Tories axe pledge over Labour spending

David Cameron said the Tories' promise to match Labour's planned spending up to 2011 was now unsustainable.

In a significant shift of policy, the Conservative leader said the Government's investment plans were based on "heroic assumptions" about the country's economic recovery.

"Labour's economic mismanagement makes it vital for the long-term health of our economy that we set a new path for restraining the growth of spending," he told reporters.

"That means for the year 2010/11 we need change, not more of the same.

"That means reducing planned government spending growth and not matching Labour's spending plans.

"To be absolutely clear - to stop future tax rises the growth rate of spending in 2010/11 will have to be lower than the growth rate laid out by Labour.

"The growth rates of spending in the years beyond 2010/11, pencilled in by the Chancellor last year, are also now unsustainably high."

Mr Cameron also warned that Prime Minister Gordon Brown's proposed "fiscal stimulus" was merely storing up tax rises for the years to come.

A £30bn injection to the economy would mean an 8 per cent rise in income tax later, he claimed.

Mr Cameron said recent forecasts meant the British economy could not withstand previous spending commitments without inflicting bigger tax rises on the public later.

Tax cuts now would make the situation even worse, he added.

Speaking at a Westminster press conference, he said: "What once looked affordable in boom times is now clearly unsustainable.

"Let me put this as clearly as I can - unless we curb the growth of spending, taxes will need to rise in future.

"Without such restraint the borrowing bombshell will turn into a tax bombshell and if Gordon Brown cuts taxes now the bombshell will be even bigger."

The Tory leader said senior Labour figures had already admitted as much.

He pointed to Business Secretary Lord Mandelson's comments yesterday that a fiscal boost to the economy now would require a "medium-term adjustment" in the years ahead.

Mr Cameron said the change did not represent a cut in spending, although he would not specify at this stage where spending priorities would lie.

He said: "Of course Labour will try their old lies about Tory cuts. If they do, we will know they are planning tax rises.

"But they don't understand what has changed: no-one believes them any more, no-one listens to that kind of lie any more, no one's interested in the old politics any more.

"People are not fools - they can see that reducing the increase in Government spending is not a cut, but what it says it is: less of an increase.

"They can see all around them that if anyone is actually cutting public services it is Labour with its targets, bureaucracy and incompetence leading to maternity services, accident and emergency units and GP surgeries all closing down."

Mr Cameron urged Chancellor Alistair Darling to reduce his plans for 2010/11 spending growth in next week's Pre-Budget Report.

And he repeated the Conservatives' demand for an independent Office of Budget Responsibility to be set up to hold the Government to account.

The Tory leader also promised to look at further short-term measures to "help people directly".

"We will continue to see what more can be done right now to put money in people's pockets without adding to borrowing and our ballooning national debt," he said.

"That's why, in my conference speech, I asked all my shadow ministers to review all over again every spending programme to see if it is really necessary and really justifiable."

Mr Cameron said he wanted to get Britain on "the path to permanent tax cuts in the future".

Mr Cameron said he could not say whether the party would vote against any specific tax cuts proposed by the Government next week until it had seen the detail of the Pre-Budget Report.

Asked if education and health spending would be protected, he said: "We are not announcing the make-up of 2010 spending today. It would be difficult to do that.

"The Government itself has said that, when it comes to health and education spending in 2010, its own plans are under review.

"What we do know is that the NHS is our number one priority; that we do believe in real-terms spending in the health service and that's what will happen."

Only one government in history had cut NHS spending, he said - Labour in 1977.

"That was the result of a failure to observe fiscal prudence and I think it is quite an important lesson: the time when you experience cuts is when your government tears up the rule book, maxes out on the credit card and bankrupts the nation.

"That's the lesson that I learn from the history books."

He accused the Prime Minister of risking the long-term health of the economy in a bid to ensure he won the next General Election.

"What Gordon Brown is trying to do is find an international cover for what he wants to do for electoral and political reasons in the UK. I think that is a great mistake."

No responsible politician could promise that taxes would not rise, he said, but the Tories would do "everything we can to stop those tax rises coming down the track at you".

Mr Cameron told reporters: "My profound sense in politics is that the British public are not fools by any imagination. They are very sharp, they are very perceptive, they know exactly what is going on right now.

"They know that the nation has maxed out on its credit card. They know that we cannot really afford a tax giveaway paid for by another borrowing splurge. And they know that if that happens it will mean tax rises in the future.

"Why do they know this? Because they have experience the last decade. After the last two elections, the Government put up taxes on average by £9bn.

"That would be peanuts compared to what would happen after the next election if Gordon Brown borrowed and spends £30bn."

The Tory leader also said "even more action" was needed to resolve the banking crisis and ensure money was being lent to house-buyers and businesses.

But he refused to give details of specific proposals, pointing only to moves by the US Federal Reserve to lend money directly to firms in America.