Economy

Gordon Brown's debt, waste and taxes are holding us back and threatening the recovery with higher interest rates.  A Conservative government will act now on debt to get the economy moving.  We will deal with the deficit more quickly than Labour, so that mortgage rates stay lower for longer with the Conservatives.

We will ensure stability, build a more balanced economy, reform public services to deliver better value for money, create new jobs and make Britain open for business again.

Ensuring stability and creating a more balanced economy

Reducing the deficit. A Conservative Government will hold an emergency Budget within 50 days of taking office to set out a credible plan to eliminate in large part the structural current budget deficit over a Parliament. The first measures will start to take effect this year.

Cutting government spending. We will protect health spending in real terms and honour our commitments on international aid.  But because of Gordon Brown's mismanagement of the economy, there will have to be cuts in other areas of government spending, including:

• A one year public sector pay freeze in 2011 (this won't affect the one million lowest paid workers);
• Bringing forward the date at which the state pension age starts to rise to 66, to no earlier than 2016 for men and 2020 for women;
• Stopping tax credits to families with incomes over £50,000;
• Cutting spending on Child Trust Funds for all but the poorest third of families and families with disabled children;
• Capping the biggest public sector pensions above £50,000;
• A 5% pay cut for Ministers followed by a 5 year freeze, and a 10% reduction in the number of MPs.

We will create an Independent Office for Budget Responsibility to restore trust in Treasury forecasts. The OBR will provide an independent audit of all Government liabilities, and hold the Government to account for its fiscal promises.

Supporting a savings culture. We will restore our savings culture and encourage people to save more for retirement by:

• Working with employers and industry to introduce auto-enrollment into pensions for those on middle and lower incomes.
• Restoring the link between the basic state pension and average earnings.
• Rewarding those who have saved for their retirement by ending effective compulsory annuitisation at age 75.
• Raising the Inheritance Tax threshold to £1 million.
• Taking 9 out of 10 first-time buyers out of stamp duty by raising their threshold to £250,000.
• Over the longer term, reversing the effects on pension savers of the 1997 abolition of the dividend tax credit for pension funds.
• Promoting responsible consumer finance by creating a powerful Consumer Protection Agency, launching Britain's first free national financial advice service, capping excessive store card interest rates, and ensuring that consumers are given much clearer information on credit card bills and advertising.

Making Britain open for business

Cutting corporation tax. Our ambition is to create the most competitive corporate tax environment in the G20. To begin with, we will cut the headline rate of corporation tax to 25p or lower and the small companies' rate to 20p, funded by reducing complex reliefs and allowances.

Simplify the tax system. We will restore the tax system's reputation for simplicity, stability and predictability. In our first Budget we will set out a five year road map for the direction of corporate tax reform, providing greater certainty and stability to businesses. We will publish all technical changes to the tax system by the Pre-Budget Report in advance of each Budget for consultation and proper Parliamentary scrutiny, and we will create an independent Office of Tax Simplification to suggest simplifications to the existing tax system.

50p tax rate. We do not regard the new 50p tax rate as a permanent feature of the tax system, but we could not even think of abolishing the 50p rate on the rich while at the same time asking many of our public sector workers to accept a pay freeze.

Business-led Local Enterprise Partnerships. We will reform regional business support to create business-led Local Economic Partnerships that will be more responsive to local business needs. At the same time we will re-establish clear national policy leadership for key sectors such as aerospace, pharmaceuticals, IT, the creative industries, high value manufacturing and hi tech engineering that generate high-quality jobs around the whole country.

Supporting new business. Any new business started in the first two years of a Conservative Government will pay no Employer National Insurance on the first ten employees it hires during its first year.

• We will build a network of business mentors and provide loans to would-be entrepreneurs, supporting self-employment and franchising as a route back into work.
• We will reduce the number of forms needed to register a new business - moving towards a 'one-click' registration model - with the aim of making Britain the fastest place in the world to start a business.
• We will end restrictions on people starting a business in social housing, to enable social tenants to become entrepreneurs.

Helping small businesses. We will reduce the burden of red tape on business with a 'one in one out' rule for new regulations, mandatory sunset clauses and regulatory budgets for departments.

• We will open up government procurement to small and medium-sized businesses by reducing administrative requirements, with an ambition that 25% of government contracts go to SMEs.
• We will make small business rate relief automatic to reduce admin costs and encourage take up.
• We will use Government guarantees to create more diverse sources of affordable credit for SMEs, building on our proposals for a big, bold and simple National Loan Guarantee Scheme.

Labour are planning to raise employer and employee National Insurance by 1% in 2011. Our first priority will be to try and avoid this tax on jobs.

Reform public services to deliver better value for money

• Higher productivity. We will reform central government and our public services in order to deliver higher productivity and better value for money for taxpayers. We will expect productivity improvements to match the best of the private sector.
• Value for money. We will improve financial discipline by introducing a fiduciary obligation to taxpayers in civil service employment contracts, strengthening the role of Finance Directors within government and implementing clear financial performance targets for senior civil servants. The Treasury will return to its core role of ensuring value for money for taxpayers.

Read our plans to Get Britain Working.

Find out more information on how a Conservative government will boost enterprise.