Pat McFadden: Labour must fashion a new economic vision

But it is not true that the Labour Government either lost the plot on economic competence or left a situation in which the only path that could be followed was the one that has been chosen.

We acted to stop the recession from turning into a depression and it meant lower unemployment than in previous recessions, fewer repossessions and fewer business failures.

Initiatives like Time to Pay – flexible tax help for firms in trouble – helped 200,000 business stay afloat and keep employing people.

The impact of the recession meant borrowing rose – but this was true in many other countries, too. And we recognised that the deficit would have to come down and produced a plan to halve it over four years.

The Government's own Office for Budget responsibility confirmed our plan was on track.

It would have meant tough decisions – there is no point in denying that – but it would have dealt with the deficit in a very different way, on a different timescale and with different priorities than the Government.

There are external pressures but how you get the deficit down is a matter of choice and judgment. That's true of the balance between

tax and spending cuts, the timescale and what you protect.

So the new Government, whether it likes it or not, cannot duck responsibility for the decisions it is taking. Everything from the VAT rise to the cancellation of the school building programme is based on their choices and judgments.

They have chosen to inflict huge pain and take huge risks with a fragile recovery.

This is faith-based economics, with the Conservatives in the role of the High Priest and the Lib Dems displaying the zeal of the convert.

They are taking a massive gamble with our future. And they seem to have no plan for the economic growth, the new industries and jobs that Britain needs to see.

Yorkshire Post readers will already know about their decision on Sheffield Forgemasters. This has been followed up with news that they may now shelve plans to fund a Green Investment Bank.

Deficit reduction and growth are not at opposite ends of the spectrum. One reinforces the other. And of course a deficit reduction plan that does little to encourage an overall increase in economic activity runs the risk of imposing huge pain for little economic benefit.

So it is essential that as part of dealing with the deficit we have an economic growth plan that makes the most of the opportunities of the future – areas like the digital economy, the transition to low

carbon and the modern manufacturing and high quality services that can help drive up exports and boost trade.

Out of the current situation we must fashion the new. And that must be an economy with aspiration at its core, ambitious for its industries, open in its nature and with opportunity for its people.

That the state will have to tighten its belt is an inevitability. That it turns away from its role in shaping the industrial future most certainly is not.

If the Government won't do this, it will fall to the Labour Opposition to set out a compelling vision of the kind of economy we can be in the future, to make the talk of rebalancing the economy real, to inspire people with the opportunities this can bring to every part of the country and to speak up for using the power of government to make it happen.

That's something worth fighting for.

Pat McFadden MP is the Shadow Secretary of State for Business.