Economy

Labour left the economy in a mess. The Government believes that it is the most vulnerable who are most at risk from the debt crisis and that it is deeply unfair to leave it to our children to pay off. We are currently spending £120 million every day on debt interest alone.

We understand that the longer we leave the nation’s credit card bill, the worse it will get. So we have taken immediate action to tackle the deficit and debt in a fair way to get the public finances back on track. We are embarking on a hard road. But it is a hard road to a better Britain.

Dealing with Labour’s decade of debt while prioritising the NHS and schools

• We have set out a credible plan to tackle the deficit and debt. Our plan will eliminate the structural deficit – the part that does not go away as the economy grows – over the next five years, with the main burden borne by reduced spending rather than increased taxes. The National Debt as a share of our economy will be falling by the end of the parliament.
• The Spending Review has set out our choices. We have chosen to prioritise the NHS, schools, security and the infrastructure that will help our economy grow. To do so we have reformed welfare and cut waste.

Tough but fair – ensuring the richest shoulder the greatest burden

• We will make the benefit system fairer by withdrawing Child Benefit from households with one or more higher-rate taxpayers – about 15 per cent of families.
• We have ensured that the banks make a fair contribution by introducing a permanent Bank Levy which will raise £2.5 billion every year over the current Parliament.
• We have ensured that this year there will be no cash bonuses over £2,000 at taxpayer-owned banks.
• We will protect those on low incomes from the effect of public sector pay constraint and other spending constraints.
• We will work in partnership with local authorities in England to freeze council tax in 2011-12.

Boosting growth

• We have delivered on our election promise by stopping the most damaging part of Labour’s planned increase in employer’s National Insurance Contributions – a tax on jobs.
• To help small firms get the finance they need, we have got the banks to lend £190 billion of new credit to business this year, up from £179 billion in 2010. £76 billion of this lending will be to small businesses – 10 billion more than in 2010.
• We will cut Corporation Tax from 28 per cent to 24 per cent over four years which is the lowest rate in the G7. We have also cut the small companies’ rate to 20 per cent.
• We are conducting a fundamental review of employment law to ensure we provide the competitive environment small businesses need to thrive.
• We are carrying out a cross-government Growth Review to remove government barriers to growth. Priority will be given to improving the planning system; supporting inward investors and exporters; and reforming the competition regime.
• We will boost growth outside the South East through a Regional Growth Fund and abolishing the tax on jobs for new businesses in the regions.