A ‘plan B’ for economy not needed says top mandarin

Sir Gus O’Donnell defied calls from Labour for Chancellor George Osborne to announce a “plan B” for the economy in his autumn statement next week and expressed pride that Britain had not joined the euro.

The Cabinet Secretary was asked for his views on the economic crisis as he faced the Commons Public Administration Committee for the last time before retirement.

“I think it is very clear to me in the circumstances that we are, with what is happening in the eurozone, that having a credible deficit reduction plan and sticking to that plan is absolutely massive important,” he said.

Referring to the famous “five tests” of whether Britain should join the euro drawn up by Gordon Brown and Ed Balls in the back of a taxi in 1997, Sir Gus added: “I think it was the best bit of evidence-based work we did to advise a Minister on a policy.

“I sleep much more happily in my bed at night knowing that we are facing this crisis, but we also have the advantage of an exchange rate and choosing our own interest rate.”

His comments came on the same day the Bank of England’s Monetary Policy Committee announced interest rates would remain at a record low of 0.5 per cent until February at least.

The nine-strong committee also voted in favour of holding the level of quantitative easing at £275bn this month, seeing “little merit in fine tuning” at this stage despite continuing strife in the eurozone and heightened risk of a double-dip recession.

Meanwhile, Business Secretary Vince Cable announced a “radical” shake-up of employment laws, including an overhaul of tribunals and a reduction in the present 90-day consultation period when firms plan to make more than 100 employees redundant.

All claims would go to the conciliation service Acas before reaching an employment tribunal in an effort to make the process cheaper and quicker.

The Government claims the reforms will save businesses £40m a year but unions reacted with fury, saying workers would have to “grovel to the boss for the right to earn a day’s pay.”

Mr Cable said: “Our labour market is already one of the most flexible in the world. This flexibility benefits businesses, staff and the wider economy, but many employers still feel that employment law is a barrier to growing their business. We’re knocking down that barrier today – getting the state out of the way, making it easier for businesses to take on staff and improving the process for when staff have to be let go.”

Unite General Secretary Len McCluskey said: “Ministers are hell-bent on removing long-established rights at work, making dismissal easier and promoting a culture of fear in the workplace.”

Comment: Page 12.