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Thursday, 26 April, 2001, 13:07 GMT 14:07 UK
Baby bond part of new economy
Chancellor Gordon Brown and Prime Minister Tony Blair
Brown and Blair unveil their big idea on savings
By BBC News Online political correspondent Nick Assinder

William Hague has attempted to seize ground on the economy just as the government unveiled one of its "big ideas" for the forthcoming election.

In a keynote speech on the same day Tony Blair launched plans for radical "baby bond" and savings gateway schemes, the Tory leader claimed the government had left the country's economy vulnerable to global pressures.

He mapped out how a future Tory government would cut taxes and free people from reliance on state handouts.

And he attacked the savings plan for attempting to bribe voters with their own money which ministers had taken from them in tax rises.

Mr Hague said Britain was "facing a critical period of uncertainty" thanks to international pressures and the slowdown in the US economy.

High tax policies

Many factors were combining to cause concern, including the "pitifully low savings ratio" in Britain he said.

He targetted the government's high tax policies and said Chancellor Gordon Brown had failed to prepapre Britain for looming problems.

He called for reductions in taxes, as was happening elsewhere in the world, and he insisted Labour had failed to reform welfare as it promised before the last election.

Tory leader William Hague
Hague on the attack over economy
But Tony Blair and Chancellor Gordon Brown insisted their handling of the economy had been a success.

And they claimed their savings proposals should be seen as part of a new economy being created in Britain where people will rely less on welfare handouts but are offered opportunities to stand on their own feet.

Big idea

The proposal has been flagged up as one of the government's "big ideas" and there is no doubt they see it as part of more wide ranging changes to the economy.

Britain has a particularly poor record on savings leading many to claim that its people have become more reliant on state handouts.

By encouraging savings - particularly when ministers will dictate how that money can be spent - it is thought the entire economy will benefit as people set up their own businesses, go into further education and generally feel they have a stake in society.

Mr Blair said: "By the time they are ready to start life on their own, every child in every family in every home across the country will have a sound financial platform which could help pay for lifelong learning, training, owning that first home, setting up a business."

Many on the left of the Labour party are dismayed at the government's direction, believing they are seeing the beginning of the end of cradle-to-grave welfare, once the cornerstone of the party's economic policies.

But Tony Blair is determined to restructure the entire system to ease the welfare burden on the economy while encouraging more self-reliance.

Ministers also clearly believe the handout will play well for them in the looming election campaign.

Chancellor Gordon Brown
Brown looks to a new economy
They will want to use it as another example of how the government's successful handling of the economy means they can target spending on tackling poverty.

Both Mr Brown and Mr Blair insist that, thanks to their economic management, Britain is in a good position to weather any storms prompted by the global economic slowdown.

Economic competence

Meanwhile, the Tories know they have their work cut out dispelling the impression that Labour has broken with its past habits and is now the party of economic competence.

The attacks on the government's record and its latest savings proposals are the start of what is certain to be a growing Tory campaign between now and election day.

Mr Hague and Mr Portillo will seek increasingly to paint the government as a high taxing party which has failed to prepare the country for a potentially dangerous slowdown.

But the problem for them is to address the persistent attacks from the government that to cut taxes as they promise, they would have to slash public spending.

Mr Hague went some way to address the key issues in his speech and by warning that Labour was leaving Britain vulnerable.

It is a difficult argument for the Tories but Mr Hague and Mr Portillo have shown they are ready to meet the challenge head on.

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26 Apr 01 | UK Politics
25 Apr 01 | Business
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