Former shadow business secretary Chuka Umunna to chancellor George Osborne: Don't cut off your nose to spite your face

James Nickerson
Follow James
The Conservative Party Annual Conference
Osborne should not raid budgets, said Umunna (Source: Getty)

While the deficit and debt need to be reduced, "raiding growth inducing budgets" such as that of the department of business is a "false economy", former shadow business secretary has warned chancellor George Osborne.

Speaking in Warwick to a group of manufacturers including representatives from Boeing and Jaguar Landrover, Unumma warned that ahead of the chancellor spending review he should not "cut off [his] nose to spite [his] face as it will be our economy which suffers".

He added:

By raiding growth inducing budgets like that of BIS – where for every pound you invest you get a multiple return in growth and tax receipts to the exchequer - is an utterly false economy.

Focussing on the budget of the department of business, Umunna said in order to drive forward the industrial strategy, you need a strong business department to act as a powerhouse for government, but "in the last parliament the BIS budget was cut by 32 per cent and is projected to have been cut by 53 per cent by the end of this one according to the Resolution Foundation".

Read more: Umunna supports Cameron's demands for EU treaty change

The speech comes days after it was announced that four government departments had agreed to cut their respective budgets by eight per cent each year by the end of this parliament.

Osborne has asked all departments, other than some that have been specifically protected, to look for cuts in the range of 25 per cent to 40 per cent over this parliament.

Read more: Cable's back - and he's still worrying about the economy

Former business secretary Vince Cable had in the summer that he had "seen very little evidence the Tories are willing to continue with the industrial strategy", leading to a lack of productivity and innovation in the economy.

Also speaking in Warwick, Umunna suggested a change in leadership for the Conservative party before the next election, saying the chancellor’s challenge will be to pull off what no other chancellor has managed to pull off under the last five Prime Ministers "and materially see a re-balancing of the economy by the time he – and it will be Osborne in my view – enters No. 10 himself".

Related articles