Letwin: Beware a chancellor bearing gifts before polling day
Tuesday 08 March 2005
Gordon Brown will be forced to resort to accounting tricks to find any money for a pre-election tax cut, the Conservatives warned yesterday.
Oliver Letwin, the shadow Chancellor, said voters should "beware a chancellor bearing gifts" in the run-up to polling day. Mr Letwin said any handouts in Mr Brown'sBudget next Wednesday would not disguise the need for tax rises of up to £11bn after an election to bring the public finances back into balance if Labour won a third term.
Mr Letwin said the Chancellor was so close to breaking his "golden rule" on the public finances - to borrow only to invest averaged across the economic cycle - that he had little room for manoeuvre. "But I have no doubt that this Budget will be designed for this election rather than the economic management of the UK," he said.
He forecast Mr Brown would find extra resources via "stealth taxes", reallocating existing spending, proposing to close tax loopholes or raising forecasts for the public finances. Mr Letwin said he was confident voters would see through tax cuts, given the warnings by independent bodies that taxes would have to rise unless Mr Brown reined inspending plans.
"It will be greeted with cynicism," he said. "People know that there will be tax rises and I don't think they will be gulled into thinking there won't be."
Mr Letwin told The Independent his plans to use £12bn of efficiency savings to fund an £8bn plug for the "black hole" and a £4bn tax cut marked a "dynamic" difference between the parties. He said the average error in the Treasury's forecasts for the public finances three years' ahead was £10.8bn - close to the Institute for Fiscal Studies' estimate of the size of the tax rise needed to hit the golden rule.
He insisted his own plans were affordable in the wake of comments at the weekend by John Redwood, a shadow cabinet minister, that a £4bn tax cut would be a "down payment".
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