David Davis’ speech reported in The Guardian


The Guardian reported:

On the eve of David Cameron’s first substantial cabinet reshuffle David Davis has challenged the prime minister to impose spending and tax cuts faster.

With the reshuffle announcement expected on Tuesday, the former shadow home secretary directly challenged the leadership of his party by saying there was an alternative economic strategy.

George Osborne anticipated Davis’s intervention by evoking the memory of Margaret Thatcher on Sunday, saying: “There is no alternative easy road.”

But Davis dismissed this. “It is not a question of there is no easy alternative. Nobody pretends the alternative is easy. It’s just we have to put front and centre the growth in the economy.”

David Davis said only 6% of the cuts programme is under way.Davis, who has not sat on the Tory front bench since he resigned from the shadow cabinet in 2008 to fight a byelection on civil liberties, was speaking on BBC Radio 4’s The World at One after delivering a speech, entitled “There is an alternative: why the government needs a growth policy”, at an event hosted by the Thatcherite Centre for Policy Studies.

Davis called on the coalition to follow the example of the centre-left SPD government of Gerhard Schröder in Germany a decade ago that cut income tax, reduced state regulation and changed employment laws for small companies. “Today, of course, they are now the masters of the universe in Europe,” Davis said of Germany, which had a higher deficit and unemployment than Britain a decade ago. “They are the dominant economy. It all started then.”

Davis, who was defeated by Cameron in the 2005 Tory leadership contest, called on the government to:

•  Gradually eliminate employers’ National Insurance contributions, starting with small companies.

•  Make further cuts to capital gains tax (CGT) in the wake of the chancellor’s decision to cut the top rate of income tax from 50p to 45p. Davis said that once the top rate of tax was cut, the “optimum” CGT, which raises the most revenue, came down.

•  Speed up the spending cuts. He told Radio 4: “The problem with the cuts is not the cuts programme itself, it is the speed of it. It is taking too long to take effect. Only 6% of it is under way. If we are going to get the debt levels of the country down, rather than growing by £600bn in this parliament, we have got to get on with it.”

Davis said the government should change tack because its economic strategy was not working. Asked whether the government had failed to deliver, he said: “That it is right. There is not much argument about that. The economy is showing a negative growth rate. Even if those numbers are a bit wrong we are near zero.

“That doesn’t create extra jobs, that doesn’t pay the bills for the government. The pressure on taxes goes on and on.”

The former shadow home secretary was dismissive of a series of announcements by Osborne on Sunday to promote growth. These included the creation of a small-business bank, a plan to underwrite £40bn in infrastructure investments and £10bn in construction, including housing.

Davis said: “They may help a small amount. The history of government-sponsored banks is not a very good one in any country in the world, let alone ours.

“There are changes necessary to the planning laws. Whether this is the right one – until I see the detail I don’t know the answer. But it is not going to save the economy. We won’t save the economy by house building. It will help, but it won’t turn it round.”

The cabinet reshuffle will be much wider than expected, putting in place the main ministers for the second half of the parliament in the runup to the general election.”