Tories will match Labour's public spending for next three years

Before 1997 Gordon Brown promised to match Tory budget plans and George Osborne has made a similar pledge this morning.  Writing in The Times, Mr Osborne says that the Tories will deliver year-on-year real increases in public spending and will match Labour's spending plans for the next two years.  The announcements are an attempt to pre-empt any Labour charge that the Tories will cut public services.

The Shadow Chancellor's article sets out the key themes of Conservative fiscal policy:

The key Conservative message: "Government should share the proceeds of economic growth between the funding our public services need and the competitive lower taxes our economy demands."

Conservatives will match Labour on spending for the next three years: "I can confirm for the first time that a Conservative Government will adopt [the Government's] spending totals. Total government spending will rise by 2 per cent a year in real terms, from £615 billion next year to £674 billion in the year 2010-11. Like Labour, we will review the final year’s total in a spending review in 2009.  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."

Conservatives will be free to change spending priorities within the fixed budget: "Adopting these 2 per cent a year spending plans has implications for the manifesto that we will offer the country at the next election. It means we will not be offering unfunded spending commitments. Additional spending in one area will be matched by a spending reduction in another."

There will be no upfront, unfunded tax cuts: "Any reduction we offer in one tax will have to be matched by a tax rise elsewhere."

Taxes will be simpler and greener under the Tories: "We would focus on the crucial job of simplifying our taxes and on shifting the burden away from taxes on income and savings and towards taxes on pollution."

Over time there will be reductions in the tax burden on families and business: "What people want to know is whether you have a long-term sustainable plan to reduce the tax burden on families and on businesses – so that taxes cut one year are not then followed by tax increases a year later."

Guido writes: 'Read George's Lips "No Spending Cuts, No Choice for Voters"'

On today's Platform, Matthew Sinclair of The TaxPayers' Alliance argues that green taxes are unfair, undermining of economic competitiveness and inefficient.

Comments

[Henry Mayhew - 'kipper]

This is an interesting card to play at this time. I wonder why Mr Osborne is being so defensive. It does not make sense to me so I look forward to the opinion of other commenters. I must have missed something because it seems so bizarre.

Rather than hoping to get into power through me-too-ing, the Conservatives have to understand and publicise Mr Brown’s weaknesses and contrast them with their philosophy.

First: his politics is all about taxing productive people, not freeing them to achieve their full potential. Second: he makes very little sense outside London and Edinburgh. Third: he is a one-man-band, which makes him brittle and unlikely to be able to cope with the pressures of the next five years as efficiently as cabinet government would.

You could further argue that his lifetime of isolation has led him to rely on socialist theory rather than interactions with other people to understand what’s going on. He doesn’t have a philosophy that hangs together. He is relying on wiliness, fear, and cash hand-outs to get by. Not good.

Mr Cameron would do well to emphasise the concept of freedom and personal achievement, - a sense of the possibilities open to people; the strength in depth of his wider team, his connection with the regions of Britain and the successful history of his philosophy. Just a few thoughts.

[Think about it]

I think I proposed this about 18 months (go on Google the conHome archives) ago, so I support it 100%.

Once(if) the Tories drop support for state funding of political parties and all the green taxes crap too, they will start to look like a real alternative.

[David]

Interestingly presented; essentially that Brown is now following the Tories' 'sharing the proceeds of growth' argument by having reduced spending increases to below the level of growth, and thus the Conservatives will continue their own policy.

[James Maskell]

This was to be expected. It allows the Conservatives to say that we wont be throwing money around doing tax cuts which would destabilize the economy.

I dont like the fact we are announcing this and this article effectively kills off any chance of a serious tax cut in a first term, but the alternative would put the public off and cause us electoral harm.

[The Huntsman]

"Total government spending will rise by 2 per cent a year in real terms, from £615 billion next year to £674 billion in the year 2010-11."

If tax revenues do not rise at the same rate, from where is the money going to come?

