Bailout Culture: Disastrous Return to 1970's

3.45.35pm BST (GMT +0100) Fri 1st Aug 2003

Commenting on the reported £50m grant from the Government to chemical company, Ineos Chlor, Vincent Cable MP, Liberal Democrat Shadow DTI Secretary, said the rise in Government bailouts heralded an unwelcome return to a '1970s industrial policy' which could have disastrous consequences for Britain's finances."

Companies such as British Energy have been dipping into the public purse. Furthermore, the latest furore over the Hawk Jets contract suggests companies such as BAe are benefiting from hidden subsidies through Government contracts.

Dr. Cable said: "Taken together, these decisions suggest a return to a 1970s style industrial policy with potentially disastrous consequences for the budget. Bailouts are becoming an all too familiar hallmark of this Labour Government."

"It is economically illiterate to think you can save jobs through Government money in this way. Bailout funds are drawn from other public spending priorities or else through higher taxes which destroy jobs in other areas of the economy."

"There is strong evidence that Gordon Brown is deeply unhappy about his reputation for prudence being undermined by his colleagues. The New Labour - Old Labour divide is alive and well."