A big black hole, say Tories

By Oliver Letwin

Shadow Chancellor

(writing for the EADT)

WHEREVER I have been up and down the country, speaking to hard-working people, they have said the same things to me again and again: "We have paid all this extra money in tax, but what have we got to show for it? Why aren't our hospitals cleaner? Why don't we have more police on our streets?"

Yesterday's Budget did not provide any answers.

Over the past eight years, taxes have been raised 66 times, so it was no surprise to see some sweeteners in a pre-election budget, designed to win votes. But I am afraid it was a "vote now, pay later" budget.

Nearly every independent expert, including the International Monetary Fund, now says there is a "black hole" in the nation's finances. This means that if Mr Blair is re-elected, he will once again have to raise taxes for hard-working families after the election.

We think there is another way. We agree with the Government that we need to increase spending on key public services. But we also want to spend within what the nation can afford, so that we can have lower taxes.

The Conservative solution is to spend on things that matter to the majority of people and cut back on the rest. We will spend the same as Labour on schools, hospitals, transport and international aid, and slightly more than Labour on police, defence and pensions.

But we will save £12billion a year by cutting back on the size and cost of government. There will be 235,000 fewer bureaucratic jobs and 168 fewer public bodies. Unelected regional assemblies will go. The new Supreme Court will be scrapped. There will be no Small Business Service and there will be no New Deal.

We will use £8bn of the £12bn we save to fill Labour's "black hole" and avoid Mr Blair's post-election tax rises. We will use the remaining £4bn of savings to cut taxes in our first budget. One of those tax cuts will be to halve council tax for pensioner households aged 65 and over.