[Moral minority]

"Over time there will be reductions in the tax burden on families and business".

I read this as saying that there will no tax cuts for individuals, e.g. widow/widowers/divorcees whose families have grown up. Surely they deserve some relief from rising taxes too!

[Alan S]

This probably is good and necessary politics but we should acknowledge the huge shift in the terms of politics that this represents.

The Labour Party has delivered a huge increase in public spending. The GDP in parts of Britain is more than 50% accounted for by the state and the Conservatives are accepting that settlement.

Britain will be much less competitive in the years to come as a result.

[Tony Makara]

Does this include extending the wasteful Labour gimmick the NEW DEAL for another three years? The NEW DEAL has already wasted 3.4 billion in taxpayers money. I hope the Conservative party will close down the NEW DEAL as soon as possible and reallocate the money elsewhere, say to education or the NHS.

[Think about it]

It is perfect politics, imho. It negates Labour's lazy 'tax cuts' line completely.

If Cameron would just show that he really supports a smaller state by dropping his God awful support for the extension to state funding of political parties, there could be a glimmer of hope that Brown could be booted out.

Come on Lord Ashcroft and other major Tory donors, sort them out!

[michael mcgough]

Gideon is proving to be very green.

[James Maskell]

Some here have said that Osbornes article here shows that we wont cut public services and that the argument that Labour frequently uses is now finished. In truth we havent done that at all. See bullet point 3 in the article above.

The article says that it can be cut to pay for higher spending elsewhere. Labour can continue to say we will cut the spending budgets of key public services without us having any response.

Not all Government spending is good. The State is bloated and needs cutting back to free the public. Weve given into the Big State philosophy and this article proves that we are desperately selling our soul to the devil for votes.

[MH]

My sincere thanks to George Osborne for this clear, robust article. He has expertly articulated why this 36 year old who works in the City will for the first time not vote Conservative at a General Election.

[Tony Makara]

James, very true. The state does need cutting back. Particularly the gravy train bureaucracies that eat up revenue. Wherever the future Conservative government can make savings, ie closing the wasteful New Deal, and reallocating the money to front-line services, they should do so. The Labour government has set up layer after layer of bureaucratic infrastructure, all in the name of accountability, yet all these tiers do is breakdown any effective chain of command, as in the NHS. Cutting waste is not cutting essential services.

[michael mcgough]

MH;you and millions of others.

[Matthew Barker]

Alan S:

Firstly, i would dispute the 50% plus figure. I believe there was an article on this site 2 to 3 months ago expressing concern that state-spent GDP had reached 44.4% in line with Germany. While this is terrible for the economy, as well as being morally abhorrent, is a reasonable step away from more than 50%.

Secondly, sharing the proceeds on the basis of 2 percent spending means that approxiamately 5 percent will be going towards tax cuts. Using figures from John Redwood's "Don't listen to Labour - tax cuts do work" article , and safely assuming 2.5 percent growth, that means in the first year there would be room for around 2.5 billion in tax cuts. this shows this policy doesn't accept Labour's state spent proportion of GDP, it wil reduce the size of the state. Just over time, making it less painful for those who rely on public services: which directly or indirectly, is all of us.

[James Maskell]

MH, Id be careful saying that if you are involved with your local Association. Justin Hinchcliffe will not be happy...

[Richard Woolley]

How about abolishing Sure Start, ending state-run childcare, scrapping the New Deal and eliminating the tens of billions pounds worth of waste in public spending? According to one report, if public administration were as efficient in the UK as what it is in the US, Australia and Japan over 70 billion pounds could be knocked off public sepending all without firing one doctor, teacher,nurse etc. And how does cutting taxes destabilise the economy? Has slashing corporation tax destabilised the Irish economy in the last decade? As long as there are tax cuts in the context of a balanced budget there can be no economic instability. Mrs Thatcher has reportedly said that 'you can't have economic stability without tax cuts'. Try telling that to Dave!
It's nonsense to 'split the proceeds of growth'. The conservatives should commit themselves to balancing the budget over a 5 year period and eliminating the PSBR through a combination of economic growth and cutting public sector waste.
Cutting taxes in the medium run tends to lead to greater tax revenue because of the greater economic activity it generates. Oh I forgot, the economic argument is over according to Dave! Silly me. But if he stopped talking about 'social responsibility' (whatever that means) and started to talk about important things such as the state of the economy he might find himself ahead of Brown in the polls.

