Chris Huhne: We will make the tough financial choices with a heavy heart

LABOUR were once a serious party. Whatever our disagreements, Labour wanted to tackle the real problems in our society. They broughtindependence for the Bank of England, devolution to Scotland and Wales, and a minimum wage. They once wanted to prove they could run the economy successfully. They said: "No more boom and bust."

But over the 13 years of Labour's government something changed. The

need for a balanced economy gave way to the needs of the City of

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London. And when the global economic crisis struck, Labour seemed paralysed. A decade of spend, spend, spend meant Labour hid their

heads. And they are still hiding them.

Labour's leadership candidates say that spending was not the problem – it was taxes. Nonsense. In just two financial years up to the election, public spending rose by 10 per cent in real terms. That's a rise after inflation of 59bn.

Spending went from 44 pence in every pound generated by our economy in 2007 to 51 per cent in 2009. Taxes went down by 1p in the pound. The truth is that Gordon Brown tried to buy the election and it is no wonder Brown could not face the problems he created. But it is inexcusable that Labour's next leaders fail to face the problems.

Today, we face the biggest budget deficit in peacetime history. Bigger than any other country in the G7. Bigger than any other nation in the G20. Bigger than every other EU country except Ireland. Half as big again as France. Nearly four times as big as Germany.

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We face the consequences of a housing bubble Labour failed to control and an economic boom built on unsustainable personal debt. It gives me no satisfaction that Labour are not willing even to talk about tackling the deficit. But they know what we know: the unavoidable cuts that are coming are Labour cuts. As Labour's Liam Byrne said when he left the Treasury, there is no money left.

Now I did not come into politics to make cuts. As a Liberal Democrat, my top priority is a strong and fair economy – caring for the

vulnerable, protecting the environment.

Yet we cannot deny the facts on the ground. There is nothing

progressive about a bankrupt economy. We inherited a record budget

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deficit. Add in the debt coming due that had to be refinanced, and we needed to borrow 185bn from the financial markets this year. And, in May, Europe faced a sovereign debt crisis. The Greek government now faces a cost of borrowing twice its pre-crisis level. At the beginning of April – and our election campaign – the Greeks paid seven per cent.

By the Friday after our election, they paid 12 per cent. And in just

those few days in which we were negotiating our coalition, Europe's finance ministers had an emergency meeting to staunch a crisis spreading beyond Greece to Spain and Portugal. They announced a 500bn euro rescue package. Our choice was simple. Take swift action to stabilise the economy, or lose control and hand the job over to others to do it for us. That was Labour's way when they had to call in the International Monetary Fund in 1976, imposing the biggest post-war spending cuts by far.

Labour ducked the tough choices and lost the right to choose. That is not our way. It only took one party to create this mess. Now two

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parties – the Liberal Democrats and the Conservatives – have come

together in the national interest to clear it up.

Labour's leadership candidates cannot go on pretending that the budget deficit doesn't exist. It does and it is the single greatest challenge facing Britain. They must take responsibility.

You cannot keep spending when the money dries up, write cheques you know will bounce and put party advantage before the national interest.

Labour's last budget planned cuts of 50bn, so why are they unable or unwilling to admit where they would fall? It is too easy to stand on the sidelines and criticise. The Labour candidates owe it to themselves and to the country to offer constructive solutions.

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I hope they will. I hope that Labour will come to terms with the truth of their legacy. I hope they will come up with ideas to help lift Britain out of their economic slump. Where they do, we will listen. But until they come up with a credible economic plan, they are irrelevant to the biggest debate in our country – the future of our shattered economy.

To be a credible leader of the Labour Party, let alone leader of the country, they must show how they would plug the enormous hole in the nation's finances.

We must start with the world we are in, not the world we wish we had.

In this world tough choices have to be made. This Government is willing to make them, with care and with a heavy heart.

Chris Huhne is a Liberal Democrat MP. He is also the Energy and Climate Change Secretary.