Cameron unveils new tax breaks to woo middle-earners

David Cameron during his keynote speech to delegates at the Conservative Party conference
David Cameron during his keynote speech to delegates at the Conservative Party conference
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THE threshold at which workers pay the higher 40p rate of income tax will rise to £50,000 if the Conservatives win next year’s general election, David Cameron has announced.

And the Prime Minister promised he will raise the level at which tax begins to be levied to £12,500, so someone working 30 hours a week at the minimum wage would pay “nothing, zero, zilch” in income tax.

David Cameron and his wife Samantha at the Conservative Party's conference in Birmingham.

David Cameron and his wife Samantha at the Conservative Party's conference in Birmingham.

The dramatic announcement came in Mr Cameron’s keynote speech concluding the final Conservative conference before the May election, at which he told activists he wanted to make Britain “a country everyone can be proud to live in”.

The PM also promised that a Conservative government would ensure that over the period of the next Parliament, the UK has the most competitive corporate tax rates in the G20 group of advanced nations - “lower than Germany, lower than Japan, lower than the US”.

Raising the higher rate threshold for income tax from its current £41,900 would take huge numbers of middle-income earners out of the 40p band, reversing the trend of “fiscal drag” which has seen ever more people paying a rate that was previously reserved only for the better-off.

And Mr Cameron said that raising the lower threshold to £12,500 - already a goal of the Liberal Democrats - “will take one million more of the lowest-paid workers out of income tax and it will give a tax cut to 30 million more”.

Mr Cameron added: “With us, if you work 30 hours a week on minimum wage you will pay no income tax at all. Nothing. Zero. Zilch.

“Lower taxes for hard-working people, that is what I call a Britain that everyone is proud to call home.”

And he said: “The 40p rate was only supposed to be paid by the most well-off people in our country but in the past decade far too many people have been dragged in to it - teachers, police officers.

“So let me tell you this today, I want to take action that’s long overdue and bring back some fairness to tax.

“With a Conservative government we will raise the threshold at which people pay 40p rate. It is currently £41,900. In the next Parliament we will raise it to £50,000.

“Here is our commitment to the British people. No income tax if you are on the minimum wage, a £12,500 tax free personal allowance for millions of hard working people and you only pay 40p tax when you earn £50,000.

“Let the message go out that with the Conservatives if you work hard, do the right thing, we say you should keep more of your own money to spend as you choose. That is what our long term economic plan means for you.”

Turning to education, Mr Cameron said it would not be possible to tell a child’s GCSEs by their postcode or by what their parents do in a “Britain everyone is proud to call home”.

He added: “There must be a great education for every child.”

The PM recalled when his four-year-old daughter Florence went to school for the first time, meaning all three of his children are at the same primary school.

He said: “It was such a joy to take them all together. Florence was sort of clinging on for dear life until suddenly she saw a new friend and rushed in to her classroom, not a backward glance - something dads have to get used to - and it is hard to describe what a relief it is as a parent to find a decent school for your child.

“But it shouldn’t be a lottery. What we have, what Sam and I have in our state primary in London, I want for every child in our country and we are getting there.”

Mr Cameron said improvements had left him finding his children’s homework “harder and harder every night it comes back”, adding that teachers now felt like leaders again,

He claimed Labour was the biggest risk to the Government’s education changes, telling delegates he was most annoyed by “the hypocrisy”.

Mr Cameron: “Tristram Hunt, the shadow education secretary, like me had one of the best educations money can buy. But guess what - he won’t allow it for your children.”

The PM also claimed that while Labour took its instructions from unions: “We in this party are a trade union too. And I’ll tell you who we represent.

“This party is the union for hard-working parents, for the father who reads his children stories at night because he wants them to learn, the mother who works all hours God sends to give her children the best start. This party is the trade union for children from the poorest estates and the most chaotic homes.

“This party is the union for the young woman who wants an apprenticeship, for the teenagers who want to make something of their lives.”

Mr Cameron said every teenager will be guaranteed a place on the National Citizen Service should a Conservative government be elected in 2015.

The Prime Minister won a standing ovation after angrily condemning Labour claims the Conservatives were running down the NHS.

He said: “From Labour last week, we heard the same old rubbish about the Conservatives and the NHS. They were spreading complete and utter lies.

“I just think how dare you. The Labour Party which gave us the scandal of Mid Staffs, elderly people begging for water and dying of neglect.

“For me, this is personal: I am someone who has relied on the NHS and whose family knows more than most just how important it is. Who knows what it is like when you go to hospital night after night with a sick child in your arms knowing that when you get there, there are people who will love that child and care for that child just as if it was their own.

“How dare they suggest I would ever put that at risk for other people’s children. How dare they frighten those who rely on our National Health Service.”

He pledged the Conservatives would continue to protect the NHS budget from spending cuts, ring fencing it through the next Parliament.

