Tories cut to the chase as George Osborne heralds age of austerity
Added: (Wed Oct 07 2009)
Pressbox (Press Release) -
The Conservative leadership took a massive electoral gamble yesterday by offering years of pain to voters in the hope of being rewarded for honestly in facing up to the nation’s plight.
George Osborne heralded an age of austerity as he pledged to freeze the pay of millions of public sector workers, cut benefits enjoyed by the middle classes and cap civil service pensions at £50,000 a year.
Together the cutbacks would save £23 billion in government spending in a first Tory Parliament.
The Shadow Chancellor’s brutal warning to the country to tighten its belt came after it emerged that plans to raise the retirement age to 66 were being brought forward by ten years.
It means that for the first time an Opposition party is entering a general election period pledging tougher medicine than the governing party. Mr Osborne warned that Britain was “sinking in a sea of debt” and outlined a series of measures under a Tory government.
Senior civil servants would have a cap of £50,000 a year on their pension payouts, saving hundreds of millions of pounds.
All public sector workers earning more than £18,000 will get no pay rise in 2011, saving £3.2 billion a year. Mr Osborne said that this would protect 100,000 jobs.
Families with household incomes above £50,000 would lose tax credits, saving £400 million a year.
“Baby bonds” worth £250 brought in by Gordon Brown would be axed for all but those chose from the poorest households or who are disabled.
Whitehall bureaucrats and quangos would be ordered to slash this budgets by a third, cutting overall spending by £3 billion a year by the end of the parliament.
No public servant would earn more than the Prime Minister (£197,000) without the Chancellor’s approval.
The 50p rate of tax of high earners, to be introduced by Labour in April, would be kept by the Tories for the time being.
The operational allowance paid to troops serving overseas would be doubled to £4,800 to meet concerns about the welfare of those in Afghanistan.
Mr Osborne stressed that he was not asking the lowest paid to make the sacrifices, saying: “We are all in this together.” But Labour seized on his decision to retain his proposal to cut inheritance tax on estates worth up to £1 million. Liam Byrne, Treasury Chief Secretary, said that he was attacking the “mainstream middle” while defending a tax cut for the richest.
Mr Osborne’s pay freeze went much further than plans announced by the Government the previous night to squeeze the pay of the 750,000 highest-paid public servants.
Under the Tory plan, only those earning less than £18,000 would get a rise. The new pension cap will affect senior civil servants, town hall executives and quango chiefs. It means that the taxpayer will not provide extra funding for any pension pot already worth £50,000 or more per year.