The Conservative Party in Blackpool: Lamont's public spending cuts hark back to 'golden age'

INSISTING that he was not presenting a 'shadow Budget', Norman Lamont yesterday proposed a pounds 5bn cut in public spending, with social security benefits the principal target.

The former chancellor also contradicted John Major's assertion last July that there never had been 'a golden age' in the 1980s, during Margaret Thatcher's tenure.

Mr Lamont set out his ideas on cutting the pounds 50bn public deficit in a speech at a Blackpool cinema, minutes after Kenneth Clarke had addressed the conference.

Some of those arguing for further increases in income tax did not understand the full extent of the increases already in the pipeline. His March Budget would raise pounds 10.3bn over three years, with taxes on income rising by pounds 5bn - equivalent to raising the basic rate by more than 3p in the pound. 'While it is possible to have such a large tax-raising Budget once in a decade, it is unrealistic to have two in the space of nine months . . . Further substantial tax rises would retard recovery, slow growth, abort job creation, penalise success and stifle endeavour - and we should reject them.'

Cutting public spending meant reduced funding in the 'citadels of the welfare state' - social security, health, education, and Scotland, Wales and Northern Ireland. These areas had seen rises totalling over pounds 19bn in the last four years.

Mr Lamont commended the 'excellent suggestions' of the Thatcherite No Turning Back Group of MPs - and the MPs themselves as a 'splendid bunch'. The proposals included giving people the opportunity to contract out of unemployment and invalidity insurance, to contract out of the basic state pension, making employers insure employees against industrial injuries, equalising the state pension age at 65, and eventually 67, and phasing out the earnings-related element of invalidity benefit. The benefit should also be taxed. 'These are propositions and policies which we must address if we are to be in power as well as in office,' he said, reworking his resignation speech criticism that the Conservatives gave the impression of being in office but not in power.

He said that 2 per cent off spending programmes across the board would yield pounds 5bn. 'Does anyone really believe that programmes cannot be cut across the board by two percentage points?'

He hoped that capital gains tax would be cut during the lifetime of this parliament, repeated his call for an independent Bank of England charged with fighting inflation, and said the Royal Mail should follow British Rail into the private sector.

Though Mr Lamont said he had no doubt that with John Major the party could win the next election, he made plain his disagreement with the Prime Minister's recent verdict on the Thatcher years - in an unguarded remark, taped by accident, Mr Major said the party was 'still harking back to a golden age that never was'. But Mr Lamont said: 'The 1980s was a golden decade.' Though there were times of great unpopularity, 'we always knew where we wanted to go'.