Conservatives: no sweeping tax cuts

Osborne outlines smart money tests

Thursday, 01, Mar 2007 12:00

The Conservatives will not fight the next election on a pledge to lower taxes, the shadow chancellor George Osborne said today.

Delivering a keynote speech to the Confederation of British Industry (CBI) in London, Mr Osborne said future Conservative policies would adhere to the fundamental Conservative principle of "sound money".

All future policies will be subject to "sound money" tests and no idea which requires an increase in public spending will be considered policy until it has passed these and been approved by Mr Osborne and David Cameron.

The Tories will not commit to spending more money than Labour in any department, Mr Osborne told the CBI, but it will also not make an upfront pledge to cut taxes overall.

"We will not seek to spend our way out of Britain's problems - that would simply make the problems worse in the long term," said the shadow chancellor.

He added: "I do not want any uncertainty over our commitment to Sound Money.

"Our Sound Money Tests are designed to provide certainty that we will always remain committed to Sound Money as the oldest Conservative principle of all."

The three tests are stability, sharing proceeds and manifesto.

For stability, Mr Osborne said the Tories will not pledge any tax cuts that could increase interest rates or threaten low inflation levels, which are important for families and businesses. For this reason they will not include overall tax cuts as a manifesto pledge as they cannot guarantee fulfilling it.

By sharing proceeds between economic growth and a well-funded public service, the Conservatives would over time move towards lower taxes, Mr Osborne explained of the second test.

Thirdly, no 'policy' with public spending implications will be accepted as policy until it has been approved by Mr Davis and Mr Cameron, passed by the shadow cabinet and then included in the draft manifesto, the shadow chancellor concluded.

The Liberal Democrats claim the shadow chancellor's comments show the party lacks credible policies.

Economic spokesman Vince Cable said: "The Tories have no policies to speak of and are seen as irresponsible, weak and lacking credibility when it comes to the public finances."

Mr Cable questioned why it had taken Mr Osborne a year to respond to his colleague's spending promises.

He concluded: "He is just not credible. His policy of 'sharing the proceeds of growth' is a completely meaningless cop-out. The Conservatives need to say what taxes they would cut and how they would pay for it."