Conservative leader David Cameron plans to slash public spending in 2009/10 by £5bn to help savers and pensioners recover from the recession.
Under the proposals, the income tax on savings by basic-rate taxpayers would be abolished, and pensioners’ tax allowance will be increased by £2,000.
The cut in public spending is equivalent to the efficiency savings that the Labour Government has earmarked for 2010/11, but Mr Cameron believes “the time to start being prudent is right now”.
Although the Conservatives have promised to match existing spending on health, schools, defence and overseas aid, other areas will see its spending growth reduced from four per cent to one per cent.
Yvette Cooper, Chief Secretary to the Treasury, believes plans to cut spending in areas like apprenticeships would take the UK in the opposite direction of where it should be heading.
Ms Cooper said: “What David Cameron is proposing is spending cuts during a recession.
“I mean, this is cuts in support for the unemployed to get back to work, cuts in support for training and apprenticeships, cuts in support for business, or housing, transport, regeneration.
“I think it’s economic madness, and no other major government in the world is considering this, quite the reverse.”
Brendan Barber, TUC general secretary, also warned the measures would “add to the dole queues as a result of proposed cuts in public spending.”
However, The Tory leader stressed the changes were needed to help turn Britain from a culture of “spend, spend, spend” to one of “save, save, save”.
Mr Cameron said: “Our vision of a good future is of a less materialistic country, more concerned with people and our relationships; a contributor society not a consumer society.”
Liberal Democrat Leader Nick Clegg also attacked Mr Cameron’s spring Budget proposals, and called for more details.
Mr Clegg said: “David Cameron is offering his own fake give-away. Cutting savings tax will mean someone saving £100 will only get an extra 40p a year.
“If David Cameron is going to be taken seriously he has to identify what cuts he will make. How many fewer police officers will there be on the street and who will have a smaller pension?
“The Liberal Democrats are the only party with a detailed plan on how to put Britain on a green road out of recession. We have set out how we would make big, permanent and fair tax cuts, giving £1,000 in income tax cuts to families on average incomes.”
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