16/03/05 - The Vote Now, Pay Later Budget

THE VOTE NOW, PAY LATER BUDGET

This was a vote now, pay later budget. Mr Blair would give with one hand before the election, and take back even more with the other, after the election. The choice for voters is clear: lower taxes and value for money – with extra funds for schools, hospitals and police - under the Conservatives, or higher taxes and more waste under Mr Blair.

After 8 years of higher taxes and waste, and just 50 days before a general election, Mr Blair claims he’s going to help families and give them value for money. We’ve heard it all before – it’s all talk.

Mr Blair has a track record of cutting some people’s taxes before a general election and raising them for everyone after it. He did that in 2001. He’ll do it again if he wins again.

Mr Blair would have to put taxes up again because he’s spending, wasting and borrowing too much. And today his Chancellor made the mistake of saying that he’d go on spending more than country can afford if Mr Blair won again.

Budget: the overview:

This Vote Now, Pay Later Budget confirmed that taxes will have to rise if Mr Blair is re-elected:

• The current deficit is 60 per cent higher than forecast last year.

• His plans mean borrowing of £168 billion over the next five years – more for every year than he forecast just a year ago.

The nature of the Vote Now, Pay Later Budget is made totally clear by three of his measures:

1. Instead of a permanent council tax discount for over 65s he has created a one year only discount.

2. He is raising more in stamp duty than he is giving away in raising the stamp duty thresholds.

3. Under his plans, the following taxes will increase: corporation tax, capital gains tax, inheritance tax, income tax, national insurance, council tax and stamp duty.

Labour give with one hand and take back more with the other.

Our plans are fully costed and fully funded. They will save £12 billion in unnecessary and wasteful expenditure. And as well as accepting the one-off payment and bus pass for pensioners and changes to stamp duty and inheritance tax, we will be able to lower taxes by £4 billion in our first Budget, a month after the election.

We’ve heard it all before on tax.

But Mr Blair has broken his word on tax 66 times. Before the 1997 election, Mr Blair said he had ‘no plans to increase tax at all’. But in Labour’s first Budget in July 1997, there were 10 tax rises, including the £5 billion a year raid on pension funds, higher fuel duties and higher stamp duty.

Before the 2001 election, Mr Blair told people they shouldn’t suppose he planned to put up national insurance but in his first Budget after that election he did just that, increasing it for mployees, employers and the self-employed.

Mr Blair’s Government has put up taxes in every Budget except one - the 2001 pre-election udget, in which Labour cut taxes. But the 2002 Budget, the first after the election, was their iggest tax-increasing Budget to date.

After eight years, and just 50 days before the general election, Mr Blair pretends that he wants to elp pensioners, homeowners, savers and motorists. But we have heard it all before.

• Council tax bills come annually – but what Labour are promising is a one-off payment to try and bribe voters at this election.

• Council tax bills have increased by 70 per cent under Labour.

• Pensioners have seen more than a third of the increase in the basic state pension snatched back in higher council tax.

• In eight years, the Chancellor has never increased the threshold before and he put stamp duty rates up in each of his first four Budgets.

• If the Chancellor had increased stamp duty threshold with house price increases it would now be £143,000.

• The number of people paying inheritance tax has more than doubled under Labour.

• In the past he said: ‘We will never raise the levels of investment in our economy if we do not encourage savings’ (A Budget for Britain¸1 November 1995), but the savings ratio has fallen by nearly a half.

• In his very first Budget (just after an election) he launched a £5 billion a year raid on pension funds.

• Over 70 per cent of the UK fuel price is accounted for by taxes and duties – the highest in the EU.

Labour would put up taxes if they won again.

Mr Blair would have to put up taxes to fill the black hole in his plans, and to pay for his unaffordable spending spree.

Many independent experts, including the IFS, IMF, OECD, ITEM Club, NIESR and CEBR agree that Mr Blair is spending and wasting so much that taxes would have to rise if he was re-elected.

Conservatives would avoid Mr Blair’s next round of stealth taxes. Our Value for Money Action Plan has identified £35 billion of public expenditure savings in 2007-8:

• £23 billion will be re-invested in people’s priorities like the NHS, schools, transport and international aid.

• £12 billion will be saved. So Conservative plans mean government spending will be £12 billion lower than it would under be Labour in 2007-8.

Of that £12 billion, £8 billion will be used to deal with the black hole in the public finances and £4 billion will be used to cut taxes in our first Budget.

Both Conservatives and Mr Blair would spend more. The Conservatives will ensure that money is wisely spent, and our plans are affordable. Government spending would grow by around four per cent per annum between 2005-6 and 2011-12 to approximately £665 billion.

Today, Labour have admitted that they would go on an unaffordable spending spree, spending £35 billion on top of that. By 2011-12 Labour would be spending approximately £700 billion.

This means only one thing: more waste and higher taxes.

• Basic rate income tax?

• National insurance again?

• Capital gains tax on homes?

• VAT on food?

Higher taxes: poor value for money

Labour have increased taxes by £5,000 per household in the UK, but what have people got to show for it?

• There are still one million people on NHS waiting lists.

• One million violent crimes were committed last year.

• One million children played truant last year.

• One million young people are not in work, education or training.

Conservative Action

In January we published our Value for Money Action Plan, setting out exactly how we will deliver value for taxpayers’ money. We will invest in people’s priorities, spending the same as Labour on the NHS, schools, transport and international development. We will spend more than Labour on police, pensions and defence.

We’re able to spend more on what matters by cutting back Mr Blair’s wasteful bureaucracy and unnecessary government activity. In the first two years, we’ll be saving 2p in every pound the government spends. In a civil service that is now the size of Sheffield, is Mr Blair really saying it isn’t possible to make modest savings like this?

By spending £12 billion less, we can fill the ‘black hole’ in the public finances, eliminating the structural deficit and avoiding the need for tax rises.

The remaining £4 billion will be used to cut taxes in our very first Budget, including halving council tax for millions of households where all members are over the age of 65, up to a maximum of £500.