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"Shadow Chancellor George Osbourne's Bonfire Of Middle-Class Benefits".

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"Shadow Chancellor George Osbourne's Bonfire Of Middle-Class Benefits". Empty "Shadow Chancellor George Osbourne's Bonfire Of Middle-Class Benefits".

Post by 1916 Thu Jan 14, 2010 5:23 pm

Middle-class families would lose benefits worth £700million a year within days of a Tory government being elected, George Osborne declared on Thursday.

The Shadow Chancellor said tax credits worth up to £545 a year to households earning £50,000 or more would be scrapped to help get the public finances under control.

Child trust funds, worth £250 to every new baby, would be limited to the poorest third of families and those with disabled children.

Government spending on advertising and consultants and other programmes that represent poor value for money would also face the axe in ‘early’ reductions.

Tory sources said the first cuts could be implemented before an emergency Budget expected in June if the party wins the election. Mr Osborne also said it would be necessary to tear up Government plans to keep on raising public spending.

Last month’s Pre-Budget Report increased spending by £31billion in 2010/11, despite alarm about Britain’s failure to produce a credible plan to rein in unprecedented debts.

The Tories warn Britain is next year forecast to borrow up to 14 per cent of national income – twice as much as when Labour chancellor Denis Healey was forced to go cap-in-hand to the International Monetary Fund in 1976.

There are fears that, like Greece, Britain could struggle to finance its vast budget deficit as markets react badly to Labour’s decision to duck tough questions on how to balance the books.

Investors have shown signs of fleeing from gilts – bonds issued by Britain to finance its debts.

Mr Osborne said there was a ‘clear and present danger’ that international markets would lose confidence in the UK as it racks up a colossal £178billion deficit.

That would mean higher mortgage rates, more businesses going bust and the economy risking slipping back into recession, he warned.

Speaking at the London School of Economics, Mr Osborne appeared with Swedish finance minister Andreas Borg – who agreed balancing the books in countries with weak public finances needed to begin as soon as possible

‘The message could not be clearer – if you find yourself on the wrong road, you take the first available exit instead of carrying on,’ the Shadow Chancellor said.

‘As he [Mr Borg] puts it so well, the longer one waits with the heavy lifting, the more difficult it becomes.

‘I agree with him and an emerging international consensus that acting early helps to establish credibility, which will in turn help to keep interest rates lower for longer and support a strong recovery.

‘As the flood of comments from analysts and credit rating agencies shows, there is a clear and present danger that the world will lose confidence in Britain’s economic policy.’

Mr Osborne added that Labour’s plans were ‘simply not credible’ and are ‘driven by a looming General Election and not economic reality’.

The tax credits cuts will mean around 130,000 better-off families losing out. Currently, families with incomes of more than £58,000, or £66,000 if they have a child under a year old, can receive child tax credits.

The maximum loss per family will be just over £10 a week and will save the Treasury £400million a year.

Reining in the child trust fund, which was launched in 2005 as a Government- sponsored savings and investment account for children, would save £300 million a year.

Mr Osborne has also set out plans for a one-year public sector pay freeze for workers earning £18,000 or more in 2011, and is promising reform of public sector pensions.

"Shadow Chancellor George Osbourne's Bonfire Of Middle-Class Benefits". Article-1243351-07DCD1CF000005DC-613_233x458
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