Davis urges a more positive message on economy gloom

David Davis, MP for Haltemprice and Howden, said Prime Minister David Cameron and Chancellor George Osborne should be congratulated for tackling the record deficit "so decisively and so immediately".

But he urged them to "rediscover the case for growth" and avoid a one-track message of "endless and painful retrenchment" that would be disastrous at the ballot box.

The influential former minister, who fought Mr Cameron for the party leadership in 2005, implored the Treasury to avoid the temptation of "easy" short-term cuts to benefits and other budgets.

The long-term benefits of reforms of the welfare system being fought for in spending negotiations by Work and Pensions Secretary Iain Duncan Smith were a prime example, he said.

In a speech to City leaders and politicians in London he said: "Let me make it quite clear: it would have been immoral for the Government to load yet more debt on future generations to repay.

"And it would have been economically illiterate. David Cameron and George Osborne should be congratulated for having the courage to grasp this nettle so decisively and so immediately.

"But it is easy to talk about cuts. It will take real nerve to withstand the storm of protest that will greet their implementation.

"The Left, the unions and the liberal media are lining up to denounce the Government's deficit reduction plans. Hard cases will be paraded before the nation. Deserving causes will abound. And the cry will go up for the Government to relax its austerity measures.

"The Thatcher Government of the 80s was demonised for simply restraining the growth in spending – this one will face even more hysterical opposition."

He went on: "But an even bigger challenge faces this Government. We cannot be defined by a purely cuts agenda.

"If the only message the public takes away from the events of the next few months and years is one of retrenchment and loss of services, politically, at least, we will have failed.

"We need a more positive narrative than only simply of endless and painful retrenchment. We need to rediscover the case for growth – and make it loud and clear across the land."

He concluded: "We need an active agenda for growth. We need to believe in markets again. Free enterprise. Low taxation. Only that way can we turn the tide."

The Prime Minister last week acknowledged the need to reassure the public that the swingeing cuts expected in next month's cross-governmental spending review were part of a plan to restore the country's economic fortunes.

There would be "more jobs, higher growth, (a) stronger economy" once Britain's finances were on a better footing, he said, even hinting that tax cuts could follow.

The warning from Mr Davis comes three weeks before Mr Osborne unveils the results of his spending review – which will see Whitehall budgets slashed dramatically.

One of the fiercest battles with the Treasury has been Mr Duncan Smith's efforts to secure up-front funding for reforms aimed at making work pay better than staying on benefits.

Mr Davis said such long-term thinking was vital.