Labour has tabled a series of amendments to the Finance Bill to protect Mountain Rescue services from the government’s VAT hike.

Before the election, Government chief secretary Danny Alexander said; “Whatever the result on Thursday, I hope this is a policy (refunding VAT for mountain rescue services) which will be put into action”. Let’s hope the government accepts our amendment.

Here’s the background

Mountain Rescue England & Wales Taxation – Context

Overview

• Mountain Rescue is a unique emergency service dispatched through the 999 system through the police. MR provide all-terrain ambulance services; perform searches for missing persons; evacuations (eg. flooding) and specialist support in major accidents (eg. Grayrigg).
• MREW is a charity, and consists of ~3500 volunteers, operating in one of 56 teams. Mountain, Cave, Search and Fell Rescue bodies all fall under the umbrella organisation MREW. Scotland has its own umbrella organisation.

VAT, Funding and Expenditure

• The majority of funding for MREW comes from voluntary donations or lottery funding. Some police forces, primary care trusts and local authorities also make small contributions or provide facilities such as garages.
• The cost of reimbursing VAT to MREW at the 17.5% would have been £200,000 pa. For central/local government to provide the services they provide, would cost an estimated £6,000,000 pa. The new rate of VAT will cost teams an estimated further £28,500.
• Gift Aid is unavailable usually as donations are often anonymous through collection tins or otherwise. Local Resilience Forum support has been turned down several times.
• Medical supplies and ambulances are exempt from VAT, but the majority of MR expenditure is on other vehicles, fuel, equipment and clothing. The cost of clothing is often covered by members themselves, and in some teams volunteer members pay an annual fee (eg. Bolton MRT pay £100 pa each) that contributes towards equipment costs.

Other charities and Scotland

• RNLI are exempt from VAT payments on equipment and repairs.
• The Scottish Government gives an annual donation of ~£300,000 to MR, and St John Ambulance works with each MR team in Scotland to provide an ambulance. No equivalent arrangement exists in England and Wales.

Liberal Democrats

Manifesto, Election 2010, Page 83

“Refund VAT to mountain rescue services”

Danny Alexander, 4^th May 2010

“It isn’t possible to put a price on the work mountain rescue teams do in the Cairngorms and all over the Highlands – not to mention the whole UK. The expertise and local knowledge which is given freely by volunteers could not be replaced.

“Everyone who enjoys our outdoors owes them a debt – and severe winter conditions like we have seen this year bring their skills into use in an even wider range of circumstances, working closely with the police.

“It has never been right that a vital service which relies on donations from the public and extraordinary commitment from volunteers gets hit by the Government for a sizeable tax payment.

“The Government has resisted calls for VAT exemption, arguing that it would not be allowed by European law, but it is absolutely clear that VAT paid could be refunded. The cost to the exchequer is small, but the difference is enormously significant for mountain rescue teams.

“Whatever the result on Thursday, I hope this is a policy which will be put into action.”

Tim Farron, 20^th May 2010

On the coalition document

“I was given very positive signals that this wasn’t the type of detail that would go in.”

“This is not one of the things we had to give way on. I am optimistic that we will get it. It is a cheap ask for something that is such great value and I can’t see why they would say no to it.

“We can get round the European Union rules and they can then claim back a grant for the same amount. We are continuing to lobby. We haven’t had a yes, but we haven’t had a no.”

Lord Greaves, 21^st March 2009

In the house

“Mountain and cave rescue services in this country rescue many people and save many lives each year. It is all done on a voluntary basis and, in England, depends entirely on donations.

“It seems ridiculous that the service, which, if the Government had to step in and replace it, might cost £6m a year, is subject to VAT on its equipment and most of its spending, when the equivalent service, the Royal National Lifeboat Institution, is not.”

Parliament

EDM 250, 16^th June 2010

VAT ON MOUNTAIN RESCUE EQUIPMENT

Farron, Tim

That this House pays tribute to the outstanding work undertaken by mountain rescue teams who provide essential support to emergency services in mountainous and rural areas; notes with concern that mountain rescue teams have to pay value added tax and vehicle excise duty on life-saving equipment which are exempt for other emergency services who do not have to pay taxes on equivalent equipment; and calls on the Government to exempt mountain rescue teams from these taxes immediately and pay back the estimated £200,000 it collected in value added tax during 2009.

