Cameron admits Tories should have seen economic crisis coming
Britain's economy is “broken” after 10 years of relying on an ever-growing mountain of debt, Conservative Party leader David Cameron said in Birmingham.
The Tory leader, in his first major speech since the death of his young son Ivan, admitted that the Conservatives should have foreseen the UK’s plunge into economic turmoil.
“We need to recognise that our economy, as well as our society, is broken, and we should have said so earlier,” he said, warning that Britain was facing a trillion-pound debt problem by the end of the recession.
And he attacked the delays to the Government’s £2.3 billion support package first unveiled in January for the UK car industry following pleas for help from Jaguar Land Rover, LDV and others.
Mr Cameron told Birmingham Chamber of Commerce and Industry’s annual President’s dinner that the next Goverment could only drag Britain out of the mire by making a “clean break with the past” and fixing four “fundamental economic weaknesses.”
“First, we’ve got an economy built on debt - Government debt, corporate debt and private debt are all at unsustainable levels.
“Second, we’ve got an economy that’s completely unbalanced, precariously dependent on too few industries and too few people.
“Third, we’ve got an economy that labours under a massive welfare burden, with millions of people who could be creating wealth not doing so.
“And, fourth, we’ve got an economy that isn’t regulated properly, where small businesses are strangled and our banks enjoyed a free rein.”
The Tory leader told guests at the International Convention Centre that a “monetary crisis that requires monetary solutions” was at the heart of the recession.
“You are on the front line of this crisis. If you can’t get credit, you can’t keep going. If you can’t keep going, you have to lay people off just to survive.
“So unemployment goes up, people have less money to spend, and the whole vicious cycle gets worse.”
Mr Camerson said large and small firms were suffering a “desperately difficult” time. “I understand just how hard it is right now for businesses and families in the West Midlands and across the country.
“Orders are down. Sales have slumped. Import costs are rising. Credit has dried up. The numbers on the collapse of exports and trade around the world are truly shocking.
“Those countries that can afford it can go some way to plugging the demand gap with a fiscal stimulus.
“Unfortunately, and scandalously, because we didn’t fix the roof when the sun was shining, Britain can’t afford to do very much.
“Here in the West Midlands you’re still waiting for the real help for the car industry that you were promised weeks ago. Today, not a single one of these schemes is properly active - and the Government is rowing about who is to blame.
“I believe we were right, as we did back in 2006, to warn about rising levels of personal debt. And I believe we were right, as we did at the last election and through to today, to consistently warn about the scale of the Government debt crisis.
“But do I believe we did enough to warn about the rising levels of corporate debt, banking debt and borrowing from abroad? No.
“And there are other areas of economic policy where I look back now and think we would have done it differently if we had the time again.
“For example, while we warned that it was wrong and complacent to claim that boom and bust had been abolished, we based our plans on the hope that economic growth would continue.”
Mr Cameron outlined a string of Tory initiatives to revive the economy, including a delay to VAT payments by six months, a one per cent cut in national insurance for the smallest firms, a two pence cut in corporation tax and a National Loan Guarantee Scheme.
He attacked Gordon Brown for blaming all Britain’s problems on events overseas and warned debt remained Britain’s biggest weakness.
“Over the past decade, Britain’s economy has been built on a foundation of debt: personal debt, corporate debt, banking debt and Government debt.
“Our personal indebtedness is the highest of all advanced economies, ever. Our banking system entered the crisis twice as indebted as America’s.
“And I know if we win the next election, we will inherit the worst public finances of any incoming Government in modern British history.
“We must rebuild our economy based not on debt but on saving and investment. Government must live within its means, just like your businesses, just like everyone else.”
