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Cameron's search for cuts to fund low taxes
Joe Murphy, Political Editor19 Nov 2008
DAVID CAMERON has told his shadow cabinet to intensify a search for Whitehall savings to make room for possible tax cuts.
With fears growing that taxes will rise whichever party wins the next election, the Conservative leader says spending cuts are vital to show voters that they can save money by voting Tory.
The search for savings will go further than merely identifying government waste. A team of officials is studying how New York mayor Michael Bloomberg managed to cut costs by reducing some services.
Mr Bloomberg is reducing New York City's workforce by 3,000, including firing 500 staff, as well as proposing cuts in health, education, police and the fire brigade programmes, and reversing a seven per cent property tax reduction - all to save £1 billion to plug a multi-billion-pound budget gap.
Both Labour and the Tories are now locked in a battle to show they can prune State spending to the bone.
Treasury Secretary Yvette Cooper will unveil the results of the Government's latest efficiency drive on Monday, likely to go further than the £30 billion savings already promised by Labour.
Her aim is to close off Mr Cameron's options by identifying cutbacks first - denying him the chance to promise easy savings without leaving the Tories open to the accusation that frontline services would be hit.
Mr Cameron has already managed to promise targeted tax cuts by saying he could fund them with specific spending reductions, such as slashing the amount that Whitehall spends on advertising government policies.
But the tactic has had mixed success with voters. In 2005, the Tories went into the election claiming that business troubleshooter David James had identified billions of pounds worth of savings for them to implement. But the exercise backfired because voters did not trust them not to cut essential services.
Mr Cameron ditched his commitment to match Labour spending plans for 2010/11 yesterday, saying the "dramatically worsened" economic crisis made them unsustainable.
He also paved the way for opposing next week's economic stimulus funded by higher borrowing, subject to seeing the details. He said it would mean a "tax bombshell" after the next election if it went ahead.
But business groups are backing the economic stimulus. CBI director general Richard Lambert said: "In the current exceptional circumstances the CBI believes there is a case for a well- targeted, controlled and time-limited fiscal stimulus in the immediate future."
Miles Templeman, of the Institute of Directors, added that a £20 billion tax cut -slashing 3p from income tax and 4p from corporation tax - should be followed by "medium-term fiscal restraint".
Reader views (14)
Here's an idea. Why not start by getting rid of MPs expenses. Given the amount of abuse that has been uncovered the least they can do is to exist on their £65000 salary which seems like more than enough to me. Everyone else has to do this so why not our MPs too? It would at least set a good example for everyone else by showing some leadership in these difficult economic times. I won't be holding my breath though!
- Luke, Nottingham, 10/12/2009 19:21
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Just stop imaging that we are a world power and cut the defence budget this could be done if europe had a single Airforce, Army and Navy.
Also people like Boris Johnson who receive at least £100k from one job should pay tax at 70% on other jobs with this rate applying to the one that pays the most.
Our problem is not to much spending its to little taxation of those who end up providing over representation.
Also why are public schools treated as charites? Treat them as businesses instead.
Close tax loopholes of the self-employed Boris could start by making Taxi drivers accept payment using Oyster!
That should make their tax records more easy to compile.
- Melvyn, Canvey Island, Essex, 20/11/2008 13:46
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If there is so many savings to be made in govt, why has it taken sooo long for nu labour to make them? If they'd made them earlier the cuts that need to be made now would be less damaging. Asleep at the wheel again!
- Gavin, Sydney Australia, 20/11/2008 06:04
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The middle class is being squeezed..
Ok, I am "generalising" here but:
1. Rich.. well, they may get squeezed, but hey they can go to Sainsburys instead of Marks.
2. Middle class.. get squeezed, give up stuff. But cannot "rely" on government assistance, even though the majority of the country is middle/working class and contiributed the most "proportially" in taxes, as they cannot get any loop holes.
3. Working class/low income.. if squeezed can call upon the government.
- Simon L., London, 19/11/2008 17:52
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errmm Harry in Acton I think you will find that TAX WASTE in overpayment and fraudulent benefits claims and government waste on NHS computer systems, MPs expenses and the dome etc etc etc ad infinitum far outstrips the minority of wealthy that manage their tax affairs, look at what is wasted first, its actually money that the government already had...
