Cameron says VAT cut was 'waste of time'

The Tory leader David Cameron today told the Prime Minister to "get with the programme" and admit that Government plans for tackling the recession were not working.

Mr Cameron said he sometimes felt like "shaking" Gordon Brown and saying: "Look, what don't you get - it's a credit crunch, that's what needs to be addressed."

He told BBC Radio 4's Today programme that the Government's plan to cut VAT by 2.5 per cent had been a "waste of time".

The "real problem" in Britain was a "massive credit crunch" that meant businesses of all sizes were unable to get any money out of the banks, Mr Cameron said.

He said: "I feel like shaking the Prime Minister sometimes and saying 'Look, what don't you get - it's a credit crunch, that's what needs to be addressed.

"'Stop wasting our money with cutting VAT, spending £12.5 billion of taxpayers' money that we're going to have to find and pay back one day on something that everyone now accepts has been a waste of time.

"'Get with the programme' is what we need to (say)'."

Mr Cameron said the Tories' proposals for a National Loan Guarantee Scheme would guarantee £50 billion of loans for small, medium and large businesses.

Mr Cameron said he would set out plans later today on how his party would help victims of the recession.

He said: "We'll be setting out later on today how we're going to help one group of people who are victims of Labour's recession and that's savers, and we'll be setting out exactly how we can do that and pay for it, reducing some of the burdens that they have."

The Tories needed to come off the Government's spending plans because the "world has changed", he said.

Mr Cameron said it was "terrifying" that the Government would be borrowing £118 billion next year.

"If you're in a debt crisis, the answer to the debt crisis cannot be more borrowing," he said.

Asked whether the Tories would continue to borrow most of the £118 billion if they were in power, Mr Cameron said: "If you're saying we're in a very deep hole and whoever runs the Government after the next election is going to have a very tough time with very big budget deficits, the answer to that has to be yes.

"But let's be clear, we would be £12.5 billion better off because we wouldn't have done the VAT cut."

The VAT cut was a "complete joke" when faced with massive sales in the shops over Christmas, he added.

"The Government might as well have gone out and burned the money; it was a criminal waste of money," he said.

Mr Cameron said the recession should not be used as an opportunity to "tear up the market system" and return to 1970s-style interventionism.

"I think that's what the Prime Minister is doing and I think that's a huge mistake," he said.

Mr Cameron said he would like to see a much larger private sector in the future.

"Over time we're saying you should hold the growth of Government spending below the growth of the economy and that means obviously that over time you will have a smaller state and a bigger economy," he said.

Speaking earlier on the Today programme, Work and Pensions Secretary James Purnell said the Tories did not have the resources to fulfil their promises.

He said: "The really hard question for (Mr Cameron) is, given that he's not going to say we need to have more help now - where is the money for the initiatives that he will be talking about coming from?

"He'll be trying desperately hard to say he'll be making these initiatives available without extra money.

"That's a bit like those diets which say you can eat as much as you want to but you'll still lose weight. It's too good to be true and people will know it's too good to be true."