Page last updated at 12:32 GMT, Monday, 8 September 2008 13:32 UK

Tories to 'review economic plans'

Shadow Chancellor George Osborne
A Tory government would face "tough decisions", George Osborne says

The Conservatives are reviewing their economic plans, George Osborne has said, because they expect to inherit a "complete economic mess" if elected.

The shadow chancellor told the Guardian the Tories would have to think "very hard" about their objectives due to the deteriorating state of public finances.

A Tory government risked inheriting a financial "straightjacket" which could limit its room for manoeuvre, he said.

He has pledged to match Labour's public spending in the period up to 2010-11.

'Economic shadow'

The Tories have not outlined their proposals for the years after that amid calls from some party supporters for David Cameron to put forward an explicit tax-cutting agenda.

The Tories have consistently made clear they will not propose any "unfunded" tax cuts at the next election, while maintaining an aspiration to cut the overall burden of taxation in the future.

Mr Osborne has argued that, in the medium term, public expenditure under a future Tory government would increase at a slower rate than the economy as a whole, enabling ministers to "share the proceeds of growth" between spending increases and tax cuts.

One of the things we are very conscious of is that we are probably going to inherit a complete economic mess
Shadow Chancellor George Osborne

But Mr Osborne has now warned that the deteriorating state of the UK economy and the government's management of the public finances would "cast a long shadow" over its future options.

"The large budget deficit is the straightjacket on British politics at the moment," he told the Guardian.

"One of the things we are very conscious of is that we are probably going to inherit a complete economic mess.

"That obviously forces us to think very hard about the difficult decisions we are going to have to take as an incoming government."

However, Mr Osborne insisted that the Tories did not plan to "impose impossible public expenditure cuts in an economic downturn".

Blueprint

The Tories' revised thinking on their economic options will be contained in a strategy blueprint to be unveiled at their conference later this month in Birmingham.

Mr Osborne said its contents would include a new "fiscal framework", based on independently drawn-up rules, on how a Tory government would raise and spend money.

This follows the party's criticism that Labour has used Private Finance Initiative (PFI) projects to keep debts off the balance sheet.

The changed economic climate would also require new approaches to green taxation, he added, and blamed the government for its handling of changes to car duty to growing public hostility to green taxes.

While stressing that green taxes were a "very powerful tool" in tackling climate change, he said the case for them had been made more difficult by Labour "because they have used them as stealth taxes".

Labour has accused the Tories of making contradictory pledges on public spending and taxation, arguing that their sums do not add up.


SEE ALSO
Tories 'to match Labour spending'
03 Sep 07 |  UK Politics
Osborne mulls fuel duty reform
06 Jul 08 |  UK Politics
Straw says UK can 'weather storm'
31 Aug 08 |  UK Politics

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