Portillo reaffirms his allegiance to Hague's policy of tax cutting

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Indy Politics

The gap between the two main parties on tax widened yesterday after Michael Portillo reaffirmed the Tories' pledge to cut taxes over the lifetime of the next Parliament.

Contrary to reports that he was preparing to ditch the Tories' tax-guarantee policy, the shadow Chancellor said he would stick by it at the next election. Labour immediately stepped up its attack on the Opposition's "irresponsible and politically driven" guarantee to reduce the overall tax burden over the lifetime of a Parliament.

Mr Portillo's supporters have indicated in recent weeks that he wants to drop or substantially amend the policy, because it fails to take into account economic circumstances. Last week it was claimed that the Tories' economic sub-committee was to meet to discuss plans to redraft the policy so that taxes would be cut over the economic cycle instead of the lifetime of a parliament.

But in a sign that William Hague has acted swiftly to rein in his potential leadership rival, Mr Portillo yesterday went on record to commit himself fully to the tax guarantee.

He brushed aside increasingly critical scrutiny of the flagship policy to insist it was compatible with increases in health and public spending.

He denied that the guarantee was "economically illiterate" and it still stood, he said, "endorsed and strengthened" by Gordon Brown's figures unveiled in last month's Budget. "That is the guarantee we gave; it's the guarantee that we have and that I stick to," Mr Portillo said on GMTV's Sunday Programme. "It is a guarantee of honesty, because what we've been noticing under this government is that they were claiming to be cutting taxation, because they cut certain taxes - but in fact the total burden of taxes is rising."

Mr Portillo said the Chancellor's own growth predictions showed that in addition to tax cuts, increases in spending on health and education could be afforded. "On that basis I am happy to say we would be able to afford increases in health and education spending and we would be able to bring down the burden of taxation during the next parliament."

Whether the guarantee would stand beyond the next parliament would depend on future economic conditions, he added. "I think it's actually only sensible to give commitments for one parliament and that's what we would do."

Mr Portillo also said that he was looking at the possibility of a future Tory government using independent advisers to improve economic transparency.

He said: "I'm considering an idea of having independent advisers who would look in on government and would say: 'Chancellor, whatever you may think, we are now in the mid-point of economic growth, or at the top of economic growth or whatever it may be, therefore you should be putting away this amount of money, you should be saving for the future'."

Andrew Smith, the Chief Secretary to the Treasury, said Mr Portillo's vow to cut taxes if a Tory government were returned at the general election "does not add up and even his own colleagues believe it's economically illiterate".

He added: "Michael Portillo showed ... why you can't trust the Tories on tax or public services. He locked the Tories into a politically driven tax guarantee to provide tax privileges for the few, irrespective of the economic circumstances.

"The Tories would deprive the NHS and education of the resources they need - and which Labour is delivering - and their plans would return Britain to boom and bust."