Osborn rules out manifesto tax cuts

Tories make public spending pledge

Tories make public spending pledge

The Conservatives have pledged to match Labour’s spending on public services over the next three years.

Shadow chancellor George Osborne announced last night the Conservatives would go further and increase public spending by two per cent in the first two years of government, with the third year open to review.

With the economy expected to grow faster than public spending, Mr Cameron said the government would then have “headroom” to consider lower taxes.

However, he said the Conservatives would not fight the next general election on a promise of tax cuts.

Under a Tory leadership, government spending on public services would rise from £615 billion next year to £674 billion in 2010-11, subject to a review in 2009.

Setting out the policy in an article for the Times, Mr Osborne said: “The result of adopting these spending totals is that under a Conservative government there will be real increases in spending on public services, year after year.

“The charge from our opponents that we will cut services becomes transparently false.”

He continued: “At the same time the share of national income taken by the state will start to fall, as the economy grows faster than the government does.

“Pursuing this approach over an economic cycle creates the headroom for sustainably lower taxes.”

But he said the Conservatives would be making “no election promises of up-front unfunded tax cuts”.

Mr Osborne said a Conservative government would also look to restructure the tax system, obtaining a greater income from so-called ‘green taxes’ and less from income tax.

The Treasury, however, responded that the Conservatives would not be able to follow this commitment through.

Chancellor Alistair Darling said: “In recent weeks the Conservatives have been proposing tax cuts amounting to £21 billion.

“Now they claim they can match Labour on public spending. They can’t and their sums don’t add up.”

“This is the latest panicked response from the Conservative party who have simply not thought their arguments through,” he added.