[MH]

James. Fret ye not. I did not renew my membership last year for the first time in nearly 20 years.

[Mark Fulford]

He has expertly articulated why this 36 year old who works in the City will for the first time not vote Conservative at a General Election.

This 39 year old, who doesn't work in the City, thinks it was an excellent piece. MH, could you elaborate on what you found so offensive? Why, to you, does this policy so miss your mark, and who is offering something better?

[TaxCutter]

Gutless

[James Maskell]

I shall fret no more.

[malcolm]

Well this 45 year old who also works in the City realises that Osborne has to face political reality. This is one way to neutralise an obvious Labour attack.
I'm glad he has more political nous than you do MH.

[MH]

Mark, very straightforward. First, I attended a dinner last year where Osborne spoke and he was useless - no policy depth and clearly not on top of his brief. Secondly, our economy has been penally taxed by this Government since 1997: simply to accept that the current burden is acceptable (or should even be added to) further erodes the incentive economically to develop and implies that that which is currently taken is spent appropriately. Why not put a moratorium on all spending imcreases pending a review of the efficiency and effectiveness of existing taxation?

Most of all, I find the pathetic attempts to appeal to everyone for fear of appearing to take a stand profoundly depressing. One week, Hug a Hoodie, next week tough on immigration. One week, yes, let's cut taxes such as IHT. Next week, err let's not and we'll put up green taxes (new and existing) to balance it all out.

The current tiny clique that run the Conservative Party might actually do so much permanent damage as to finish the thing.

[James Maskell]

I dont understand the logic. Labour is attacking us over tax cuts and the ridiculous argument that we are advocating cutting front-line public services, so the answer is to give up defending and to come out on the same side as Labour?

[Alistair]

"I attended a dinner last year where Osborne spoke and he was useless"

No surprise there MH. Little Georgie Osborne has become a walking joke even among Tories like yourself.

I don't make a habit of buying the Torygraph But when I saw that the Prime Minister was being interviewed I bought it (hiding it inside my Guardian as I walked down the street)

This fantastic multi page interview is further proof that the establishment welcomes Gordon Brown and takes him seriously unlike the Tory playschool

[DavisFan]

I am strongly of the opinion that David Davis' £38bn tax cut bonanza is exactly what we need. None of this pussyfooting around making sure that things are 'affordable' or that numbers 'add up'.

That's not the approach David Davis would take. We need to get rid of these namby pamby bean counters and show some iron will!

[Curly]

It still worries me that Osborne hasn't got the hang on how to create economic activity, growth, and increased revenues through lower taxation. He talks of "smaller government" while wishing to carry on throwing taxpayers' money around!

I'm sure most voters wish to see clear daylight between the two major parties, particularly when it comes to talking about the economy, we wish to be able to make a clear choice, but it becomes rather difficult when they both preach essentially the same message!

[James]

I agree with MH vis-a-vis Osbourne. He seems too much like Dave's school yard side-kick to carry much weight as a political force in his own right, and as this announcement shows, he's once and for all ceded the intellectual ground on taxation to the liberal-left anyway.

Saying they will tax pollution seems an especially useless argument given Matthew Sinclair's interesting piece on the same issue.

[Michael Davidson]

You know, I don't even know why we're called the Conservative party anymore because there's nothing remotely conservative about us.

