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Cameron challenged on Labour claim

David Cameron's General Election campaign ran into its first setback within hours of his visit to Buckingham Palace to inform the Queen of the dissolution of Parliament, as a respected economic think tank challenged his claim that a Labour victory would result in tax rises of more than £3,000 for every working family.

Mr Cameron made the claim outside 10 Downing Street as he issued a warning that the May 7 poll offered voters a "stark choice" between him and Ed Miliband as prime minister, and claimed that a Labour win would deliver "economic chaos".

The £3,000 claim was dismissed by Labour as a "made-up figure", and the Institute for Fiscal Studies (IFS) later released an analysis which found that the party had not said "anything to suggest that this is what they are planning".

Meanwhile, Labour ran into difficulties after a senior business figure objected to the use of his quote in a party advert in the Financial Times, which warned of the risk Mr Miliband believes would be posed to British business by the referendum on the UK's EU membership promised by Mr Cameron if the Tories win.

Siemens UK chief executive Juergen Maier was quoted as saying that the prospect of a referendum was "profoundly worrying for business leaders", but later said he had not wanted his comments "attributed specifically to any particular party", as his company was apolitical. Mr Miliband said Labour was simply quoting public statements by business figures.

Explaining Mr Cameron's tax warning, Tories said that Labour would need to deliver £30 billion of tax rises or spending cuts by 2017/18 to meet the requirements of the Charter for Budget Responsibility which it voted for last year. Conservative sources pointed to comments made by Mr Miliband in 2010 - before he became Labour leader - as an indication that he would rely on £15 billion worth of tax hikes for half of the necessary "consolidation".

But the IFS said that - even if Labour chose to divide the burden of consolidation 50/50 between taxes and spending cuts - it could meet its fiscal target of falling public debt with a £5 billion tax rise in 2016/17 and may need no tax rises at all to achieve its goal of eliminating the current budget deficit by the end of the parliament, or £3 billion if it chose to do so in 2018/19.

With their commitment to balancing the overall budget by 2017/18 and going on to run a surplus, Conservatives would require "substantially bigger spending cuts or tax increases than Labour", said the IFS analysis.

"There is little value in bandying around numbers which suggest either party would increase taxes by an average of £3,000 for each working household," said the paper by IFS director Paul Johnson, his deputy Carl Emmerson and research economist Soumaya Keynes.

"We don't know what they will do after the election. But neither of the two main parties has said anything to suggest that is what they are planning."

Under new rules fixing each term at five years, the Prime Minister is no longer required to ask the monarch to order the dissolution of parliament, which is now governed by statute rather than royal prerogative. But he nevertheless took the short journey to Buckingham Palace to recommend the Queen issue a proclamation summoning the new parliament on May 18.

Meanwhile, Mr Miliband launched Labour's business manifesto with a warning that Mr Cameron's referendum promise represents "a clear and present danger to British jobs, British business, British families and British prosperity".

Deputy Prime Minister Nick Clegg - who followed the PM to the Palace in his role as president of the Privy Council - predicted another hung parliament, saying: "It's my view that the era of single-party government is over in British politics."

Mr Clegg said Britain was at risk from a "lurch to the left or the right" under a Labour or Tory majority administration, and promised that his Liberal Democrats would keep a future government "anchored in the centre ground".

Speaking outside Downing Street on his return to the Palace, Mr Cameron told voters: "In 38 days' time you face a stark choice. The next prime minister walking through that door will be me or Ed Miliband.

"You can choose an economy that grows, that creates jobs, that generates the money to ensure a properly funded and improving NHS, a government that will cut taxes for 30 million hard-working people and a country that is safe and secure.

"Or you can choose the economic chaos of Ed Miliband's Britain - over £3,000 in higher taxes for every working family to pay for more welfare and out-of-control spending. Debt will rise and jobs will be lost as a result.

"Ed Miliband pays lip service to working people while planning to hike taxes and increase debt. After five years of effort and sacrifice, Britain is on the right track. This election is about moving forward - and as prime minister here at Number 10 that is what I will deliver."

But the IFS said Mr Cameron had been "unhelpful" in providing a cumulative figure of tax increases over four years, and said it was not "sensible" to refer only to the impact on working households. A £15 billion tax hike would usually be described as leaving the average household worse off by £560 a year, rather than £3,000, said the think-tank.

