In a letter published in today's Sunday Telegraph, in direct response to last week's letter by a group of economists rejecting the notion that the government should spend on public works in the current economic downturn, some of the UK's leading economic and social policy experts have said the government is absolutely right to use fiscal policy in order to boost the country's ailing economy, including spending on public works.

The letter co-ordinated by leading centre-left pressure group Compass reads:

"The economists who claim the government is "misguided" in using public works to help deal with recession are burying their heads in the sand. We would instead argue the Government is right to take a pragmatic approach, including spending on public works.

Britain faces a potentially deep recession. Given the likely depth of the problem, it would be irresponsible for the Government not to use all the tools at its disposal to limit the damage from any downturn.

The consequences of failing to reflate the economy through state intervention would mean the most vulnerable in society would pay the heaviest price for market failure.

We agree that tax cuts can play a role in fiscal stimulus - particularly when targeted at those on lower and middle incomes. However increased public spending can play a crucial role too in stimulating economic activity, not least when it is also private businesses, such as those in the construction industry, who benefit from public procurement contracts, not simply the public sector.

The assumption that the economy can contract and then expand in a rational fashion of its own accord was the massive mistake made after the 1980s recession and again after the 1990s recession - we must never make the same mistakes again, we can no longer afford to simply leave it to the market.

So with the wider economy, just as we've witnessed with the Government's intervention in the banking sector, this time demands a different approach."

The letter is signed by:

Dr Jon Cruddas MP;
Neal Lawson, Compass;
Richard Murphy FCA, Tax Justice Network;
Ann Pettifor, Advocacy International; Adam Lent, Head of Economic & Social Affairs, TUC;
Roger Berry MP;
Howard Reed, former Economist, IPPR;
Prof George Irvin, SOAS;
Prof Colin Crouch FBA, Warwick Business School;
Kate Green, CPAG; Dave Prentis, UNISON;
Dr Peter Kenway, New Policy Institute;
Dr Sally Ruane, De Montford University;
Dr Chris Edwards, University of East Anglia;
Prof David Byrne, Durham University;
Richard Burden MP;
Doug Naysmith MP;
Chuka Umunna, Labour PPC Streatham;
Martin McIvor, RENEWAL;
Dr Stuart White, Jesus College Oxford;
Billy Hayes, CWU;
Robert Taylor, Independent Economist;
David Purdy, Independent Economist;
Roger Jeary, Unite;
Roger Levett, Levett-Therivel Sustainability Consultant;
Gavin Hayes, Compass.

Neal Lawson, Chair of Compass said: "A financial crisis that was in part caused by the excesses and risky behaviour of those at the top should not be allowed to unnecessarily hurt the rest of us. That is why it is absolutely right for government to limit the impact of the recession by using pragmatic and sensible measures such as spending on public works."

Ann Pettifor of Advocacy International said: "When billions of taxpayer-backed funds were used to bail out the private banking sector, the silence of neo-liberal economists was deafening. The UK's stock of debt is low compared to other big OECD economies, and so it is right and proper that the government should stimulate economic activity by expenditure that through the multiplier effect will pay for itself anyway."

For more information/comment call Gavin Hayes on 07900 195591 or Neal Lawson on 07976 292522.