By Richard Johnstone in Birmingham | 1 October 2014
Prime Minister David Cameron has pledged to balance the public finances by 2018 and said a Conservative government would not increase taxes to tackle the £25bn funding gap that still needs to be closed.
His speech at the end of party’s conference today set out a plan to make Britain a place ‘that everyone is proud to call home’. In it, Cameron committed to raising both the tax-free personal allowance and higher rate 40p tax band if he remains prime minister after next May’s election.
‘We are going to balance the books by 2018, and start putting aside money for the future,’ he told delegates.
Government borrowing stood at £99.3bn in 2013/14, and is forecast to fall to £83.9bn in the current financial year. Chancellor George Osborne announced on Monday that, according to the Treasury’s latest analysis, an additional £25bn of reductions would be needed, on top of plans already announced, to balance the budget.
Cameron told delegates: ‘That's a lot of money, but it's doable.
‘It is a quarter of the savings we have found in this Parliament. I am confident we will find the savings we need through spending cuts alone.’
He also said that it was necessary to make tax cuts so that people can keep more of their own money to spend as they choose.
‘I can tell you now that a future Conservative government will raise the tax-free personal allowance from £10,500 to £12,500,’ he said.
This would take another 1 million people out of paying income tax, following the increases to £10,000 in the current financial year and the rise to £10,500 from next April.
A Conservative government would also raise the threshold at which the 40p tax rate kicks in from its current level of £41,900 to £50,000 by the end of the next parliament.
Elsewhere in his speech, Cameron committed to continue ring-fencing the budget for the NHS and increase it real terms. This had only been possible because of the other decisions made to cut spending, he said.
‘That is why I can tell you this: we will do it again. The next Conservative government will protect the NHS budget and continue to invest more,' he added.
Responding to the pledge, Dr Jennifer Dixon, chief executive of the Health Foundation, said that although the protection was welcome, there could be no quick fix.
She added: ‘In 2015/16 alone the NHS will have a hole in its finances to the sum of £2bn. Spending pressures are expected to increase by £30bn by the end of the decade but most estimates suggest that productivity savings will meet just a third of this.’
King’s Fund chief executive Chris Ham commented: ‘As they stand, neither Labour nor the Conservatives have addressed the scale of the funding challenge facing the NHS.
‘In the short term, more money is needed to support NHS organisations struggling as a result of the unprecedented pressures on their budgets and meet the costs of essential changes to services. While there is still scope to improve productivity, unless this funding is found, patients will bear the cost as staff numbers are cut, waiting times rise and quality of care deteriorates.’