Signatures: Tim Farron, Peter Bottomley, John Hemming, John Leech, Andrew George, Mike Hancock, Jeremy Corbyn, Ian Davidson, Jeffrey Donaldson, Mark Durkan, Margaret Ritchie, David Simpson, Ian Paisley Jnr, Nigel Dodds, Jonathan Edwards, William McCrea, Gregory Campbell, Simon Hughes, John McDonnell, Greg Mulholland, Tony Cunningham

MREW Response to Budget http://www.theboltonnews.co.uk/news/8248780.VAT_hike_will_be_uphill_struggle_for_rescue_team/

Bolton Mountain Rescue, 1^st July 2001

BOLTON Mountain Rescue has hit out at the Government’s VAT increase which it says will have a “considerable impact” on the volunteer-run organisation.

From January, VAT will rise from 17.5 per cent to 20 per cent, a move which has been criticised in some quarters as “a tax on the poor”.

And the rise will affect the life-saving rescue service — which costs £25,000 a year to run and is funded entirely by public donations.

Team leader Garry Rhodes said: “In organisations like ours, the rise in VAT will have quite an impact.

“We are now losing even more money to the Government when we are providing an essential service.”

Here’s the link to the Hansard of the second reading of the Finance Bill – scroll down to 5.15pm for the start of my contribution.

Today, I set out in the Guardian exactly what the Lib Dem’s broken VAT promise is going to mean for charities – something like £150 million more in irrecoverable VAT. First strike against the Big Society?

Today, the Government announced that they will cancel support for jobs, industries of the future and the frontline NHS.

In a botched announcement in the House of Commons, Chief Secretary Danny Alexander, finally had to admit that the notion of Labour’s ’scorched earth’ was utterly misleading.

In slight desperation, he had to add up the total lifetime cost of the projects he was cancelling. In fact, when we look at the project costs of the investments he cancelled in this financial year, it amounts to at best 0.07% of this year’s public spending. And indeed, one of the most high-profile project – Sheffield Forgemasters – was actually a government loan, that paid 3.5% interest plus equity warrants for the government.

Mr Alexander went on to say another £8 billion of schemes would be reviewed. He was oddly silent on the fact that just one project – the renewal of our search and rescue service made up 3/4 of the figure – and again would be a cost spread over many years in the future.

The cost of defending our country against the global recession in the last two years has been high. But if we’d have taken the wrong decisions, the cash-points would have stopped working and the dole queues would have been massively longer. Now, we are on the road to recovery, it is time to pay that bill. That is why Labour set out in such detail, £19 billion of tax rises and the first £20 billion of spending cuts in our budget this year (see chapter 6 of the Red Book).

But the projects the Lib Dems and Tories have cancelled tell you all you need to know about this new Government’s approach:

• Scrapping support for people out of work at a time when unemployment is still far too high. They have confirmed the cancellation of the Future Jobs Fund, but also added support for the long term unemployed to the list of cuts.
• Reversing vital investment in industries of the future. The investment in Sheffield Forgemasters would have enabled Britain to become a key player in the nuclear supply chain. By turning their backs on this proposal the government have turned their backs on manufacturing and they have turned their backs on the critical question of how we get more jobs out of the transition from a high carbon economy to a low carbon economy.
• Cancelling the North Tees and Hartlepool hospital. It doesn’t get much more frontline than this. The decision will hold the local NHS back from improving services for people living in Hartlepool, Stockton and parts of Easington and Durham.

Danny Alexander finally concluded today the Liberals are simply the Conservatives’ whipping boys. After all, here’s what Vince Cable had to say to the IoD on 28 April 2010

“We Liberal Democrats recognise the sheer scale of the challenge ahead. The economy also requires rebalancing and transforming. We are the only party with a plan to do just that and we are ready to begin that massive undertaking.”

They’ll transform the economy alright – by risking the recovery.

George Osborne’s plan to cut £6bn from public spending this year was a key debate in the recent general election – and risks putting Britain in the slow lane back to growth.

During the election, Labour’s argument against the Tories’ plan was two-fold:

First, that pressing ahead with these cuts, in year and on top of our existing ambitious efficiency programme, would mean hitting frontline public services.

Second, that with the recovery just underway, now was not the time to be taking risks with people’s jobs by taking money out of the economy.

The Liberal Democrats, and Vince Cable in particular, agreed. Here’s the link to what Vince Cable said in January: “I do not think we should rush into rapid cuts”.

