Hague's £8bn tax giveaway

Hague defends his tax cut plans

Conservative leader William Hague has said a future Tory government could cut tax by £8bn while preserving public spending on key services.

He said the tax cuts could be achieved by a series of reforms across government such as cutting waste in Whitehall to the tune of £1.8bn and attacking social security fraud.

Everyone knows that the real Tory plan is privatisation in health, pensions and education

Andrew Smith

Mr Hague said that at the heart of Tory plans was the "basic Conservative principle" that the government would spend what the nation could afford.

He told the Cardiff Business Club: "I believe Britain can be the best and I believe in a Britain that can lead the world.

"That is why the next Conservative government will be a tax-cutting government."

Risk of Labour mockery

Previous Tory claims that they can cut taxes while matching key government spending commitments have been roundly mocked by Labour.

Mr Hague's speech will be seen as a bid to firm up earlier announcements of proposed Tory tax cuts.

As well as the saving on Whitehall running costs, and a £1bn saving on social security, Mr Hague said his plans included reform of government programmes such as the New Deal.

Tory saving plans

£1.8bn in Whitehall running costs

£1bn on social security fraud

£425 million on housing benefit reform

£1bn would come from reforming help for inner city regeneration

£300 million on scrapping DTI red tape

£1.3bn by privatising student loan system

£525m by reform of legal aid

£400m in New Deal reform

£160m by forcing employers to insure against injury

£210m from Channel 4 sell-off

£500m by forcing lone parents of secondary children to work

£430m from unemployment benefit reforms

"Add up these individual items and you will reach a total of over £8bn of savings - savings that would bring the overall increase in government spending in line with what the country can afford," said Mr Hague.

And he attacked Labour assertions that a Tory administration would result in £16bn of cuts as "malicious scaremongering".

"We won't take a penny from the investment planned for our vital public services," he said.

We will match Labour's increases for the NHS and for our schools.

Mr Hague insisted that his party would spell out the details of the tax cut proposals over the coming weeks.

Married couples, working mothers, pensioners and savers would be among those to benefit, he said.

But Chief Secretary to the Treasury Andrew Smith said Mr Hague's plans did not add up.

Bogus savings?

He said that "reannouncing bogus savings" was no substitute for economic policy.

Mr Smith argued that announcing tax cuts was not valid without detailed explanation of any spending cuts.

The £8bn tax cuts could only be achieved by cutting deep into "vital public services like schools, hospitals, transport and the police", he said.

"Everyone knows that the real Tory plan is privatisation in health, pensions and education, and billions of pounds of cuts the nation cannot afford."

Mr Hague's speech to the Cardiff business club comes ahead of a Cabinet meeting that, it is believed, will focus on the outline of Labour's election manifesto for what many believe will be a May poll.