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Issue of the day: Public spending
Party spokesmen debate their tax and spending proposals.
Labour: Chief secretary to the Treasury Paul Boateng
The recent Budget announced measures to help families and children. An increase in the child element of the Child Tax Credit means that the effective income tax rate for a family with two children earning £25,000 a year will be just six per cent, and at £30,000 just 10 per cent – a family tax cut that does most to help low and middle income families.
In addition we are improving financial support for 16 to 19-year-olds in learning through extending Child Benefit and Child Tax Credit to unwaged trainees from April 2006; and ensuring no teenager faces long term unemployment through £30 million allocated for 16 and 17-year-olds to receive as an allowance to encourage progress towards formal learning and ensure that all children and teenagers have a decent start in life.
The Budget also provided more help for pensioners, including free off-peak local bus travel from next year for every pensioner. And in recognition of the fact that pensioners who are on fixed incomes face pressure from even small increases in council tax bills, we are providing a payment of £200 to every pensioner of 65 or over living in a household paying council tax.
And for those seeking to buy a home, we are doubling the point at which any stamp duty is paid from £60,000 to £120,000.
We will continue to invest in our future prosperity and reject Tory cuts in public expenditure. Their plans to spend £35 billion less than Labour would mean real cuts in the level of that investment and real harm to vital public services.
We will take every opportunity to explain to the British people how Michael Howard's Conservative Party is committed to abolishing the New Deal, the Small Business Service and other business support. Their plans would put Britain’s future economic prosperity at risk – this we are not prepared to see happen.
Conservatives: Shadow chancellor Oliver Letwin
[T]he Budget guarantees two things if Labour is re-elected: 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 they will raise.
What we now need is action to get spending under control to deliver value for money and 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 than Labour on police, defence and pensions, but save £12bn by cutting back on the size and cost of government.
This means 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: 168 public bodies and 235,000 bureaucratic posts will be removed.
We'll use £8 billion of the savings to reduce public sector borrowing and avoid the tax rises that would be inevitable under Tony Blair. The remaining £4bn will be used for reducing tax in our first Budget, including a permanent 50 per cent discount up to a maximum of £500 on council tax bills for households where all members are over 65.
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. What Blair does not want to admit is that this is compatible with lower growth in public spending if his vast and wasteful bureaucracies are meaningfully reduced.
There will be a clear choice at the election between more waste and higher taxes under Mr Blair or value for money and lower taxes with the Conservatives.
Liberal Democrats: Treasury spokesman Vincent Cable
The Budget we listened to this year was unfortunately nothing more then a 'sticking plaster'. Although Brown clearly has started to acknowledge much of the unfairness we find within the tax system, his actions over council tax are merely palliative while his inaction over pensions shows that he is still failing to deliver on his own rhetoric. How can it be right in Britain today that the poorest 20 per cent pay more in tax, as a proportion of their income, than the richest 20 per cent?
Brown’s first move as chancellor was his boldest and his best, making the Bank of England independent. Since then, though, he has consistently tinkered with the tax system, but he has failed to tackle the fundamental unfairness in the system.
Although there are, admittedly, winners under this budget, it does not deal with the root problems of an unfair taxation system, and the gimmicks he has used to hide this fact merely complicates the tax system further.
As a government, the Liberal Democrats would be prepared to make these tough choices by switching government spending from low to high priorities. By scrapping the DTI, ID cards, and Child Trust Funds (among other things), we would make £5bn in savings, which would go into pensions, policing and education.
The above texts are edited versions of articles which first appeared in the Parliamentary Monitor magazine.
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