Letwin cautious over tax cuts

LABOUR spending excesses could hinder Tory plans to cut taxes after the next General Election, Shadow Chancellor Oliver Letwin warned.

With just a week to go before Gordon Brown‘s Budget, Letwin said the first aim of a Tory administration would be to avoid the prospect of Middle England being stung by another array of Labour tax rises.

But, he admitted, a great deal depended on the likely size of the public spending deficit that a Conservative Government inherited.

Letwin insisted that targeted savings of about £15bn were achievable and could be enough to stave off tax rises after the election.

But, he added, Gordon Brown‘s largesse meant that uncertainties remain. He declined to be drawn on specific tax pledges but warned that much depends on the scale of the problem that Labour leaves behind it:

?I hope Gordon Brown‘s black hole will not be enormous. If it is just large we‘ll be able to fill the hole and avoid tax rises. We have to slow the rate of growth of public spending and use efficiencies to avoid the prospect of these tax rises. The question is, how much more than this we can do.‘

Middle England does not have the appetite for further tax rises, Letwin declared, but said the Conservative Party still had a lot of work to do to convince voters that tax cuts would be possible without sacrificing public services.

?We have shown that it is possible to achieve real savings by reducing the scale of the civil service, trimming various kinds of government spending, increasing public-private partnerships and, at the same time, keep up the front line services that people expect.

?Gordon Brown has taxed heavily but voters see they are not getting value. Our task is to show the country that there is a plausible alternative that avoids Labour‘s third-term tax rises and which is capable of achieving the structural reforms we need to reduce the rate of growth in public spending.‘

Letwin said the growing public sector deficit would cast a shadow over Labour‘s reputation for economic competence and added that past Tory mistakes under former Chancellor Norman Lamont were ancient history.

?People can now put that into perspective. We made bad mistakes over the Exchange Rate Mechanism but we made Britain rich again. The fact is that Labour inherited a strong economic legacy from the last Conservative Government. That represented a radical improvement.

?Over the past two years, however, Gordon Brown has inflated public spending hugely and taxes have risen to pay for it. There is money sloshing around the system like crazy and we need to tackle that.

?We‘re half way to persuading commentators and, by implication, the public that we have a well-considered plan for enacting the structural reforms necessary to rein in public spending.‘