We intend to be a responsible opposition. But we will be powerful and effective check on this Tory-Liberal Government.

On Monday the coalition will announce details of how they will make these cuts. This will provide a first test for the new Government. And of the influence of the Liberals on the Tories.

Today I make two predictions:

That we will see real cuts, not efficiencies, announced on Monday. Cuts with a real impact on peoples’ lives. That would be in direct contradiction to George Osborne and David Cameron’s clear promise that frontline services wouldn’t be cut.

Second, my guess is that Vince Cable will have lost out to George Osborne who will push ahead with taking the vast majority of the £6bn out of the economy – a risk that we shouldn’t be making now – with only a token few hundred million being reinvested to save the Lib Dems blushes.

I hope I am wrong. But if on Monday we do see cuts to frontline services like skills or university places, or investment in rebalancing our economy then our clear warning about the Conservatives’ plans will I’m afraid have come to pass. No amount of joint press conferences or Liberals in the Cabinet will have made an ounce of difference.  The “new politics”, will look like old fashioned broken promises.

My fear is that George Osborne is determined to set course for the slow lane out of recession – and a return to the economy of the past by axing investment in the skills and jobs of the future.

Finally, it would be completely unacceptable if this announcement of cuts, and this change in Government’s spending plans, is being made anywhere other than in the House of Commons.

That’s why Rosie Winterton wrote to the Speaker yesterday, asking him what can be done about George Osborne’s plan to make this announcement in a press conference rather than to Parliament.

The BBC’s excellent Stephanie Flanders has blogged about our new document, which reveals the £22 billion credibility gap at the heart of Tory economic policy. Our document, is here -

I’m a huge fan of Stephanie’s work but there are a few points where I think she’s got the wrong end of the stick.

To kick off with National Insurance. Stephanie says that we have costed the Conservatives’ NICs policy “as if they were reversing all of next year’s rise”.

This isn’t right. The document we published today presents an HM Treasury costing of the precise Conservative policy, calculated following the Conservative announcement and cited in Parliament by me on Wednesday. This is specifically, as I told Parliament this week, a costing of the Conservative proposal for increased NICs thresholds, not a costing of the reversal of Labour’s policy.

“Even the shadow Chancellor has said that that will cost £5.6 billion, but the Treasury has now costed those increases in national insurance thresholds at £6 billion in 2011-12, £6.3 billion in 2012-13 and 2013-14, and £6.7 billion in 2014-15.” Liam Byrne, Hansard, 30 March 2010, column 738

Stephanie questions whether the Tory policy to bring back the dividend tax credit is actually party policy, saying that George Osborne’s office told her that he wants to bring back the dividend tax credit, but have said that it could take “more than one parliament”.

The fact is that the Tories are campaigning on this issue – for example, they put it in their posters this week. They say it is a problem they want to solve, and David Cameron has included it as an issue they wish to address over a Parliament.

If they are ruling our any move here for the rest of the next Parliament then we will accept that – but they need to then stop suggesting to the British people that they are making a promise on this issue. Whether they do this by abolishing stamp duty on shares or by some other measure, they don’t seem to disagree that there is a pricetag of around £5bn.

On reducing taxes on savings, Stephanie suggests that Tory promises made at the time of a Budget aren’t actually “Tory policy”. Sorry, Stephanie! What we say at a Budget is Labour policy, and what the Tories say at a Budget is Tory policy! These were their policies – and they campaigned on them. When it was pointed out that they had no money to pay for them, then they suddenly started talking about them being “budget submissions”.

Now we come to marriage tax. Stephanie says that the Tories haven’t committed to spending £5 billion on “recognising marriage”. The truth is that they have been promising these tax breaks for five years and never once come to a firm proposals. But what we do know is:

o The only proposal that’s come from an official Conservative Party policy review is of a transferable tax allowance
o David Cameron has said that it would apply to all married couples
o The costing is for the final year of a Parliament, so that even if it was implemented in a staged way, the full tax break would be in
operation by that year.

Now you could “recognise” marriage in the tax system for almost nothing – like taking VAT off confetti or wedding cake! But the Conservatives have told the British people that this is a substantive pledge. If they are today downgrading their pledge officially to less than a billion pounds, we will happily update the document. Mind you, they would still have to set out how it would be funded though – and they have got nowhere near doing that at all.