Our party should always stand for tax cuts - it's probably the most important pillar of conservatism and yet the Roons with the help of Boy George have abandoned it in some desperate attempt to suck up to Brown. Even Bercow and Mercer seem to love Brown more than their own party. It's abyssmal.

If the elites at the top of the party think this is the way to win support and elections, I seriously doubt their sanity.

[Mark Fulford]

First, I attended a dinner last year...

Not this article, then.

Secondly, our economy has been penally taxed by this Government since 1997

The Labour government matched our tax / spending plans up to 2000.

A moratorium on spending increases would see spending fall in real terms – and that will be labelled “a cut in services”.

The “sharing the proceeds of growth” formula will see taxes fall relatively, albeit not as fast as you’d like. We could borrow to initially fund tax reductions, but would that really be advisable? Alternatively we could hope to become the first Conservative administration in history to actually deliver efficiency improvements.

Most of all, I find the pathetic attempts to appeal to everyone for fear of appearing to take a stand profoundly depressing.

Not this article, then. Again.

[malcolm]

Well said Mark.

[Elrafa]

Logic says that there will be no economic growth in first 3 years of Conservative Government then. As if there are no tax cuts then there is no sharing of the proceeds of economic growth.

Oh dear oh dear what a muddle we have got into.

Why are we so ashamed to stand up and say that taxes must fall. That there are better ways of delivering public services than currently, that are more efficient, cost less and deliver more.

Why can't we say welfarism has to come to an end.

It really makes you dispair for the party. We could have a real problem if the Lib Dems elect one of their Orange Bookers, as that approach is much more progressively Conservative than the drivel Cameron and Osbourn spout.

[Yet Another Anon]

The promise seems to go further than Gordon Brown's pledge in the run in to the 1997 General Election, Labour's pledge then was to keep within the Control Total planned for each year but they left things so that they could alter Departmental spending levels within those plans.

In addition, if the proposal is to stick to the spending plans, then where is the money going to come from for repayment of National Debt. Under Margaret Thatcher and in the 1997-2001 parliament repayment of National Debt was a priority, National Debt repayment reduces the amount of interest that the state has to repay each year and also allows more flexibility in the event of a genuine national emergency for essential borrowing.

Have things reached the perverse situation where in order to get elected Labour have to cut public spending for their first term although they want to increase it and the Conservatives have to increase public spending in order to get elected, usually when people vote for a different party it is because they expect something to be different from the way it was, such plans leave it wide open for the Liberal Democrats to come out and propose a series of economy measures and be the one of the 3 parties proposing the lowest levels of public spending and tax cuts targeted at the poor.

David Cameron and George Osborne are rather lacking in substance, they could end up losing support off to Labour, Liberal Democrat and UKIP. The whole strategy of the Conservative leadership seems to be to go for an even more image based version of the one that Tony Blair used in 1997, the pledge by Labour in the 1990s followed a situation in which the whole economic strategy of the then Conservative government had fallen apart to the point where things that had happened by accident were being described as policy and Kenneth Clarke commented that he went into a cabinet meeting in a situation in which the government no longer had an economic policy.

If inflation was to rocket, or Labour were to suddenly abandon vast swathes of policy in panic then maybe such a strategy would work, but I rather think that the general Public perception will be that David Cameron and George Osborne are not up to the job of government.

The general complaint at the moment is that taxation is too high and that public money is being misspent, the Conservative Party need a coherent agenda for an alternative programme of taxation and spending that allows for targeted spending including increases in some areas with cuts in others, and an overall cut in the tax burden and National Debt repayment.

[Yogi]

Gideon is still caught up in the bright headlights of yesterdays Tony Blair. Remember he once said 'we are heirs to Blair'. The man keeps barking up the wrong tree and is now being wrong footed by Brown. The country (apart from teh political anoraks) is crying out for change and all cameron and Gideon are capable of offering is the same old Labour policies. If so, there will be less than 60% turn out and Labour will walk.
Our MPs should tell Cameron and his touchy feely acolytes that it is time to stop this pandering to the Guardian readers and the Islington Liberals and engage with the grassroots.
The key issues are, Law and Order, immigration, EU Constitution (treaty), tax, education and regulation. This government has failed the country in all of these and is living proof that throwing money at a problem or making eyecatching statements are not the answers.

