George Osborne failed to outline how he would pay for the £13 billion of Tory policy proposals already promised this week during his speech to conference today.
George Osborne failed to give detailed figures for the £10 billion of spending commitments announced by the Conservatives this week during his key-note address to the Tory party conference today.
Among the unfunded promises already annnounced are £3.2bn on tax breaks for married couples, £2.34bn on apprenticeships, £3.63bn on back-to-work programmes and £250 million on removing National Insurance Contributions for certain employees, as well as uncosted proposals to build 5,000 more prison places, school dental checks for every child and a reduction in corporation tax – many of which were announced in yesterday’s “Get Britain Working” policy document.
Two of his key proposals, a freeze on all public sector pay for those earning more than £18,000 a year (and servicemen whose operational allowance would be doubled) will only raise £3bn, according to BBC Economics Editor Stephanie Flanders.
It is further estimated that the abolition of tax credits for families with incomes of more than £50,000 will raise only £400 million. The 50p tax rate will remain, as will child benefit, winter fuel payments and free TV licences. The greatest savings, the Shadow Chancellor revealed, would come through cutting the cost of Whitehall by a third – cutting the number of MPs by 10 per cent, cutting the pay of Ministers by 5 per cent and cutting the salaries of the highest-paid civil servants.
Mr Osborne also savaged the VAT cut, telling his audience that “not a single government in the world” followed Britain’s lead, and that “hardly a single major retailer” thought it worked. These statements, however, appear to take little notice of a recent CBI warning that the reversal of the cut in January could lead to a reduction in growth from 0.4 per cent in the final quarter of 2009 to 0.1 per cent in the first quarter of 2010.
Leading economist Rachel Reeves, in an article for Progress, has more on the Shadow Chancellor’s speech, including three tax-raising measures announced by Labour in the budget which the Tories have not commited to:
• They will NOT address the anomaly which sees a quarter of all pensions tax relief going to the top 1.5% of savers (raising £3.1bn a year); and
• They have NOT signed up to the 0.5% increase in all rates of National Insurance Contributions (raising £3.35bn a year).