On efficiency savings, Stephanie says that the Tories are promising to cut departmental spending in line with the savings and says that makes them ‘real’, even if they are not as painless as they suggest.

Of course the Conservatives could simply cut budgets by £6bn indiscriminately. But that is not what they have said publicly. If they are now saying that they will make £6bn in cuts rather than vague efficiency savings, then they should tell people where those cuts would fall. We’ve been clear about where we will find the £35 billion of efficiency savings over the next year – the Tories haven’t given us any details of where they’d find the extra £12 billion of savings they think they can find in a matter of weeks.

On council tax, we think Stephanie has made an error. She describes our costing of the Conservatives’ council tax freeze as a mistake saying that the Institute for Fiscal Studies don’t agree with us. But they do! The Treasury has costed their policy at £1.4 billion, and the IFS says that this is correct, when the Barnett Formula us taken into account:

“Under the infamous ‘Barnett formula’, a £1.3 billion increase in grants to English local authorities would be matched by a £0.3 billion increase in grants to the devolved administrations in Wales, Scotland and Northern Ireland. This increases our estimate of the total net cost of the policy to £1.4 billion after rounding – and would presumably increase the Treasury’s estimate of the cost to roughly the same level if they were to net off the council tax benefit savings too.”
Institute for Fiscal Studies, “The Conservative Party’s Council Tax Freeze”, March 2010,

Elsewhere in the same IFS document, they say: “Labour rightly say that this pledge costs £1.4 billion (if we consider the pledge in isolation from the planned reductions in advertising and consultancy spending)”.

It’s worth stating that the document we published today does not consider the pledge in isolation from the planned reductions in advertising and consultancy spending. These are presented on p. 90 of the document. Our document considers tax, spending and savings pledges separately, but the final figure we present is net of all of these.

Now a few points which might only be of interest to politics geeks – but which we think are worth setting straight.

Stephanie also asks why we haven’t mentioned the Tory promise to reverse the On 50p rate of income tax, and why we haven’t classed it among our “Tory broken promises”. Well, the truth is that we thought we’d bend over backwards to be fair to the Tories on this one. Following the publication of our analysis in January, the Conservatives conceded they won’t commit to reverse the Government’s position on 50p rate of tax and pension relief reform. Even though they gave the strong impression at the time – through nods and winks – that they would reverse it, we’ve given the benefit of the doubt and taken it out, so it doesn’t appear in the document we launched today at all.

On the Tories’ broken promise on providing 45,000 new single rooms in the NHS. Stephanie suggests that the Tories “stepped away” from their 45,000 single rooms. That’s not actually correct -

Stephanie says that the Conservatives had “arguably” stepped away from their promise of 45,000 single rooms before the first dossier came out. This is not true. The first Labour dossier and the Conservatives’ draft health manifesto were published on the same day. The Conservatives’ health manifesto represented the first time they had publicly backed down from their previous firm promise to build 45,000 new NHS single rooms. They had not “stepped away from it before the first dossier came out” – in fact, the dossier was published a few hours before the draft manifesto. Their policy of building 45,000 new single rooms was still on their website until later that week.

Similarly, with maternity nurses. Stephanie suggests that our dossier today provides “no documented evidence for a [Tory] pledge to spend £492m a year on providing maternity nurses for all”. In fact it does. The dossier includes quotes from shadow children’s minister Maria Miller, saying “we are also committed to introducing our version of the Dutch kraamzorg system” in a speech to Conservative Party Conference, 30 September 2008, and the shadow children, schools and families secretary Michael Gove talking about “implementing a version of the Dutch kraamzorg or state maternity nurse system” in a speech to Barnardo’s, 9 March 2009. This goes further than Conservative officials saying that they will just “look at” the system in Holland!

Do take a look at our document – here -

Stephanie’s blog is here -

This was a very slippery performance from David Cameron that will set alarm bells ringing up and down Britain.
He said he wants deeper, faster cuts than Labour but then deepened the mystery about where the cash would come from.
Again he said he wants to cut the deficit faster but yet again he says nothing about how. People will notice he refuses to match Labours promise to protect police teams, sure starts and schools and draw the obvious conclusion.
Frankly the time has now come for him to make clear tax and spending commitments.

I thought it might be worth posting in full my opening of the debate on the pre-budget report in the House of Commons this week.