Mr Cameron said the Tories could be “proud” of its achievements providing more doctors, nurses and a cancer drugs fund.

And he paid tribute to the researchers who were now mapping the genome.

Mr Cameron said: “Cracking this code could mean curing rare genetic diseases and saving lives. Our NHS is leading the world on this incredible technology and I know personally the differences it could make.

“When you have a child who is so ill the doctors can’t work out what he’s got and why, you would do anything to know. Investment we are making will mean more parents will have those answers and hopefully the cures that go with them.”

He added: “Let us be clear: all this is only possible because we have managed our economy responsibly so I can tell you this today. We will do it again, the next Conservative government will protect the NHS budget and continue to invest more because we know this truth, something Labour will never understand and we will never forget.

“You can only have a strong NHS if you have a strong economy.”

In what aides characterised as a “profoundly optimistic” speech, the Prime Minister said people throughout history had known that the UK represents “freedom, justice, standing up for what is right” and he wanted to create a future that people could be equally proud of.

Mr Cameron used his conference speech to promise to protect NHS spending for a further five years if the Tories win next May’s general election.

But the switch of a wealthy party donor to Ukip renewed focus on the Prime Minister’s struggles to unite his party over Europe, days after the conference opening was overshadowed by the defection of a second MP to Nigel Farage’s eurosceptics.

Reflecting on his trip to Normandy to take part in the 70th anniversary commemoration of the D-Day landings, Mr Cameron said: “June 6, this summer, Normandy. I was so proud of Great Britain that day.

“Here today I want to set out how, in this generation, we can build a country whose future we can all be proud of.

“How we can secure a better future for all, how we can build a Britain that everyone is proud to call home.”

Following Scotland’s rejection of independence in last month’s referendum, he said he was “so proud to stand here today as Prime Minister of four nations in one United Kingdom”.

And he pledged that increased devolution for Scotland would be matched with “English votes for English laws” at Westminster, promising: “The Conservatives will deliver it.”

Mr Cameron said that the package he wanted to offer voters was “pretty simple really - a good job, a nice home, more money at the end of the month, a decent education for your children, a safe and secure retirement.

“A country where if you put in, you get out. A country everyone is proud to call home. And above all, a proper, real long-term plan to get there.”

He set out his commitments to create “full employment in Britain” and to “abolish youth unemployment” by ensuring that young people “earn or learn” rather than going straight on to benefits after they leave school.

But he warned that these goals would not be attainable if a future government abandoned the Tories’ long-term economic plan to eliminate the deficit with £25 billion of cuts to public services and welfare in the two years after the election - including a two-year £3 billion freeze on working-age benefits announced by Chancellor George Osborne earlier in the week.

He told delegates: “We can get there, but only if we stick to our plan.”

Mr Cameron said: “Our opponents have opposed every change to welfare and I expect they will oppose this one too. They sit there pontificating about poverty and yet they are the ones who left a generation to rot on welfare.”

The PM insisted the country needs a majority Conservative government to take power at next year’s general election rather than a coalition.

He said he believed in “something for something not something for nothing”.

Mr Cameron said he did not want a “free-for-all but a chance for all”, explaining: “Those who do the right thing and put the effort in and work and build communities, these are people who should be rewarded and all of this is underpinned by deep patriotism.

“I love this country and my goal is this - to make Britain a country everyone is proud to call home.”

The Prime Minister, who once left his daughter in a pub, mocked Labour leader Ed Miliband’s omission of the deficit during his conference speech.

“He said he forgot to mention it,” he said.

“Look, Ed, people forget their car keys, my children sometimes forget their homework.

“I once even forgot that I left Nancy down the pub. Samantha, I’m sorry, it won’t happen again.

“But let me say this: you cannot be prime minister of this country and forget the most important issue that we face.”

He added: “They say that madness is doing the same thing over and over again but expecting different results.

“Well I say that madness is voting for this high-spending, high-taxing, deficit-ballooning, shower of an Opposition and expecting anything other than an economic disaster.”

The Tories have set out plans to build 100,000 starter homes, available to first-time buyers at a 20% discount.

Mr Cameron said: “In a country that everyone is proud to call home, you should be able to buy a home if you are willing to save.

“It shouldn’t be some impossible dream. But we inherited a situation where it was.

“Young people watch Location, Location, Location not as a reality show but as a fantasy.”

Mr Cameron said the new scheme would not be open to buy-to-let landlords or wealthy foreigners, only first-time buyers under 40.

He said: “Homes, built for you, made for you. Our party, the Conservative Party, the party of home ownership once again.”

On pensions, Mr Cameron said there had been mistakes made in creating pension credits based on means testing.

And he said it was wrong people couldn’t spend their savings as they wished, and that when people died their remaining savings were taxed at 55%.

The Prime Minister said: “Three wrongs and we are putting them right. The means test, it is going. In its place a new single tier pension at £142 a week.

