Owen Smith MP, Labour’s Shadow Exchequer Secretary to the Treasury, in response to today’s inflation figures, said:
“The rate of inflation has fallen as expected, mainly because last year’s VAT rise has now fallen out of the official figures. But out of touch Ministers need to realise that the cost of living is still on the up and rising much faster than the Government’s target rate.
“While the banks are getting a tax cut this year, millions of families are facing further cuts to tax credits in just a few weeks time. This is the wrong choice and will be a huge hit to people in the squeezed middle who have already been hit hard by Tory tax rises, pay freezes, soaring rail fares and rising energy bills.
“Of course there need to be tough decisions on spending, tax and pay to get the deficit down, but cutting spending and raising taxes too far and too fast has backfired. By choking off the recovery and putting more people out of work, the Government is now set to borrow £158 billion more than planned. As Moody’s has now said, ‘weaker growth prospects’ are making it harder to get the deficit down.
“Labour would be making different and fairer choices to help families by putting jobs and growth first. The Government should adopt our five point jobs plan, which includes a temporary VAT cut to ease the squeeze and a tax on bank bonuses to fund 100,000 jobs for young people. And ministers should deliver public sector pay restraint in a fair way – with tougher settlements at the top to give bigger pay rises to those on lower incomes."