Alastair Darling and Vince Cable gang up on Osborne in chancellor debate
The General Election campaign burst into life last night when the three men who would be Chancellor clashed over how to cut the £167bn deficit in public finances.
In the election's first major live television debate, Shadow Chancellor George Osborne struggled to defend the Tories' flagship policy, announced yesterday, to reverse Labour's planned 1% rise in national insurance contributions (NICs) in April next year.
His proposal to find £12bn of government efficiency savings to finance the £5.6bn “tax cut” was ridiculed by Chancellor Alistair Darling and Liberal Democrat Treasury spokesman Vince Cable in a heated one-hour debate on C4.
They also attacked Mr Osborne over his commitment to start to cut public spending in the financial year beginning next month, warning that the move could tip Britain back into recession.
The Tories claimed Mr Darling committed a “gaffe” by revealing a government decision to be announced today to rule out a “death tax” on people's estates to fund social care for the elderly.
Viewers who voted online during the programme awarded victory to Mr Cable, who won 36% of their votes, compared with 32% for Mr Darling and 31% for Mr Osborne. The head-to-head event, with questions from a 200-strong studio audience, was seen as a warm-up act for Britain's first election TV debates between the three party leaders next month.
Mr Darling told his Tory shadow it was “incredible” that he had announced plans to spend £30bn over five years by avoiding the increase in NICs, which would force a Tory government to cut spending deeper or put taxes up.
“We have got to get our borrowing down. But the first thing you announce is not measures to reduce that borrowing, but instead to go on a spending spree which you cannot finance.” He said Mr Osborne had “not a single penny in the bank” to pay for tax cuts.
Mr Cable recalled that the Tories had dismissed the £11bn efficiency savings announced in Mr
Darling's Budget last week as “complete fiction, which frankly a lot of them are,” but were now using the same device to finance their tax cut.
Mr Osborne insisted that the proposed £12bn of savings had been been supported by two former government efficiency advisers, Sir Peter Gershon and Martin Read. “The choice is this: do you want taxes going up on people's incomes, on jobs in the middle of a recovery or do you actually want to tackle the wasteful government spending we see all around us?”
Labour will be delighted that Mr Osborne was under pressure on his party's key tax pledge, having decided to target him as the Tories' “weakest link”.
But the Conservatives scented blood, claiming that Mr Osborne had forced the Chancellor to rule out a controversial Labour proposal for a 10% levy on estates to fund the spiralling social care bill.
Andy Burnham, the Health Secretary, will confirm that the idea has been dropped when he unveils a White Paper today after the collapse of all-party talks aimed at finding a pre-election consensus.
The Cabinet's climbdown follows concerns that the proposed “death tax” would alienate older voters at the election.
The White Paper is not expected to include proposals on funding. Instead it will propose setting up a Royal Commission to draw up plans to fund care after 2015. “It's a simple question,” Mr Osborne told Mr Darling. “Is that an option that a Labour government, if elected in four to five weeks' time, will keep on the table?”
Mr Darling said: “No, it is not.”
Mr Cable and Mr Osborne both said “yes” when asked whether public spending cuts would have to be deeper than those implemented 20 years ago by Margaret Thatcher. Mr Darling replied: “I said last week they are going to have to be pretty deep.”
The three agreed on the need to reduce the bill for public sector pensions, and all declined to rule out VAT rises in future to get the deficit under control.
Mr Darling said he had already taken “difficult” decisions to raise NICs and income tax for the highest earners. “That is the choice I made and that is the choice I'm sticking with,” he added.
Mr Osborne admitted that there would be “some tax rises that we cannot avoid”, adding: “The thing I am working hardest to avoid is the national insurance rise.”
Asked to set out the qualities he brought to the post of chancellor, Mr Darling pointed to the “tenacity” which had helped steer Britain through a very difficult period. He said everything he did in politics was driven by a “sense of fairness”.
Mr Osborne argued he would bring “energy and new ideas” and teamwork to the job, and take difficult decisions which were “rooted in values”. He denied his priority was cutting inheritance tax for estates over £1m, insisting his focus was cuts in NICs.
Mr Cable cited his long experience of the private sector and warnings of the dangers in the economy long before the crash. He said the Liberal Democrats were different, because they were not “beholden to either the super-rich or militant unions”.
“The Tories presided over two big recessions in office, they wasted most of the North Sea oil revenue, they sold off the family silver on the cheap. Now they want to have another turn to get their noses in the trough and reward their rich backers.”