UK Politics

Ed Miliband: Economy is at 'turning point'

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Media captionEd Miliband has again urged the government to change course on its economic policy

Ed Miliband has said the UK's economic worries have reached a "turning point" and urged ministers to change direction "for the sake of the country".

The Labour leader said all the evidence showed the coalition's policies were not working and a stimulus package, not continued austerity, was now required.

The opposition suggest the government's policies could see borrowing more than £100bn above target by 2015.

The Conservatives say Labour's policies will push the deficit up hugely.

In a speech to the Social Market Foundation, Mr Miliband it would be the "height of irresponsibility" for ministers to stick with their economic policies as conditions worsen.

'Change now'

He said Wednesday's unemployment figures and the Bank of England's decision to cut growth forecasts for 2011 and 2012 were an "economic turning point" and "we cannot carry on as we are".

"Austerity at home, collective austerity abroad is no solution to the problems of jobs, growth or the deficit.

Don't believe those who will tell you that any change in course will make us like Greece. The markets are as worried about the lack of growth in the economy as they are about debt levels.

"Knowing what we know now, about our economy, about growth prospects, about unemployment, about higher than expected borrowing, it would be the height of irresponsibility for the government to carry on regardless.

"I urge David Cameron: change course now, change course for the sake of our young people, change course for the sake of the country."

Labour have called for an immediate stimulus package, including a cut in VAT and tax breaks for small firms recruiting new workers.

But in his speech, Mr Miliband also suggested a future Labour government's room for manoeuvre on spending would be constrained by the continuing need to deal with the deficit.

"The failure of the government's austerity plan meant that the next Labour government is likely to inherit a deficit that still needs to be reduced," he said.

"So even then resources will have to be focused significantly on paying down that deficit."

The government have dismissed figures which Labour suggest could see the government's borrowing rise by £109bn more than had been planned between 2011 and 2015.

Comparing Office for Budget Responsibility forecasts from November 2010 with the latest estimates from independent forecasters, Labour said borrowing could rise by £11bn more than planned this year, £22bn next year, £34bn in 2013-14 and £42bn in 2014-15.

But the Conservatives said Labour's spending commitments would increase the deficit by £85bn a year by the end of the Parliament.

"Ed Miliband talks about responsibility but the most irresponsible thing you can do is borrow money you don't have," the party's deputy chairman Michael Fallon said.

"Rather than speculating on whether businesses are good and bad, Ed Miliband should set out a credible plan to clear up the mess Labour left behind."

Skills fund

The BBC understands ministers are working on a host on initiatives to help growth ahead of Chancellor George Osborne's autumn statement to MPs on 29 November on the state of the economy.

The government announced on Thursday that businesses will be able to bid directly for cash from a £250m fund to improve workers' skills.

The money will be channelled from colleges and other training providers and awarded to firms which can show how existing staff and potential recruits may benefit.

Prime Minister David Cameron said this "radical new approach" will encourage firms to invest in their employees' skills and complement existing schemes increasing the number of apprenticeship places.

Business Secretary Vince Cable said incentives would be made available for small employers taking apprentices under the age of 24 - sufficient to fund 20,000 places during a trial year.

"In the toughest circumstances facing the country, apprenticeships have provided a source of real encouragement - for individuals and businesses," he said.

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