Pre-Budget Report - The Economics of Complacency - Cable

8.30.00am GMT Thu 2nd Dec 2004

In response to the Pre-Budget Report, Liberal Democrat Shadow Chancellor, Dr Vince Cable MP, said: "Last week the Prime Minister gave us the politics of fear; this week the Chancellor has offered the economics of complacency. There are serious challenges ahead from the falling dollar and from the rapid downturn in the UK housing market and rising personal debt. But they have not been confronted.

"Gordon Brown faces a specific challenge to his credibility from the threatened breach of the 'golden rule'.

"He must open up fiscal policy to an OFSTED style inspection by allowing the NAO to inspect and evaluate the Government's accounts. The Chancellor can no longer get away with setting the tests and marking them himself."

Dr Cable went on to emphasise that the Government's margin of safety regarding the budget is small with some dangerous loose ends:

" For example British taxpayers are facing the full brunt of the costs of the Iraq war. In the first Gulf War grateful Arab and European allies paid 80% of costs. This time we will pay at least £5 billion if we stay in Iraq until January 2006."

"Tough choices need to be made and the Liberal Democrats are the only party to be explicit about what will be cut to allow for spending on areas such as pensions, policing and education. Our cuts would include the ID card scheme whose costs are spiralling out of control -its estimates have doubled in the last few days; the Baby Bond scheme; and the big growth in spending envisaged in the DTI."

Dr Cable went on to criticise the Chancellor for his failure to make the tax system simpler or fairer. Dr Cable said:

"However well intentioned the Chancellor's tinkering, he has made taxes extremely complex.

"Many pensioners and hard working families now face marginal rates of tax over 50%. It is hypocritical of the Government to attack the Liberal Democrat 50% tax rate on people with high incomes.

"It is about time the Chancellor tackled the tax system to make it fairer to reduce the inequality. Abolishing the regressive Council Tax would be a good start to achieving this."