Tories claim Britain will soon pay for Labour tax cuts

THE CONSERVATIVES have launched a “tax bombshell” poster campaign ahead of UK chancellor Alistair Darling’s “emergency budget” statement setting out Labour’s plans for tax cuts and increased borrowing and spending to lead Britain out of recession.

Mr Darling will reveal the Brown government’s high-risk “fiscal stimulus” strategy in his pre-budget report to MPs this afternoon, amid expectations that he will also have to disclose details of deferred tax increases and future cuts in public spending to finance what the Tories are branding a “£100 billion borrowing binge”.

As British prime minister Gordon Brown confirmed his intention to seek a co-ordinated European approach to cutting taxes, Tory leader David Cameron accused him of a “scorched earth” approach to the British economy.

“He knows it’s going to get worse and that he’s going to get found out,” the Tory leader predicted ahead of the most critical economic policy statement since Labour came to power in 1997.

But Mr Brown said yesterday: “I don’t see this as a gamble, I see this as necessary, responsible action that any sensible government would want to take.”

He declined to confirm widespread reports that a 2.5 per cent cut in VAT would be the centrepiece of the measures designed to kickstart the economy.

At the same time, Mr Brown underlined the risk for a Tory leadership that has dropped its commitment to honour Labour’s future spending plans and is banking on a reputation for financial rectitude to hammer home the message that Labour’s fiscal stimulus plan will result in unmanageable debt and sharp tax hikes after the next general election.

“Those people who say do nothing now would have people, as in the 1980s and 1990s, without hope that their mortgage problems could be sorted out or their job problems could be sorted out,” said Mr Brown. “It would be lacking in compassion, as well as irresponsible, in my view.”

Mr Brown said there would “no hidden manifesto” in the pre-budget report when asked whether Mr Darling would spell out details of tax increases to come. “I think you’ll find that everything is above board. It is stated. There is no hidden manifesto.

“People will be absolutely clear that we are taking action now to prevent permanent damage later,” the prime minister said.

Other measures expected in the chancellor’s statement include an extension of the relief introduced last summer for low-paid workers hit by the abolition of the 10p starter tax rate, and the scrapping of planned increases in vehicle excise duty. The Liberal Democrats welcomed the reported plan to cut VAT by the maximum allowed, while favouring “sustainable tax cuts” for people on low incomes by way of reduced rates or increased thresholds.