Lower spending increases are not spending cuts
Because of the credit crunch which has already hit us, and the recession which even the government admits is likely, Britain can no longer afford the large increases in public spending which Labour is proposing.
Labour's policy of unfunded tax cuts now combined with rises in public spending will mean even bigger tax rises after the next election if they win.
As any reputable economist will admit, big increases in public borrowing, even if temporary, will usually mean that interest rates have to be higher than they otherwise would have been. This means that if the government is already borrowing lots of money, as the current Labour government is, a further fiscal stimulus (that's economist-speak for governments spending more) can "crowd out" private spending.
That is why the Conservatives will no longer by promising at the next election to match Labour's spending plans for the first two years of a Conservative government.
This does NOT mean that we are proposing to cut spending on schools and hospitals.
Saying that we are no longer confident that the country can afford large spending increases is not the same as saying that we are going to cut the overall level of spending. And where a Conservative government does make savings it will be in administration and unproductive spending, while front line services such as schools and hospitals will be protected.
David Cameron has stressed Britain faces a clear choice: tax cons now and tax rises later with Labour, or fiscal responsibility and permanent funded tax cuts with the Conservatives.
In a press conference in London, David attacked Gordon Brown’s plans to go on a “borrowing binge”, warning that Labour’s borrowing bombshell will turn into a tax bombshell in the long run.
Labour Ministers Tony McNulty, Alistair Darling and Peter Mandelson have all indicated that increased borrowing would have to be paid for with higher taxes at some point – and David said:
“Gordon Brown knows that borrowing today will mean higher taxes tomorrow. If he doesn’t tell you that he is deliberately misleading you.”
David stressed that instead of a tax con, Britain needs fiscal responsibility:
“Not spending money we haven’t got - but saving it to help people through tax relief. Not borrowing money on the nation’s credit card - but getting a grip on public spending and making sure Britain starts living within its means. That’s the only responsible way to get our economy back on the path to recovery.”
David promised to set up an independent Office for Budget Responsibility to bring stability to the public finances and open the way for permanent tax cuts in the future.
And he said he would restrain the growth of spending by not matching Labour's "unsustainably high" spending plans for 2010-11 and the years beyond.
“What once looked affordable in boom times is now clearly unsustainable. Let me put this as clearly as I can - unless we curb the growth of spending, taxes will need to rise in the future. Without such restraint, the borrowing bombshell will turn into a tax bombshell.”
Labour's policy of unfunded tax cuts now combined with rises in public spending will mean even bigger tax rises after the next election if they win.
As any reputable economist will admit, big increases in public borrowing, even if temporary, will usually mean that interest rates have to be higher than they otherwise would have been. This means that if the government is already borrowing lots of money, as the current Labour government is, a further fiscal stimulus (that's economist-speak for governments spending more) can "crowd out" private spending.
That is why the Conservatives will no longer by promising at the next election to match Labour's spending plans for the first two years of a Conservative government.
This does NOT mean that we are proposing to cut spending on schools and hospitals.
Saying that we are no longer confident that the country can afford large spending increases is not the same as saying that we are going to cut the overall level of spending. And where a Conservative government does make savings it will be in administration and unproductive spending, while front line services such as schools and hospitals will be protected.
David Cameron has stressed Britain faces a clear choice: tax cons now and tax rises later with Labour, or fiscal responsibility and permanent funded tax cuts with the Conservatives.
In a press conference in London, David attacked Gordon Brown’s plans to go on a “borrowing binge”, warning that Labour’s borrowing bombshell will turn into a tax bombshell in the long run.
Labour Ministers Tony McNulty, Alistair Darling and Peter Mandelson have all indicated that increased borrowing would have to be paid for with higher taxes at some point – and David said:
“Gordon Brown knows that borrowing today will mean higher taxes tomorrow. If he doesn’t tell you that he is deliberately misleading you.”
David stressed that instead of a tax con, Britain needs fiscal responsibility:
“Not spending money we haven’t got - but saving it to help people through tax relief. Not borrowing money on the nation’s credit card - but getting a grip on public spending and making sure Britain starts living within its means. That’s the only responsible way to get our economy back on the path to recovery.”
David promised to set up an independent Office for Budget Responsibility to bring stability to the public finances and open the way for permanent tax cuts in the future.
And he said he would restrain the growth of spending by not matching Labour's "unsustainably high" spending plans for 2010-11 and the years beyond.
“What once looked affordable in boom times is now clearly unsustainable. Let me put this as clearly as I can - unless we curb the growth of spending, taxes will need to rise in the future. Without such restraint, the borrowing bombshell will turn into a tax bombshell.”
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