Here I set out the argument for precisely how we halve the decifit over the next four years – and how the sums add up – and second, gently make the point that the Conservatives still have a £34 billion credibility gap to fill before they even get close to matching us on the level of detail needed to be taken seriously on the question.

Text below

I welcome the chance to open today’s debate, the first on the pre-Budget report. I welcome it because decisions as significant as these should be tested in debate, so that the House and the public whom we represent can see clearly where each party stands and, amidst the arguments that we have in the media and elsewhere outside, where the policy of each party really rests.

We on the Government Benches are very clear about where we stand. We stand on the side of workers, businesses and home owners, who need protection from the worst global recession in 60 years, and for locking in recovery. We stand for taking the difficult decisions that will be needed to halve the deficit over the four years to come, while protecting our priorities for public services. We also stand for investing in growth, new jobs, new industries and new infrastructure that together will be vital in balancing our economy better in the years to come.

I hope that the crispness and clarity of our position in this debate will be matched, especially by the Opposition. This week, policy pose after policy pose has given way to position after position, sometimes with up to three difference stances in one afternoon. However, credit where credit is due: the Opposition are nothing if not nimble, as they hop madly between constituencies that they are so desperate to please. We will have none of that on this side of the House, so let me use the few minutes allotted to me this afternoon to set out some of the measures that my right hon. Friend the Chancellor presented before Christmas.

The first objective of our policy as set out in the pre-Budget report is, of course, to secure the recovery. When we look back over the year that has passed, we are glad that we ignored the idiosyncratic advice proffered by the Opposition and, instead of doing nothing, as they suggested, chose to act: to rescue the banking system from the brink of collapse; to cut VAT; to invest £5 billion in jobcentres, which have helped 3 million people out of unemployment in the past year; to introduce measures to allow families to stay in their homes, helping to ensure that repossessions are two times lower than in the 1990s recession; and to set up the Time to Pay scheme, which has helped more 160,000 businesses to spread their tax payments over a timetable that they can afford, helping to keep insolvency rates three times lower than in the 1990s.

In the pre-Budget report, the Chancellor forecast a return to growth, but as we know, over the next period unemployment may continue to rise in the short term. So to lock in the recovery, the Chancellor said that he was able to do more: by extending the Time to Pay scheme for as long as it is needed; by deferring the proposed increase in corporation tax for smaller companies, leaving the 2010 tax rate unchanged for nearly 900,000 small businesses; by freezing support for mortgage interest at 6.08 per cent. for six months more, to help people who are worried about their mortgage payments; and, perhaps most importantly, by ensuring that every 18 to 24-year-old who has been out of work for more than six months is offered the chance of a job, training or community service.

However, the second point made by the Chancellor in the pre-Budget report is about looking ahead-to the years beyond 2010 and the return to growth and prosperity in the years to come. I am afraid that those years of growth will not be years without difficult decisions-indeed, they will be full of them-and especially not without the decisions needed to halve the deficit and protect our priorities in public services. We have said that, in our judgment, the right time frame over which to execute this difficult decision is the 48 months up to the end of 2013-14.

It is fair to say that the Conservatives have questioned our judgment that four years is the right time frame over which to halve the deficit, but their questioning has been in the style and manner of rather open-ended, slightly ponderous thinking aloud. They have not offered an alternative proposition, such as reducing our four-year time frame to three. They know what the price of such a move would be, and they seem unsure whether they want to pay it.

First, let me return to the question of the level of detail, because the House is right to ask how the sums will add up in 2013-14. In framing my remarks, I should like to draw on the excellent report from the Treasury Select Committee and the evidence presented to the Committee by the Chancellor and by Her Majesty’s chief economic adviser.

Our judgment is that the deficit must fall from £178 billion this year to £96 billion in 2013-14, a fall of £82 billion. We anticipate that £25 billion of that sum will come from growth, and the return to business as usual, including the reversion of the VAT rate, but, as the Chancellor said to the Treasury Committee, £57 billion must come from discretionary action-in other words, decisions. As the chief economic adviser said to the Committee, we have decided to deliver two thirds of that sum through spending, and one third through new taxes. On decisions on tax, we have set out plans to raise £19 billion from new taxes, which we have sought to introduce in a fair way by ensuring that 60 per cent. of them are paid by the top 5 per cent. of earners in this country. That leaves £38 billion to be secured from spending cuts.

