Government Accused Over Borrowing and Debt

He said: “The Government is in danger of doing what it criticised the banks for – being too highly geared. That was one of the problems which created the recession in the first place.

“In due course they will have to count the cost of all this borrowing. They need to take a much sharper knife to public spending.”

He said the planned increase in tax for top earners was almost entirely symbolic. “It applies to just one per cent of the workforce and will raise only about £2 billion in tax revenue. That is less than the increase fuel duty and a mere drop in the ocean when compared to the borrowing forecast.”

Elsewhere, he welcomed the stamp duty holiday extension, the delay of increase in small companies corporation tax and the doubling to 40 per cent of the first year allowance on new capital expenditure for companies, sole traders and partnerships. Plans to extend the loss carry-back rules would also be of benefit to hard-pressed companies.

On the scrappage scheme for cars over ten years old he said it was a pity that the Government had not linked the plan to credit guarantees.

“A lot of people won’t be able to raise the finance to buy a new car in the first place, irrespective of the £2,000 scrappage incentive,” he warned.