[DavisFan]

You know what. If we had got DD in, we'd now be releasing a flurry of attacks on Europe, promising unfunded tax cuts and promising to shut the door to Johnny Foreigner - and I cna guarantee you that we would be at least 15 points ahead in the polls.

[Iain]

"I attended a dinner last year where Osborne spoke and he was useless - no policy depth and clearly not on top of his brief. "

MH, you don't need to hear Osborne speak at a dinner to realise he isn't up to the task, for I haven't but have realised he is useless.

It is my belief that many of the woe's currently afflicting the Conservatives stems from the failure of George Osborne to have challenged Gordon Brown's record as Chancellor, and in failing to do that means you have no basis on which to set your own political philosophy or policies, making the call for tax cuts, without any intellectual backing, sound extreme, and so means the Conservatives have to tag along with Labour's tax and spend policies.

[215cu]

It seems very reasonable to me.

Mention tax cuts then Labour get the 'cuts to public services' line out. It works, it kills Tory support. Despite the small fact unnoticed that Labour are sharing the proceeds of growth already, a key Tory economic position.

There is plenty of fat there to trim. The tax code itself is a legalistic wet dream, it's the most complex in the world.

How about the £140bn spent in quangos for starters?

As for the 'well, I'm so-and-so and I will not be voting Tory'.

Fine. As if that is going to make one shred of difference. If you want to change, then debate your position and make a stand.

Not throw your toys out of your pram and go off in a huff like someone 30 years younger.

[malcolm]

If you're going to troll davis fan please try at least to be funny. At the moment you're a bit boring to be honest.

[Yet Another Anon]

promising unfunded tax cuts
I don't think they'd be unfunded, there are always different ways of doing things, he could have room to announce some increases in some public services as well as extra money for Defence, National Security and Policing and cuts through phasing out many public sector non jobs, why aren't David Cameron or George Osborne after the vast bureacracies of non jobs anymore, there are probably more of them than ever and this is recognised by most people supporting every single political party. Hugely expensive PFI projects and people with job descriptions so absurd that they seem to be something out of some kind of spoof novel.

[Traditional Tory]

I actually now think it is possible that Cameron might just dig himself out of the hole he spent months digging himself into.

More sensible Toryism like we got last week and an end to all the hoodie-Rwanda-Grammargate drivel, and the party's traditional support could return.

But one thing is for certain. 'George' Osborne aged 15¾ needs to go.

After all, we can't even blame Cameron for that bizarre appointment.

[David Belchamber]

215cu @ 12.18:

Thank you for a breath of fresh air and commonsense:

"It seems very reasonable to me.

Mention tax cuts then Labour get the 'cuts to public services' line out. It works, it kills Tory support".

We had the hysterical Ed Balls saying exactly that only two days ago, and Alistair Darling repeated it a few weeks ago. Facts and figures mean nothing to this government; they manipulate them as they wish (like the crime figures used against Cameron on Newsnight the other day).

Like other posters, I regard Osborne as being too lightweight for the job but I have frequently in the past asked the tories to commit themselves as he just has to stop Labour lies (though I have always confined my suggestion to education and the NHS only).

I also agree with other posters that there is so much waste expenditure in the system that the tories must be able to make worthwhile economies to pay for tax cuts without in any way reducing standards - indeed, with greater efficiency, standards will probably improve.

[Jonathan Powell]

I think most people on here are missing the point. First, just because a political party promises something doesn't mean they will keep their promise. Labour promised not to raise taxes, and yet they have repeatedly broken that promise yet remain popular. It's all just words at this stage -- if the Tories win power then I'm sure they'll find a way to cut taxes without cutting services and no-one will complain, but right now the game is to nullify Labour's smear that the Tories want to sack a load of nurses to finance tax cuts "for the rich".