Capital investment must fall, as it safely can, from today’s historically unprecedented level. In the 2008 pre-Budget report and the 2009 Budget, we announced substantial reductions to the overall capital spending budget, and that is set out on page 189 of the pre-Budget report book. Yes, Departments will have to cut back, which is why we have reduced our plans for current expenditure from 2011 onwards.

That is why this pre-Budget report, together with the command paper “Putting the Frontline First”, announced £20 billion of cuts and efficiencies. If the House will bear with me, I think that it will be helpful if I run through them. They include: £8 billion to be delivered by 2012-13, identified across the public sector through cutbacks in Whitehall through the operational efficiency programme; £600 million from the greater use of online systems to deliver public services; £650 million from cuts in consultancy, marketing and communication spending across government; £550 million from cutting back on quangos and arm’s-length bodies; £550 million from local government, including reducing the costs of inspection; £140 million from cutting senior civil service costs by 20 per cent.; £1.4 billion from ending temporary employment measures as unemployment falls; £850 million from delaying things that can wait, or from cutting back systems such as the NHS IT programme; £900 million from asking businesses and students to pay a little more for training; £360 million from reforming the criminal justice system and legal aid; and £730 million from focusing regeneration and transport spending on areas where it is needed most.

Of course, to this sum may be added the windfall of lower unemployment. For the purpose of the PBR, we made the extremely cautious assumption that unemployment would not fall. In fact, if unemployment does indeed come down, as we expect it to, the benefits bill will be billions of pounds lower. It is also possible that, as the economy grows faster-as the Bank of England has projected-there will be further fruits of growth in the years to come.

The House will rightly ask how such windfalls will be put to use. I will state the position bluntly, by repeating what the Chancellor said to the Treasury Committee. He said that, in the event that growth turns out to be more robust than in his forecast, borrowing would naturally fall faster, and that it would then be possible to reduce the structural deficit further in the medium term.

The pre-Budget report set out plans to rebalance our economy in the years to come. In the Budget, we said that we would do this through fair tax increases and the tighter control of public spending, to ensure that long-term interest rates were kept low. That point has often been made by the hon. Member for Runnymede and Weybridge (Mr. Hammond). There are now great strengths on which we can build in the years to come. We have low interest rates and low inflation. We also have the most flexible labour market in Europe, the lowest rate of corporation tax in the G7 and a competition regime that is among the best in the world. That is why we are judged to be one of the best places in the world in which to do business and to attract inward investment.

The pre-Budget report develops those strengths. It sets out how we will maintain our leadership in the low-carbon sector, how we will boost investment in our national infrastructure and skills, and how we will support our world-class high-tech industries. Over the next year or two, we will extend by £500 million the amount of lending available to small and medium-sized enterprises, through a 12-month extension of the enterprise finance guarantee scheme.

We have created a new growth capital fund, with a new £325 million. We have created Infrastructure UK, which will help to accelerate private sector investment in new infrastructure. We are proposing to introduce a patent box, which is a reduced rate of corporation tax applying to income from patents from April 2013. We have also proposed £200 million for the strategic investment fund, of which £150 million will be routed to support low-carbon investment. We are doubling the UK’s commitment to funding carbon capture and storage demonstration sites from two to four. We are increasing support for low-carbon vehicles and setting out additional funding for low-carbon industries and energy efficiency, including Warm Front. Those are all policies-indeed, all ambitions-in which the Conservative party has little interest.

I hope that over the hours to come, we get a chance to explore some of the myths thrown around during the last week, starting perhaps with the most important question of whether our plan to cut the deficit is fast enough. Is it fast enough, for example, for the people who buy our bonds? We have heard a lot about the intentions of PIMCO and some of the quotations bandied around the House to date have, of course, been a bit selective and one-sided, if I may say so. PIMCO, reflecting on the flight to safety that brought buyers to UK bonds and brought gilt rates so low is naturally thinking about divestment into riskier assets as the world economy returns to its former state. This is not a new notion, as that was said last July.

Is the plan fast enough for the Governor of the Bank of England? The shadow Chancellor is fond of quoting the Governor. The shadow Chancellor is not in his place.

In fact, the full answer from the Governor of the Bank of England on this question paints a very different picture. He gave his answer in evidence to the Treasury Select Committee, saying:

“It is certainly true that if you eliminate the deficit too aggressively it will have an adverse consequence.”