“Every penny you save during your working life, you will keep. Compulsory annuities scrapped, giving you complete control over your private pension.

“And as for that 55% tax on your pension, you heard it this week - we have cut it to 0%. Conservative values in action.”

The Prime Minister claimed the mantle of being “the real party of compassion and social justice” on the grounds of falling inequality and rising employment.

He also pledged to scrap exclusive zero hours contracts which tie people to a company without the guarantee of work.

Turning to the divisive issue of Europe, Mr Cameron promised to put tackling immigration from within the European Union at the heart of his plan to renegotiate the UK’s relationship with Brussels.

And he also signalled he would defy the European Court of Human Rights over the issue of prisoners voting.

Identifying problems with the free movement of people in the EU, Mr Cameron said: “Immediate access to our welfare system, paying benefits to families back home, employment agencies signing up people from overseas, not recruiting here, numbers that have increased faster than we in this country wanted and at a level that was too much for our communities and for our labour markets.

“All of this has to change and it will be at the very heart of my renegotiation strategy for Europe.

“Britain: I know you want this sorted, so I will go to Brussels, I will not take no for an answer and when it comes to free movement I will get what Britain needs.

“Anyone who thinks I can’t or won’t deliver this, I will say ‘judge me by my record’.

“I’m the first prime minister to veto a treaty, the first prime minister to cut the European budget and yes, I pulled us out of those European bailout schemes too.

“Around that table in Europe they know I say what I mean and I mean what I say.

“So we are going to go in as a country, we are going to get our powers back, we are going to fight for our national interest and, yes, we will put it to a referendum, in or out it will be your choice and let the message go out from this hall: it is only with the Conservatives that you will get that choice.”

Mr Cameron also restated his commitment to a British Bill of Rights to replace the Human Rights Act.

He criticised the European Court of Human rights for a series of decisions that “are frankly wrong”.

“Rulings to stop us deporting suspected terrorists.

“The suggestion that you’ve got to apply the human rights convention even on the battlefields of Helmand.

“And now - they want to give prisoners the vote. No, I’m sorry, I just don’t agree.

“Our Parliament - the British Parliament - decided they shouldn’t have that right.

“This is the country that wrote Magna Carta, the country that time and again has stood up for human rights, whether liberating Europe from fascism or leading the charge today against sexual violence in war.

“Let me put it very clearly: We do not require instruction from judges in Strasbourg on this issue.

“So at long last, with a Conservative government after the next election, this country will have a new British Bill of Rights to be passed in our Parliament, rooted in our values.”

Mr Cameron addressed the threat posed by Ukip, warning that a vote for Mr Farage’s party would help send Mr Miliband into No 10.

“This is a straight fight. It doesn’t matter whether Parliament is hung, drawn or quartered, there is only one real choice - the Conservatives or Labour. Me in Downing Street or Ed Miliband in Downing Street.

“If you vote Ukip, that is really a vote for Labour.

“Here’s a thought for you: on May 7 you could go to bed with Nigel Farage and wake up with Ed Miliband.”

As the audience laughed, Mr Cameron joked: “I don’t know about you, but not one bit of that works for me.”

The Prime Minister added: “So this is the big question for that election. On the things that matter in your life, who do you really trust?

“When it comes to your job, do you trust Labour - who wrecked our economy - or the Conservatives, who have made this one of the fastest-growing economies in the West?

“When it comes to Britain’s future, who do you trust? Labour - the party of something-for-nothing, and human wrongs under the banner of human rights - or the Conservatives, who believe in something for something, and reward for hard work?

“Who do you trust? The party of big debt, big spending, big borrowing, or the party - our party - of the first pay cheque, the first chance, the first home, the one that is delivering more security, more opportunity, more hope, the one that is making this country great again.”

Mr Cameron struck an upbeat tone on the economy, saying that the “long dark days” were over, but warned that it was not time to change course.

“We’re at a moment where all the hard work is finally paying off and the light is coming up after some long dark days.

“Go back now and we’ll lose all we’ve done, falling back into the shadows when we should be striding into the sun.

“That’s the question next May. Do you want to go back to square one or finish what we have begun?”

Concluding, Mr Cameron said: “I love this country and I will do my duty by it. We’ve got the track record, the right team to take this plan for our country and turn it into a plan for you.

“I think of the millions of people going out to work, wiping the ice off the windscreen on a winter’s morning, raising their children as well as they can, working as hard as they can, doing it for a better future to make a good life for them and their families - that is the British spirit.

“It’s there in our ordinary days as well as in our finest hours. This is a great country and we can be greater still because history is not written for us but by us in the decisions that we make today, and that starts next May.

“So Britain, what’s it going to be? I say let’s not go back to square one, let us finish what we have begun, let us build a Britain we are proud to call home for you, for your family, for everyone.”

At the end of the 52-minute speech, he received a standing ovation and was joined on stage by his wife Samantha.