'Abandon austerity and borrow' North East Labour Mps urge Ed Miliband

All the major parties have made the "tragic" decision to continue with austerity, North East MPs on the Labour left have warned.

Labour leader Ed Miliband with his press secretary Bob Roberts

(Labour leader Ed Miliband with his press secretary Bob Roberts)

Labour MPs have urged party leader Ed Miliband to abandon plans for further spending cuts and instead back a major programme of investment to create jobs and get the economy growing.

A statement was issued by 15 Labour MPs, including a number from the North East, to mark the fact that there are now fewer than 100 days to go until polling day.

Those signing it included Blaydon MP Dave Anderson, Wansbeck MP Ian Lavery, Gateshead MP Ian Mearns and Easington MP Grahame Morris.

The MPs, on the left of the party, criticise the consensus between all three major parties that further cuts are needed to reduce the deficit.

Instead, they argue that low interest rates make it possible to borrow money for a £30 billion investment project which could create a million jobs.

Alternatively, funding could be raised from the two banks which are already in public ownership, or by new taxes on the ultra-rich, they said.

The MPs also call on Labour to pledge to take rail franchises back under public control, and to restore collective bargaining rights for workers.

Mr Mearns said: “I meet so many people in my constituency who need things to change.

“From my perspective it’s not good enough for us as a party to be going to the electorate in the General Election and saying ‘vote for us because we are not as nasty as them’.”

He pointed out that the UK invested in a major programme of public works after the Second World War when it was almost bankrupt.

“It did increase debt in the short term but it got the country back on its feet,” he said.

Mr Anderson said: “People at the sharp end have suffered too long for the crass behaviour for the so called Masters of the Universe whose greed and self-interest turned this country upside down.

“It’s time to redress the balance and give some relief for those least able to carry the heaviest burden.”

Mr Miliband and Shadow Chancellor Ed Balls have criticised the Coalition government for cutting spending “too far and too fast” but have announced that the party’s election manifesto will include a pledge to “cut the deficit every year while securing the future of the NHS”.

Labour plans to cut the deficit to zero and run a surplus on day-to-day spending, excluding investment.

This means it plans to cut less than the Conservatives, who say they would get the entire government budget into surplus, but would need to make cuts.

Mr Balls has written a letter to every member of the Shadow Cabinet which warns: “You should be planning on the basis that your departmental budgets will be cut not only in 2015/16, but each year until we have achieved our promise to balance the books.”

The Labour MPs demanded a different approach. They said in their letter: “All three main parties, tragically, seem to agree that deep spending cuts must continue to be made until the structural budget deficit is wiped out in 2019-20, even though wages have already fallen 8% in real terms, business investment is still below pre-crash levels, unemployment is still 2million, the trade deficit in manufactured goods at over £100bn is now the largest in modern history, and household debt is now over £2 trillion and still rising.”

The MPs called for rail franchises to be returned to public ownership once they expire - and rejected the existing Labour policy of allowing a publicly owned business to compete for the franchise against private sector bidders.

The success of anti-austerity party Syriza in Greece’s general election has also inspired some Labour MPs to demand an end to austerity in this country.

A Commons motion signed by Mr Anderson, Mr Mearns, Mr Morris and North West Durham Labour MP Pat Glass “welcomes the result of the general election in Greece” and argues that it is “now time to turn away from austerity and promote an economic system that puts the wellbeing of a nation’s citizens before the desires and demands of those who created the economic mess in the first place.”