David Cameron doesn’t “see a time” when the government’s austerity programme will end and is poised to extend public spending cuts until 2020.In an interview with The Daily Telegraph, Mr Cameron says that he now expects the crisis in the eurozone to drag on for years, blighting the British economy.
He indicates that the programme of spending cuts, initially planned to take five years, is now likely to last for the entire decade.
Mr Cameron insists that he still wants to cut tax but that any reductions would have to be funded by even greater public spending reductions.
Asked whether the austerity programme would now last a decade until 2020, the Prime Minister replies: “I think it’s going to be…this is a period for all countries, not just in Europe but I think you will see it in America too, where we have to deal with our deficits and we have to have sustainable debts. I can’t see any time soon when…the pressure will be off.
“I don’t see a time when difficult spending choices are going to go away.”
However, he adds: “Now, that doesn’t mean that you can’t cut people’s taxes…You can do exciting and radical and Conservative things at the same time as having difficult overall spending choices.”
After the 2010 general election, the Coalition initially said that its austerity programme would finish by 2015. During this period, more than £80 billion will be raised by spending cuts and tax rises.
However, the programme was extended to 2017 last autumn – with further savings expected of up to £30 billion – amid the deteriorating economic situation.
Since then Britain has fallen back into a double-dip recession and Mr Cameron now faces the prospect of fighting the next election campaign with a pledge to cut spending for another five years. His remarks come after Sir Jeremy Heywood, the Cabinet Secretary, also hinted recently that the cutbacks could last until 2020.
The Prime Minister admits that the economic situation has proved far worse than he anticipated. He says: “We are in a very difficult situation. There is some good news, we’ve just seen inflation fall again.
“But, I don’t deny for a minute that it is a lot tougher than the forecasters were expecting. I think the impairment to our economy in the bad years, the damage done to the banks, the indebtedness of our households, the extent of government debt, the extent of the whole growth model was unbalanced. You know, that impairment has been greater, it’s been tougher to recover.”
In the interview, on the final day of Parliament before the six-week summer break, Mr Cameron also discloses that:
*He does not believe that Britain should leave the EU and says he will never campaign for an “out” vote in any referendum. The Prime Minister warns that Britain would become a “sort of Greater Switzerland” which “would be a complete denial of our national interests. Mr Cameron indicates that he will seek to negotiate a “new settlement” with Europe which will be put to a referendum rather than offering an in-out vote.
*The commitment to hold a full-scale review of public spending with Coalition-agreed plans for three years of Government cuts after 2014 may now not be realistic. He says the Coalition has still to agree “how many years” they will agree for a wide-ranging spending review amid growing signs that any deal will only last until 2015.
*Conservative MPs who voted against Government plans on reforming the House of Lords will still be considered for ministerial promotion in the future.
*The Coalition may switch to a looser form of “confidence and supply” Government in the year before the next election. This would mean that the Liberal Democrats agree to support key Government votes on the budget and any confidence motions – but not a wider policy agenda.
*There will be a cap on social care costs pledged by the next election as proposed by Andrew Dilnot, the economist who reviewed the system for the Government.
* Mr Cameron intends to travel to the Olympic games on the Tube and will be taking prominent business leaders with him to events
The Prime Minister says that it had been a “very tough time to be in Government” but that he was confident that the British public would eventually support his re-election bid.
“We’ve had one of the longest and deepest recessions for decades in Britain,” he says. “It was an incredibly tough set of circumstances and it has proved very hard to get out of those situations. But I think the plan we have has given people confidence that the government has a grip and it knows what needs to be done.
“The way I put it is look, it’s like there’s a sort of global race on right now, in which countries are going to make it and which countries aren’t. And in this highly competitive world, you’ve got to get on top of your debts, you’ve got to reform welfare, you’ve got to make sure you can pay your pensions…you’ve got a public sector you can afford.
“I’m determined that Britain is one of the countries that have the recipes for success.”
Mr Cameron says that he believes the public are currently “with-holding judgement” on his premiership but would ultimately come to realise that he shares their values.
“They [the public] want to know, what I want to know, that at the end of this, have you built a more worthwhile country, a society based on a set of values, where if I work hard and do the right thing I get rewarded rather than stuffed. That, I think, is in a nutshell what people want.”
He adds: “I think the sense I get from people is, look, ‘I know you’ve got to cut public spending, I know you’ve got to get the deficit down, I know you’ve got to make sure our businesses are competitive, I know you’ve got to do all these things, but I want to know that as we get out of this mess, it won’t be the same group of people that benefited in the past. There won’t be a splurge of public spending, mass immigration, wasted money on welfare, bankers paying themselves enormous salaries when they’re not delivering safe and effective banks. I want to know that in future a hard day’s work means a hard day’s pay.'”
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