He went on to say:

“You have to take action to bring down the deficit of the size we have-it is a very large structural deficit-but to do so at a rate that is consistent with the restoration of growth in the economy”.

That is why we propose to reduce the structural deficit from 9 per cent. to 3.6 per cent. in the space of just one Parliament.

Is our deficit reduction plan fast enough for the ratings agencies? Again, their views are sometimes traduced in this House, but the reality is that in Moody’s analysis published last month, both the US and the UK triple A ratings are described as “resilient”; all three rating agencies have acknowledged the UK has access to particularly deep and liquid capital markets; and on perhaps the ultimate test of demand, gilt auction performance remains strong. Ten-year gilt yields averaged over 11 per cent. in the 1980s; they are now around 4 per cent. I hope that all these arguments and more are debated this afternoon.

If I were forced to characterise this pre-Budget report, I would say that the sweep of its ambition is matched by the depth of its detail. In the debates that we have had-not only in this place, but in the media and elsewhere, and particularly in the debates the hon. Member for Runnymede and Weybridge and I have had late at night in TV studios around London since 9 December-I am sure that you, Mr. Deputy Speaker, will have been struck like me by the sheer contrast between 212 pages of detail on specific, pressure-tested proposals and the vacuous nonsense of the Conservative party.

The truth is that the Conservatives have been love-bombing every audience they can find within easy reach of a press conference, and with that love-bombing has come a new lexicon of ambiguity. Thus, instead of a straight “promise”, we now have a “pledge”, an “aspiration”, a “commitment” or a “No. 1 priority”.

This morning the Leader of the Opposition continued his careless whispers, reassuring listeners to the “Today” programme. He said that he would have to be tough and pull back from the Conservatives’ guarantee of 45,000 single rooms in the national health service.

It could not be a pledge, he said, but he told the listeners not to worry, because “it is an aspiration”. It seems that the Conservatives now cannot stop adding to their now famous “queue” of commitments. We all remember what a Tory queue looks like. We used to call them waiting lists, and they were so long that people often expired before they reached the front.

The Conservatives’ “all things to all people” policy has left them with a £34 billion credibility hole that they cannot airbrush away. If the Shadow Chancellor spent more than 40 per cent. of his time on economics, perhaps the hon. Member for Runnymede and Weybridge would not be in such an embarrassing position this afternoon; but he is, and the whole House is looking forward to seeing whether he can climb out of the hole in which his party leaders have left him.

Today we set out some of the work we’ve been doing over the Christmas break, putting a price-tag on Mr Cameron’s effort to be all things to all people.

It’s an extraordinary picture.

Its looks as if there is an incredible £34 billion gap in what the Tories are saying they want to do – and the tax rises and spending cuts they have proposed to pay for them. And this is before they turn their minds to reducing the deficit.

How did the Tories get themselves in this position? It looks as if its as simple as Mr Osborne failing to keep track of all the promises he and David Cameron have been making. In short, for two years, David Cameron has gone round the country telling people whatever he thinks they want to hear. Every audience gets told whatever they want You want tax cuts, here they are. You want a faster cut in the deficit, we’ll do that too. You want more spending, here it is. Lots of it. You want to reverse what Labour’s doing, we can do that too. That’s their message.

But no one has been keeping tabs of all their promises – certainly not George Osborne.

Until today. For the first time, we have brought all the Tory promises together to present the bill.

The Tories have made over £45bn of pledges, but can barely explain how they can pay for a quarter of this. This leaves them with a credibility gap of £34bn. They have made tax promises worth £21bn per year by the end of the Parliament, including: • £4.1bn for removing basic rate income tax from savings • £4.9bn for married couples allowances, where the highest earners get the most benefit • £1.5bn for Inheritance tax cuts focused on 3000 estates.

They have also said they have a ‘queue’ of planned tax rises that they would reverse. These amount to £13.3 billion per year by the end of the next Parliament. These include measures to reduce the deficit, such as the national insurance rise, the new 50p top rate and restrictions on pension tax relief for the very highest earners. They have also made over £11.1 billion of spending commitments. Such as 45,000 extra rooms for the NHS, 5000 more prison places and 3 more infantry battalions.

And this doesn’t include many potentially expensive promises – like tax credits for grandparents or a ‘National Citizen’s Service’ – which are just too vague to cost. We have included Tory figures for efficiencies and cuts where they are credible and genuinely additional to anything the government is already doing.

