Chris Huhne hints at shift in public sector cuts

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Chris Huhne
Image caption,
Chris Huhne says governments should not speculate about the global economy outside of a Budget

Public sector cuts could be scaled back if economic conditions deteriorate or improve, a cabinet minister has said.

Lib Dem Energy Secretary Chris Huhne told the Daily Telegraph the spending reductions due to be outlined on 20 October were not "lashed to the mast".

Later Chief Secretary to the Treasury Danny Alexander told the Scottish Liberal Democrat conference the planned cuts were "unavoidable".

The UK would be "stronger, fairer and more prosperous" as a result, he said.

Their comments come amid concern from some economists that the UK is still susceptible to a return to recession and that the £83bn cuts programme, due to be detailed in the comprehensive spending review, could worsen matters.

BBC political correspondent Mike Sergeant said the message from the prime minister and the chancellor so far had been that the planned cuts were unavoidable, but there now appeared to be a slight softening of the harsh language ahead of the spending review.

"George Osborne is emphasising the fact that spending reductions will be staggered over four years. The full pain won't all be felt at once," our correspondent says.

"Chris Huhne - himself an economist - seems to be even more flexible. Mr Huhne's argument is that if the economy performs better, cutting spending could be less urgent. If things deteriorate, deep cuts could be economically dangerous."

Mr Huhne said Mr Osborne's emergency budget, which indicated a shift in fiscal policy away from the former Labour government's, had been "absolutely right".

But Mr Huhne also argued that the figures could be amended if global conditions deteriorated.

"I've never known one Treasury red book to be exactly like the last one. There is always a change," he said.

"It is a bit like setting sail. If the wind changes, you have to tack about to get to [your destination].

Double dip?

"Global growth could be either higher or lower. We just don't know, and it's not sensible, outside the Budget period, for governments to make speculations about what is going to happen.

"The right time to look at that Budget judgement is when we come up to the Budget in the spring. The key thing then is to look at things in the round and remember the overall objective is to stabilise and begin to reduce the public debt to GDP ratio."

He said he believed a return to recession - known as a double dip - was "not impossible", although he did not consider it likely.

Later, his spokesman said: "Chris Huhne was crystal clear that he stands full square behind the chancellor's emergency Budget and that tackling the record deficit inherited by this government is unavoidable.

"He believes that unless the nation's debt is dealt with and spending is reduced, that we run the real risk of the recovery coming to an end."

At his party's Scottish conference in Dunfermline, Mr Huhne's fellow Liberal Democrat Danny Alexander said he and ministerial colleagues faced "some of the most difficult decisions of [their] lives".

"This action is unavoidable and unless the nation's deficit is dealt with and spending is reduced as planned we would put our economic recovery at risk.

"We inherited a country in the danger zone. We have taken it to the safe zone. We have to keep it there. That is what our spending review will do," he said.

Angela Eagle, Labour's shadow chief secretary to the Treasury, said Mr Huhne had "let the cat out of the bag by acknowledging the risk to growth and people's jobs posed by the coalition's reckless gamble with the economy".

She said it was "disgraceful" that the Lib Dems were supporting the Tory cuts plan, despite knowing the "devastating effect" it would have on families and "waiting to change course... was economic madness".

Mr Osborne, who was in Washington on Friday for the annual meetings of the International Monetary Fund and World Bank, stressed that the government was "trying to sustain a steady and sustainable recovery", the Financial Times reported.

He said: "We are talking about a staggered plan that takes place over four years and does not take place overnight."

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