Oliver Letwin, the cabinet's policy guru, ran into trouble yesterday after he warned that Britain was facing a "national crisis" over poor levels of economic growth and job losses.
Labour said that Letwin, who memorably added £12bn to the Tories' proposed tax cuts during the 2001 election, had "let the cat out of the bag" by highlighting a crisis of the government's making.
The row broke out when Letwin outlined the scale of the economic challenge facing Britain during an appearance before the environmental audit select committee. The cabinet office minister, who co-ordinates government policy with the treasury chief secretary Danny Alexander, said: "Leading up to the recent budget, we took the view collectively in cabinet that we faced an immediate national crisis in the form of less growth and jobs than we needed".
Letwin added that the government was responding to the crisis by introducing a series of measures to promote economic growth. He said: "We were determined collectively to try to increase that growth and those jobs. And that set in train a process which was chaired by the chancellor and Vince Cable and myself and which almost all of our senior colleagues attended in a series of meetings going through ideas about how we could do things that would continue to meet our medium and long-term goals – including, very importantly, our carbon goals and sustainability goals – but which would induce faster growth in the early years than we otherwise might have."
Angela Eagle, the shadow chief secretary to the Treasury, said that Letwin had inadvertently drawn attention to a crisis of the government's own making. Eagle said: "With unemployment at a 17-year high and the economy contracting at the end of last year, there is a jobs and growth crisis in Britain.
"But it's a crisis of George Osborne's own making and the government still seems to be in denial. By hiking up VAT and cutting too far and too fast we're now set for slower growth and higher unemployment in the years ahead. That doesn't make economic sense because, as the independent Office for Budget Responsibility said last week, the government will now have to borrow £46bn more over the coming years.
"Recognising that there's a problem is a good start. But there's no point having crisis talks if you then decide to carry on regardless with a reckless plan that is hurting but isn't working."
Labour monitors Letwin's interventions with care after a slip up during the 2001 general election campaign when he suggested that the Tories would cut taxes by £20bn by 2006 – more than twice the £8bn by 2003 pledged by the party leadership. Letwin made his remarks to the Financial Times after William Hague, then Tory leader, asked him to spell out how the Tories hoped to match the tax cutting plans of George W Bush.