Alistair Darling: 'We ignore the deficit at our peril'

Alistair Darling warned the coalition government that it was taking "a huge gamble with growth and jobs" as he used his last big speech in frontbench politics to defend Labour's economic record. The outgoing shadow chancellor said the rightwing ideology of the Conservative-Liberal Democrat coalition government was "putting at serious risk the recovery we worked so hard to bring about". But following the election of Ed Miliband as Labour leader, Darling insisted the opposition would not be taken seriously by voters unless it had a credible plan to cut borrowing. "One of the lessons that Labour has learned – and learned well – in the past 20 years is that the message to the country has to strike a chord with ordinary people as realistic and credible. We have to be realistic or it just won't wash." The shadow chancellor, who was in charge of the Treasury during the worst economic crisis since the 1930s, said there was a difference between Labour's plan at the election to halve the deficit over four years and the tougher austerity package outlined by the coalition. "You and I know that we cannot ignore the deficit. That would be as foolish as standing back and doing nothing when the crisis hit," he said. "Our approach is measured and balanced. What we did over the last two years has worked. That's why our economy is growing, why borrowing is coming down. To abandon that balanced approach, as the Tories and Liberals are doing, will put tens of thousands of jobs at risk, and hit the living standards of millions of families." Darling said the UK's record peacetime deficit was not the result of Labour's extravagance but of measures taken to mitigate the impact of the recession. "Of course there was another choice. We could have sat back and done nothing, letting people sink or swim. If we had listened to the Tories, who now decry our record, that's exactly what would have happened." The shadow chancellor said that even though the global crisis caused a collapse in activity much more severe than in the recessions of the 1980s and 1990s, job losses and home repossessions had been far lower. "Our judgment was proved right. Our approach worked." Darling said the Conservatives believed that government was always the problem and never the solution. "And that's what's driving their approach now. The cuts they are making are the same old rightwing ideology dressed up as necessity. Their approach is dishonest." Fellow shadow ministers waded in to defend Labour's track record and criticise the pace and depth of proposed spending cuts. Liam Byrne, the shadow chief secretary to the Treasury, said that Miliband's call on the party to reflect with humility and pride on its record in office and look at what to do next to return to government was "pitch perfect". "Nowhere is that more true than on the economy and on no other front did Labour deliver more," he said. The government picked the "lesser of two evils" by choosing to act to achieve recovery when the forces of the global economic storm hit Britain. No one had wanted the deficit to get so big, Byrne said, but the government did not want to see unemployment, repossessions and small businesses going bust as they had in the past recessions of the 1980s and 1990s, he said. He conceded that the Labour government did not get everything right, before adding: "But I would rather a government that made mistakes, than a government frozen in the ice of its own indifference". Byrne called for a new politics of aspiration combined from the "best of old and New Labour in renewed Labour". While Labour should not oppose every Tory cut, the fact was that the government was cutting £87bn over and above what was wise, he said. "So we have to get out there and offer a vision that's different. A plan that's real but that doesn't flinch from some tough choices." Pat McFadden, the shadow business secretary, told delegates: "The Tories and Lib Dems say that if only we cut the state fast enough and hard enough, the private sector will step up to the plate. But cut too fast or in the wrong places and you run a risk with recovery and prosperity." He said the package of measures put in place in response to the world recession saved British people from the pain of a far greater downturn. McFadden listed some counterproductive coalition cuts, such as the £3bn worth of investment allowances for manufacturing and the decision to scrap regional development agencies, which were designed to support businesses up and down the country. And he rebutted Tory and Lib Dem claims that some of the former Labour government's schemes had been a waste of money, calling on the government to reverse the "stupid decision" to cancel a loan to a steelworks. The £80m loan, which would have enabled Sheffield Forgemasters to make components for nuclear power plants, was cancelled as the government tried to rein in public spending. McFadden told the Labour conference the government was behaving like the banks in refusing to financially support British industry. Defending the former Labour administration's record on providing financial assistance, he said: "It wasn't a waste of money to work with Nissan to make sure their first electric car was built here in Britain in the north-east. It wasn't a waste of money to put a loan guarantee in place for Ford to make the next generation of low-carbon diesel engines here in the UK either. "And it wasn't a waste of money to grant the loan to Sheffield Forgemasters to try to make this country a world leader in the civil nuclear supply chain. Last week, Vince Cable made a speech attacking the banks and arguing for corporate change. Fine. We can agree on a lot of that. But in denying this loan the government behaved just like the banks they like to attack for not supporting industry. So together we will keep up the fight to reverse this decision."