Cameron urged to back down over cuts

Prime Minister David Cameron came under pressure from Labour today to back down over plans to cut public spending following grim GDP figures.

Labour leader Ed Miliband urged the Prime Minister to "put his arrogance aside" and acknowledge his plan was not working.

As the pair clashed at Prime Minister's Questions, Mr Cameron insisted the deficit inherited from Labour needed to be tackled and claimed Mr Miliband's alternative was to borrow more and "spend money on things we can't afford".

Bur Mr Miliband shot back by claiming Mr Cameron's programme was "hurting but it's not working".

Figures released by the Office for National Statistics yesterday showed a shock 0.5% plunge in gross domestic product (GDP) between October and December.

Mr Cameron said: "They are disappointing growth figures and they are disappointing even when you have excluded what the Office for National Statistics say about the extreme weather.

"The point I would make is this: this country does have an extremely difficult economic situation, for two main reasons.

"First of all, we have the biggest budget deficit in Europe and we have to get to grips with that and that is difficult.

"Second, we had the biggest banking boom and the biggest banking bust anywhere in Europe and we have to deal with that."

He said it was inevitable that the recovery would be "choppy and it will be difficult".

But Mr Cameron insisted: "The worst thing you could do would be to ditch your plans on the basis of one quarter's figures."

Mr Miliband said Mr Cameron had been claiming the UK's economy was "out of the danger zone" but, even without the bad winter weather, the GDP figures would have shown the growth rate was flat.

The Prime Minister acknowledged that was what the ONS figures indicated but added: "Britain is no longer linked with countries like Greece and Ireland and Portugal."

Before the election "there was no credible plan to deal with the deficit" and "if you don't deal with your debts, you will never have growth".

But Mr Miliband said: "If you don't have growth, you will never cut the deficit."

The Labour leader asked Mr Cameron: "What the country want to know from you, as millions of families and businesses are worried about their livelihoods, they see unemployment rising, they see inflation rising and they see growth stall, are you going to change your strategy in any way in order to get the economy moving?"

Mr Cameron told him: "What we need to do in our country is get the deficit down and accompany that by doing everything we can to encourage growth."

The Premier said the head of the OECD had backed the Government's deficit reduction strategy.

Mr Miliband said: "When we left office the economy was growing."

He said Mr Cameron still had a choice about whether to press ahead with plans to "take another £20 billion out of the economy this year when the recovery is fragile".

He asked: "Are you telling the House and the country that you are determined to go ahead, irrespective of the figures and irrespective of what people up and down the country are feeling?"

Mr Cameron mocked Mr Miliband's claim that the Government had been left a "golden inheritance" by the Labour administration.

"This is one of the most laughable propositions I have ever heard put in the House of Commons," he said.

"We won't forget the fact that we had the biggest budget deficit in the whole of Europe.

"We were spending £120 million every day just on the interest on that deficit."

Referring to Mr Miliband and his new shadow chancellor, Ed Balls, who both worked for Gordon Brown in the Treasury, the Prime Minister said: "We inherited a situation where, because of the regulation carried out by those two gentlemen when they were in the Treasury, we had the biggest boom and the biggest bust in our banking system.

"We had a growth model that was based on uncontrollable boom in housing, uncontrollable boom in financial services, uncontrolled public spending and uncontrolled immigration.

"A completely bust system we inherited from the two people who worked in the Treasury throughout the last Labour government." Mr Miliband said: "When we left office the economy was growing."

He said Mr Cameron still had a choice about whether to press ahead with plans to "take another £20 billion out of the economy this year when the recovery is fragile".

He asked: "Are you telling the House and the country that you are determined to go ahead, irrespective of the figures and irrespective of what people up and down the country are feeling?"

Mr Cameron mocked Mr Miliband's claim that the Government had been left a "golden inheritance" by the Labour administration.

"This is one of the most laughable propositions I have ever heard put in the House of Commons," he said.

"We won't forget the fact that we had the biggest budget deficit in the whole of Europe.

"We were spending £120 million every day just on the interest on that deficit."

Referring to Mr Miliband and his new shadow chancellor, Ed Balls, who both worked for Gordon Brown in the Treasury, the Prime Minister said: "We inherited a situation where, because of the regulation carried out by those two gentlemen when they were in the Treasury, we had the biggest boom and the biggest bust in our banking system.

"We had a growth model that was based on uncontrollable boom in housing, uncontrollable boom in financial services, uncontrolled public spending and uncontrolled immigration.

"A completely bust system we inherited from the two people who worked in the Treasury throughout the last Labour government."

Mr Miliband said it was clear Mr Cameron was not going to change course, a sign of "how out of touch the Prime Minister is".

He claimed "people up and down the country" believed Mr Cameron was going "too far and too fast" in cutting the deficit.

"The evidence shows that while cuts are being made in the public sector, while jobs are being lost in the public sector, jobs are not being created in the private sector," he said.

In a challenge to Mr Cameron, he asked: "Why don't you just for once put your arrogance aside and admit you know how to cut jobs but you have absolutely no idea how you are going to create them?"

The Prime Minister responded with a jibe at Mr Miliband's reshuffle following Alan Johnson's decision to quit as shadow chancellor.

He said: "You ask about changing course. I have to say to you, you seem to have replaced the shadow chancellor who didn't understand Labour's programme with one who doesn't agree with it."

Labour's own plan would see "significant cuts in spending" starting in April.

"You shake your head, that is your plan that you are meant to be committed to. If you are now telling us that's all gone and you are just going to spend more and borrow more, then you ought to tell us.

"Because as far as I can hear, your only plan is to borrow money we haven't got, to spend money on things we can't afford and not to do the work we need to do to sort this economy out."