Even in the most generous scenario for the Conservatives, all these pledges would yield annual savings of £6.6 billion.

And finally, their tax rises – on increasing the cost of business investment and putting a levy on non-doms from day one, for example – yield them a further £5.1 bn.

Taken all together this leaves a credibility gap of £34bn in their plans.

By the way, we’ve tried to be as generous as possible to the Tories. Generous to a fault you might say. We have given the Tories the benefit of the doubt and used their estimates except where there are clearly more recent or more credible numbers available. The costings are based on publicly available sources such as Parliamentary Questions or the Pre-Budget Report. In some cases, later costings credit the Tories with additional revenues or savings. In others costings suggest the Tories have over-estimated revenues or under-estimated costs, leaving them with a substantial credibility gap.

Now, already this morning, Mr Cameron has backed off some of the commitments we listed. Fine. We’ve been trying to get the Tories to clarify for 18 months whether their promises are real or empty. We just want him to be straight with the British public.

Here’s the text of my article in today’s Independent.

George Osborne admits that he devotes more time to politics than to economics, and on Wednesday we saw the proof.
In a serious debate on the pre-Budget report, he fired cheap shots when what was needed was a big judgement call. Alistair Darling set out the most detailed plan of any G7 country for halving the deficit over four years. He acted to secure the economic recovery and go for growth – because faster growth will cut the costs of unemployment. He set out plans which will rebuild the public finances fairly – because we need to get the timing right, not choke off the recovery by cutting too soon.
And, true to our Labour values, he promised to protect our schools, health, police and Sure Start – while making services smarter, more efficient and more responsive. His message was clear: we will tighten our belts, as families are doing. It will not be painless, but it will not be reckless.
In reply, all Osborne could offer was political knockabout – long on jibes but desperately short on serious policy. The contrast, not just in demeanour, but in sheer weight of policy, was striking.
Now that we have set out our plans, the time has come for Osborne to do the same. The broad contours of the Tory approach are becoming clearer. We know that by cutting support for the economy now, he risks a decade of austerity and low growth. We know that he favours unfunded tax cuts to the wealthiest. We know that by opposing our guarantees on public services, such as being certain of seeing a specialist within two weeks of your GP suspecting cancer, he’s content to reduce public services to a gamble.
But there are more questions he has to answer. The key question in British political economy is this: Osborne says that he would close the deficit faster, but halving the deficit just a year faster than us would mean cutting £26bn from public services or increasing VAT to 23 per cent. Which will he choose?
On spending, Osborne has also failed in the first task of a shadow Chancellor – controlling his Shadow Cabinet colleagues, who have indulged themselves in the Tory habit of trying to be all things to all people, making spending pledges as they did so. The cost of the resulting list? Tens of billions of pounds.
Meanwhile, his plans to save money unravel by the day. His party claims that its plans to curb spending – including scrapping ID cards and the NHS IT scheme, bringing forward retirement age and capping public-sector pensions – would save up to £45bn. In fact, our analysis suggests they’d save less than 5 per cent of that. What else will he cut – or which taxes will he increase – to make up that gap?
At their party conference, the Tories claimed they could make £7bn in savings, including £3bn a year by the end of the Parliament, by cutting Whitehall and quango costs by a third. But our “Smarter Government” document, published just before the pre-Budget report, saves around that amount from central government alone – and in fact much more in the wider public sector. How can he go further than that?
Treasury figures, disclosed to Parliament, show that his claim to save £400m from cutting Child Tax Credits for households on more than £50,000 a year misses the mark by a country mile, saving just £45m a year. They reveal that to save £400m means cutting benefits from people earning just £16,000. Will he cut those benefits or will he admit he got it wrong?
We live in serious times, and people want serious answers from their politicians. This week, Alistair Darling delivered them. As a pretender to the same historic office, the time has come for George Osborne to set aside the lightly proffered laurel of the Parliamentary sketchwriter. He must answer the tough questions he has so far ducked. It’s time for him to step up.

If you were in any doubt about the basic unfairness of the Tories’ inheritance tax plans, looks at this story. here.

Its about a survey that shows the vast majority of people don’t pay inheritance tax.  That means the Tories need to explain why in difficult times, they are prioritising a tax giveaway of £200,000 for the richest estates and nothing for 98% of the population. They are a party for the few, are they not?