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We will not shy away from tough decisions, promises Osborne
Public borrowing predictions set out by Alistair Darling in the Budget have "vindicated" the Tories' analysis of the recession, Shadow Chancellor George Osborne said yesterday.
Mr Osborne said his party had been warning about a looming debt crisis for months and that the Chancellor's bleak Budget statement had shown Tory economic forecasts to be correct.
Warning that there would be "very tough decisions ahead" to repair the UK's finances, Mr Osborne accused the Government of ignoring the problems and failing to put forward solutions.
And he said the Tories would set out specific proposals on how they would cut public spending as part of moves to secure a mandate at the next general election.
In his Budget statement on Wednesday, Mr Darling said borrowing would soar to a record 175bn this year – 12.4 per cent of national output – and would fall only slightly next year to 173bn.
Mr Osborne at the Conservatives' spring forum in Cheltenham said: "Our big call on this recession has been vindicated, which was that there is a looming debt crisis. We have been warning about it – David Cameron, myself, other Conservatives – for months.
"I think people can now see that our economic forecast was right and so therefore we do now have to make the argument that we need a government of thrift in this age of austerity.
"We are not hearing that argument from the Labour Party. The Budget had no answers to the problems that this Government created, of course attention comes to us...to show the country that there is an alternative that we can deliver value for money in a period of spending restraint."
Mr Osborne said his party would look to cut back on expensive spending programmes such as identity cards, while also looking at the culture in Whitehall and public sector pay as ways to save money. But he warned that there was "no silver bullet".
Asked whether the plans would leave them open to accusations of traditional Tory spending cuts, Mr Osborne laid the blame with the current administration.
"I think there will be very tough decisions ahead," he said. "These are not going to be Tory cuts, these are going to be Labour cuts. It is the Labour Government that has left the country in this situation."
The Conservatives have come under pressure to set out specifics on how they would seek to balance the books, but Mr Osborne said that was normal in opposition.
And he pledged to set out detailed plans in due time, saying: "We will provide the country with specifics. We are looking for a mandate at this election for the decisions that we need to take in government but we will do it at the right pace.
"We will make sure that we have done the proper research and identified those programmes which the government cannot afford given the current economic circumstances and we will do it at a pace which I think is appropriate." The shadow chancellor also reiterated his position over the new 50p top rate of income tax for high earners unveiled by Mr Darling.
There could be no commitment to reversing it, Mr Osborne said, because his priority was to avoid tax rises that will hit lower and middle income earners.
In his speech to the conference, Mr Osborne said he did "not need convincing that higher tax rates discourage enterprise and damage economic activity".
But he stuck to his insistence that there were higher priorities for action. "Like you, I believe in the virtues of lower taxation."
"That's why stopping that national insurance tax rise on the incomes of everyone earning 20,000 is the number one task.
"Our priority must be to stop the tax rises on the many not just the few." Wednesday's Budget sounded the death knell for New Labour, he told them.
"The economy is on its knees, enterprise is suffocated, we're falling behind in the race to the future. And what is their proposal? A return to the 1970s with a 50 per cent top rate of tax.
"With the dishonesty of trying to present a 2bn tax rise on the wealthy as the answer to a 200bn borrowing requirement. So out goes all that New Labour talk of 'aspiration' and 'opportunity' and owning the centre ground. In comes all that Old Labour language of 'soak the rich' and 'make the pips squeak'.
"We will look back at this time and realise that we were hearing the last, sour notes of a requiem mass. New Labour. Born 1994. Died April 22 2009. Private funeral. Don't send flowers."
He said that he and David Cameron had "earned the right to be heard" on the economy after being almost the only voices saying the Government's VAT cut could not be afforded.
It would be wrong however to set out detailed economic plans at this stage. "I know how impatient people are to get the detailed plans and hear all the figures. In 2006 they wanted me to write my budget for 2010. And they wanted it in 2007 and 2008 too. And if we had listened, I would be tearing it up now – just as the Liberals have been forced to tear up their tax plans this week."
The higher tax rate came under attack from senior business leaders, who warned that it may damage Britain's prospects.
Former trade minister Lord Jones of Birmingham – who was appointed last October as one of Prime Minister Gordon Brown's "business ambassadors" – said the tax rise was born out of a "thirst for revenge".
And Virgin tycoon Sir Richard Branson warned that it could be "a real hindrance" to attracting high-fliers to locate to Britain.
Mr Osborne agreed with the tycoons, saying: "I do not think the tax rate is a good idea, I think it will do long term economic damage to the country."
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Saturday 26 May 2012
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