Labour slams 'no-growth Government'

Labour today seized on figures showing a sharper decline in the economy in the first three months of the year to claim the coalition was a “no-growth Government with its head in the sand”.

Shadow business secretary Chuka Umunna branded the coalition "shambolic" for "squabbling" over Adrian Beecroft's controversial report commissioned by the Prime Minister, which called for changes in the law to make it easier for businesses to sack staff.

Office for National Statistics (ONS) data showed gross domestic product (GDP) shrank by 0.3% between January and March, down from a first estimate of 0.2%.

Speaking during Commons business questions, he said: "We have always known that Tory-led Governments are heartless, do today's figures not demonstrate they are not just heartless, they are hopeless too?"

Universities and Science Minister David Willetts hit back, citing comments made by IMF head Christine Lagarde, adding: "We are committed quite rightly to reducing the burden of red tape and regulation on the economy and alongside that, we are also constructively investing and supporting the industries of the future."

Mr Umunna said: "The Government inherited an economy that was growing, with unemployment falling and a recovery settling in.

"The revised GDP estimate for the first quarter of this year, far from being revised up as some expected, has just been revised down.

"With the country in a double-dip recession created by this Government, 50 businesses going under every single year and over 2.6 million people out of work, this shambolic Government has been squabbling over a report produced by a millionaire Tory donor that suggests all would be well were it not for people's rights at work.

"Why on earth are they going along with this nonsense, instead of for example implementing the active industrial strategy that we need?"

Beecroft's proposal for "no-fault dismissal" was previously dismissed by Liberal Democrat Business Secretary Vince Cable as "nonsense".

Mr Willetts responded: "Let's be clear, this coalition Government also inherited an economy that had been hit by a major financial crisis because of the failure of the party opposite to regulate financial services, and unsustainable levels of Government borrowing which, as the head of the IMF said earlier this week, caused her to shiver when she thinks what would have happened if it had not been tackled."

Mr Umunna attacked the Government's record on job creation, stating: "This is a no-growth Government with its head in the sand.

"They blame business, they blame the people who work in them and now they seek to blame the eurozone, when countries like Germany and France are not in recession and we are.

"They said they would increase lending to small businesses - there's been a net contraction in lending to small businesses in every single month of this Government.

"We have always known that Tory-led Governments are heartless; do today's figures not demonstrate they are not just heartless, they are hopeless too?"

Mr Willetts pointed to the Government's efforts on boosting trade with overseas markets, citing exports to China being up 18%, Indian exports up 29% and Brazilian exports up 11%. He also pointed to employment rising, with inflation and public borrowing down.

PA