Now, it may well be possible to educate the electorate that it's possible to reduce the size of the state and simultaneously improve schools & Hospitals, but the reality is DC and Osborne have not been pursuing that strategy. It's ridiculous to expect them to suddenly start making the argument for a smaller state a month before the election. This announcement is just the logical culmination of the Cameron strategy of "triangulation", centrism and all that other BS that worked for Blair. If by some miracle the strategy proves successful then the whole game will change, Labour will be on the back foot and the Tories will be free to run the country as they see fit.

[Winchester whisperer]

Even from a spin perspective, the idea that the Conservatives are going to copy Labour, does not come across as positive. There must be clear blue water.

[Sean Fear]

My own view is that George Osborne has been overpromoted.

I would personally be very reluctant to close off any of my options by promising to match Labour's spending increases for three years.

[Iain]

"I would personally be very reluctant to close off any of my options by promising to match Labour's spending increases for three years."

Especially when we haven't even got to the first base of attacking Gordon Brown's record and policies, for why should people want a change in Government, when the Shadow Chancellor hasn't even made the case for a need in a change of Government, let alone announcing policies to rectify the problems he hasn't even bothered to identify. Which more or less goes to explain why George Osborne seeks to copy Labour’s economic policies, because he hasn’t bothered to intellectually challenged the direction of Labours economic strategy, hasn’t bothered to identify the problems, so hasn’t needed to set out policies other than to copy Labour. The problem for this strategy, other than to give George Osborne an easy ride, so he can do the Shadow Chancellor’s job part time, is that he has failed to give people a reason to vote Conservative.

[David Cooper]

George Osborne appears to justify his proposal to adopt Labour spending totals by contrasting 2% annual spending rises with an anticipated 2.75% growth rate of the economy, implicitly describing this as sharing the proceeds of growth.

Two thoughts: (1) does this mean, translated into plain English, that under a Conservative government the government’s take of annual gross domestic product will fall – if so, can we have that in writing? (2) what if the anticipated growth rate of the economy could not be taken for granted, and we were to inherit a Brown created recession with no proceeds of growth to share?

Or is it too much to expect answers to such questions from someone who goes on in the same article to offer no tangible reduction in tax at all, starting off with “we have the highest tax burden in our peacetime history” only to pronounce “any reduction we offer in one tax will have to be matched by a tax rise elsewhere”?

Michael Howard returned from the back benches to take on the shadow chancellor’s role in the last Parliament. Is it too much to hope that, if asked nicely, John Redwood might do the same now?

[spagbob]

great, that article makes the conservatives sound much more like a prudent, economically disciplined party ready for government. we finally have a clear statement of conservative economic policy under Cameron. thanks George.

[Paul, Southampton]

The Labour government matched our tax / spending plans up to 2000.

Mark Fulford 11:23

Really? Brown abolished the tax credits that pension funds could receive in July 1997. That wasn't in the Tory tax plans, ergo, he didn't match Tory tax / spending plans up to 2000.

The Tories seem to lack the ability to articulate to the wider electorate the arguments in favour of a wholesale reduction in the amount of public spending. They are running scared of the left wing media.

[Mark Wadsworth]

Richard Woolley and David Belchamber hit nail on head. Government waste (pen-pushers, meddlers, qaungista, consultants, red tape) costs us somewhere between £50bn and £100 bn per annum. So there's no need to sack any teachers, nurses etc.

Go large, George! These plans always get watered down once your in government.

[Mark Fulford]

Really?

The point I was making is that you cannot quote 1997 as a period of high taxation.

The Tories seem to lack the ability to articulate to the wider electorate the arguments in favour of a wholesale reduction in the amount of public spending.

Why don't you give it a stab (being sure to mention which public spending you'll reduce)? You'll soon see that it's not quite as simple an argument as you think.