Its analysis added: "There is real uncertainty about what path the Labour Party want to follow for the public finances. The Conservatives have been clearer about what they want to achieve, but they have not been clear about how they would achieve it. They would require substantially bigger spending cuts or tax increases than Labour."

Mr Cameron's Conservative Party entered the first day of campaigning buoyed by an opinion poll giving it a four-point lead over Labour - its biggest advantage since September 2010 - overturning a similar lead for Labour in a survey released over the weekend.

Mr Miliband launched Labour's business manifesto in London with promises to balance the nation's books and get debt falling by the end of the parliament, support training, apprenticeships, business lending and infrastructure investment and to "return Britain to a leadership role" in Brussels.

He accused Mr Cameron of overseeing a "divided Conservative Party, half of whom want to leave" the EU. The PM did not seem to know his own mind on Europe and had promised a Tory leadership contest in which candidates were likely to vie against one another to be the most extreme on Europe, said Mr Miliband.

"It is a recipe for two years of uncertainty," he said. "A clear and present danger to British jobs, British business, British families and British prosperity."

Promising to "build a better country together", Mr Miliband said: "There are two futures on offer at this election: to carry on with a Conservative plan based on the idea that as long as the richest and most powerful succeed, everyone else will be okay.

"Or a Labour plan, a better plan, that says it is only when working people succeed that Britain succeeds."

Speaking outside the Cabinet Office, Mr Clegg said: "About the very last thing the country now needs is a lurch to the left or the right and yet that is exactly what the Conservative and Labour parties are now threatening."

Tories and Labour were offering a choice between "too much cutting and too much borrowing", said Mr Clegg, adding: "I think what the vast majority of people in this country want is that we keep this country and our government anchored in the centre ground, which is where the Liberal Democrats have anchored the government over the last five years."

Ukip leader Nigel Farage unveiled his party's "pledge to Britain", which includes saying no to the EU, controlling the country's borders, an extra £3 billion for the NHS, cuts in foreign aid spending and no tax on the minimum wage.

Labour Treasury spokesman Chris Leslie said: "This is a disastrous and embarrassing start to David Cameron's campaign. Within hours of making totally false claims about Labour on the steps of Downing Street, the independent IFS has totally undermined them.

"As the IFS has said, tax and benefit changes by the Tories since 2010 have cost households an average of £1,100 a year. And they say that the Conservative Party's plans for the future would mean substantially bigger spending cuts or tax increases. The whole country knows that these extreme plans will mean the Tories end up raising VAT again and cutting the NHS if they get another five years.

"Labour has a better and more balanced plan. We will cut the deficit every year and balance the books in a fairer way, including by reversing David Cameron's tax cut for millionaires."

Mr Miliband accused the Conservatives of preparing to run a very negative campaign targeting him personally.

"I think David Cameron is in a very defensive, flustered, negative frame of mind from what he's doing," he told Bloomberg Television.

"He's going to throw lots of stuff at me in this campaign, but that means he's worried. That means he's worried that he might lose his job, but I'm going to stay focused on the British people."

Chancellor George Osborne said the Conservatives had made a "reasonable estimate" when claiming a Labour victory would result in tax rises of more than £3,000 for every working family.

He told BBC News: "It's based on what the Labour Party voted for and what Ed Miliband has said he will do. He's very clear he would put taxes up to deal with the hole in the public finances that we would go on filling by savings of public spending and that means that money comes out of working families.

"I think that's a perfectly fair thing to point out."

Pushed about the sums, Mr Osborne said: " I am confident that that is based on what the Labour Party has voted for in Parliament - they voted for a £30 billion saving - and Ed Miliband has said half of that should come from taxes, that's £15 billion, then you take the working families of this country and you come up with that number for the following parliament."

He added: "The Labour party economic policy is all over the place so we've taken what they vote for and we've said let's see what Ed Miliband claims about taxes, put the two together, have the £3,000 figure.

"That's what working families will pay. Everyone knows if you get a Labour prime minister like Ed Miliband they'll pay more taxes and that is a reasonable estimate of the extra taxes people will pay over the coming parliament."

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