UK Politics

David Cameron defends economic growth policy

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Media captionDavid Cameron insists that the government has an "incredibly active growth strategy"

Prime Minister David Cameron has defended the government's policies on economic growth following criticism from a prominent Tory figure.

Commons Treasury Committee chairman Andrew Tyrie said the government was not doing enough to promote growth.

He called for tax cuts for business and questioned government initiatives, such as the Big Society.

Mr Cameron said growth was vital and the government had an "incredibly active" growth strategy.

Mr Tyrie said some government initiatives "have seemed at best irrelevant to the task in hand, if not downright contradictory to it".

According to Mr Tyrie, the government is pursuing policies more suited to an age of abundance rather than austerity.

He does support the coalition's strategy to reduce the public deficit, saying it is both necessary and correct.

Living standards

But in the pamphlet for the pro-free market think tank, Centre For Policy Studies, he said the government had to review its positions on the reform of public services, the increase in overseas aid and some aspects of its environmental agenda.

The pamphlet, called It's the Economy, says: "Without the lynchpin of a clear strategy for growth in place, other attempts to provide a more appealing theme than austerity are unlikely to succeed.

"The Big Society; localism; the Green strategy - whether right or wrong - these and other initiatives have seemed at best irrelevant to the task in hand, if not downright contradictory to it; likewise the huge spending hike on overseas aid and the cost of the Libyan expedition."

He said instead there should now be a relentless focus on improving living standards.

Mr Tyrie called for the tax system to be simplified and business taxation to be reduced, and said he wanted to see fewer regulations and changes to labour laws.

"There is much to do, and it is not just a question of gaps in policy; in places it is inconsistent, even incoherent," he wrote.

"A much more coherent and credible plan for supply-side reform to improve the long-term economic growth rate of the UK economy is now needed."

The issue is likely to dominate at the Conservative Party conference which begins in Manchester on Sunday. Economic policy is being debated on Monday.

Mr Cameron said: "First of all, we've got to deal with the debts and the deficit and stick to our plan there, but we are doing things to cut corporation tax, to help small businesses to de-regulate, to make it easier to employ people.

"Just today, we've announced the single thing the CBI have asked for most - which is to reform employment regulations, to make it easier for small firms to take people on."

Some of Mr Tyrie's views would be shared by other Tory backbenchers, former Conservative cabinet minister John Redwood told the BBC.

"I think Andrew Tyrie speaks for a lot of Conservatives when he says that he thinks that some of the spending priorities are not appropriate for current austerity Britain and that we need to make stronger strides to get the deficit down by controlling spending," he said.

Chancellor George Osborne has suggested there might not be tax cuts before the next general election.

In an interview with the Daily Telegraph, the chancellor said tax cuts "should be for life not just for Christmas".

"We'll see how things develop in the rest of this parliament," he said.

"I'm a Conservative who believes in lower taxes. They lead to a more enterprising economy.

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