Election first, tax rises later

The budget already seems a long time ago, especially after Labour's attempt to follow it with an attack on Conservative "cuts" went so spectacularly wrong. But it's worth remembering just what this budget was all about: votes.

It contained a measure to help pensioners pay their council tax bills, but only for one year - election year. The chancellor also announced a doubling of the stamp duty threshold from ?60,000 to ?120,000.

This was his ninth budget. In his first eight, he put up the rates of stamp duty four times and never increased the threshold. The average homebuyer now pays well over twice as
much in stamp duty as in 1997.

With just weeks to go before the likely date of the general election, the chancellor tried to convince us that he was the saviour of first-time buyers. But we've heard it all before.

In the budget before the 2001 election he cut taxes. In the 2002 budget, the first after the election, he put up national insurance for employees, employers and the selfemployed.
He froze the personal allowance, sucking hundreds of thousands of low-paid workers into income tax.

The budget was eye-catching for what it contained but notable for what it didn't. There was no attempt to get government spending under control. Spending is rising too quickly and isn't delivering value for money. People want cleaner hospitals, school discipline and more police but the money that should be paying for these things simply isn't getting to where it's needed. It's being tied up in wasteful and unnecessary bureaucracy. That's why there are still a million people on NHS waiting lists and why there aren't more police on our streets.

Almost all the independent experts, including the Institute for Fiscal Studies, the International
Monetary Fund, the OECD and the Item Club say Labour's spending plans are unaffordable without tax rises.

So the budget guarantees two things if Labour is reelected: another round of stealth taxes and continuing lack of value for money. It's not a question of whether Labour will put up taxes, or even when, but which taxes.

What we need is action to get spending under control to set Britain on the path to lower taxes. We can do this by spending on the things that matter to the majority of people and cutting back on the rest.

That is why a Conservative government will spend the same as Labour on schools, hospitals, transport and international aid, and slightly more on police, defence and pensions, but save ?12bn by cutting the size and cost of government.

We will have to take some tough decisions. We'll abolish the regional assemblies and scrap the supreme court. There will be no Small Business Service and no New Deal. One hundred and sixty eight public bodies and 235,000 bureaucratic posts will be removed. We'll use ?8bn of the
savings to reduce public sector borrowing and avoid the tax rises that would be inevitable under Mr Blair.

The remaining ?4bn will be used for reducing tax in our first budget, including a permanent 50% discount, up to a maximum of ?500, on council tax for households where all members are over 65.

Less than 24 hours after the vote-now-pay-later budget, Labour moved to deflect attention from the fact that its plans mean more tax rises by unveiling a poster claiming Conservatives plan to cut spending on public services by ?35bn.

As has been widely reported these claims are untrue. There will be no cuts to public services
under a Conservative government: no cuts to nurses, doctors, teachers or police. Spending on frontline public services will increase significantly year-on-year. Mr Blair does not want to admit that this is compatible with lower growth in public spending, if his vast, wasteful bureaucracies
are meaningfully reduced.

There will be a clear choice at the next election between more waste and higher taxes under Mr Blair or value for money and lower taxes with the Conservatives.

· Oliver Letwin is the shadow chancellor
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money that should be paying
for these things simply isn't
getting to where it's needed.
It's being tied up in wasteful
and unnecessary bureaucracy.
That's why there are still a million
people