- John G, London UK, 19/11/2008 17:26
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Cameron should have remained supportive of the Government's package of measures to solve the credit crisis. It is clearly beginning to work already
- Keith Price, Luton, England, 19/11/2008 17:08
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Well when our group of Old Etonian millionaires get elected they could set a good example by refusing their Ministerial Salaries, Expenses and pensions. Look at the example set by Boris Johnson in London. They all insist they are in Politics to make things better!
- Herbert Hoover, Acton England, 19/11/2008 16:17
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One good start to cost-cutting might result in substantial losses of advertising revenue for the Guardian. We need to get rid of the various nonsense jobs created to put politically correct lefties in our town halls and Whitehall. Abolish the target culture in all departments, thus freeing operational staff to do their job properly instead of filing endless paperwork for yet others to audit, monitor and collate into mendacious statistics. The public sector has been transformed from being overstaffed and inefficient to being corrupt, overstaffed and appallingly managed. There will be no option but to swing the axe at the bureaucrats.
- Peter, Pirot, Serbia, 19/11/2008 15:21
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Instead of cutting services and creating even more unemployment the tax system should be changed so that higher rate taxpayers pay tax at 40 percent on their higher earnings and don't manage to cut their tax rates to 15 percent by using Tax loopholes. All loopholes should be abolished and Companies too should pay Tax on profits they make in this country.
- Harry Hack, Acton England, 19/11/2008 14:17
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Dear David, if you want to save millions of pounds please a look at the objectionable system of paying children's benefits to people whom have no children in this Country and have never had their claim checked by anyone. Please check how many of the alleged thousands of immigrants returning have canceled their benefits, please cancel the thousands of quangos, please get rid of the hundreds of thousands of shiny bottoms infesting the NHS and civil service. Cancel sending 825 million pounds to India which is a nuclear nation, richer than us and is currently playing in space. Use the money to save pensioners lives in this Country and reduce our taxes before we all have to go on the dole. Build prisons and start to lock up the scum on our streets and scrap political correctness and modernize that pitiful Human Rights Act. On the following day please urgently deport all immigrants criminals and stop this madness of letting criminals out after serving only half the sentence. By the way, the public have seen through the smoke and mirrors of crime statistics, we know the truth (crime is out of control) so dump the pathetic forms the Police have to complete and get them out 24hrs everywhere to police our streets. On the 3rd day get cadet forces running and lets start to train plumbers and chippy's instead of media and tourism studies. Let's face it most things have been wrecked but everyone has to start somewhere.
- Roger, Staines., 19/11/2008 14:12
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It must be the easiest thing in the world to point out obscene waste carried out by Brown ,money has no meaning at all to him,the whole world connected with this government is on 100.000 pounds a year and inflatin proof pension, all at taxpayers expense
- G Graeme, london, 19/11/2008 13:53
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Ten painless ways to reduce tax:
1. Pull out of Europe. That will save a few MEPs salaries and expenses, not to mention the thousands of civil servants who support them.
2. Close down the Met Office and Office for National Statistics: nothing that either of them produce is accurate.
3. Make the BBC a commercial station and float it as a public company. That will raise a few quid in the short term and save us money in the long term.
4. Pull troops out of Iraq and Afghanistan.
5. Re-negotiate all NHS drug contracts and every governmental IT contract.
6. Scrap the Olympics.
7. Remove at least one tier of management in every government department, especially the NHS and Education.
8. Remove final salary pensions for all new civil servants from 2010.
9. Devolve power to Scotland, Wales and Northern Ireland properly. We either have a Scottish government and no Scottish MPs, or no Scottish government at all; ditto for Wales and NI.
10. Scrap road tax and link it to the duty on fuel.
That's my starter for ten. Dave, you can contact me via The Standard.
- Nobby Clark, Perth, Scotland, 19/11/2008 12:55
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From what I have seen..
1. majority of mortgage holders are NOT on base rate trackers. What with floors in the small print too..
2. if you are on a SVR, you may be not passed the full rate cut. Its a "political" play when Westminster blows their horn.
3. quite a few of us aer on fixed rates as we anticpiated rising rates (referring to historical trends)
I.e. most of the population does not benefit from therate cut.
4. Savers are being punished as saving rates are being cut.
5. People who have been risk adverse are paying for the risky customers.
Therefore I would say a tax break would be fairer and help more of the population. 3p from income tax... definitely a good thing.
- Phelix, London, 19/11/2008 12:03
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I can help Mr Cameron identify many many areas of waste across the UK both at a local and national level. There are too many pen pushers, form fillers and jobs worths not adding any value at all.
- Fly, london, 19/11/2008 10:42
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