Cable: Tax cuts must be fully funded and targeted at low and average income earners

11.53.00am GMT Mon 24th Nov 2008

Speaking ahead of the Pre-Budget Report, Liberal Democrat Shadow Chancellor, Vince Cable said:

"The Liberal Democrats welcome the Government's recognition that radical action is now needed, reflecting the dire and deteriorating position of the UK economy. But if the Government is going to borrow more money, this should be spent only on capital investment, not on short-term tax cuts.

"What we really need is permanent fully funded tax cuts targeted at those on low and average incomes, through reductions in income tax, rather than giving a temporary VAT cut, which will primarily reward the big spenders who have loads of money.

"There is also a very big danger that the benefits of any tax cuts will be more than cancelled out by the reduction in bank lending.

"In his announcement tomorrow, Alistair Darling must make it clear that, having invested £37bn in recapitalising the banks as well as giving hundreds of billions in guarantees, the banks must maintain their lending, as they promised."