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Parties row over tax and savings plans

By Channel 4 News

Updated on 08 April 2010

A plan 'with the strength of a house of cards': 'reckless opportunism'. Labour have attacked the Conservatives pledge to reverse part of the Government's plans to raise National Insurance for people earning more than £20,000 - accusing them of relying on 'fantasy' efficiency savings.

Gordon Brown, Peter Mandelson, Alistair Darling (credit: Reuters)

The Chancellor Alistair Darling cast doubt on the Tories claim that they could find an extra £12bn of efficiency savings on top of what the government's already saving. That would make a total, he said, of £27bn in one year - equivalent to half the education budget.

"The Tories have no credible means for achieving the scale of savings that their economic strategy requires", he said - and claimed that trying to cancel IT projects or pull out of contracts would end up costing more in penalty charges.

Gordon Brown said the entire plan was based on one four page press release - dismissing it as a "back of the envelope set of calculations".

He quoted the former Treasury adviser and chairman of Standard Life - Gerry Grimstone - who wrote in this morning's Financial Times that "it is just not credible to think that our savings can be almost doubled".

The last thing the country needs, he went on, is "a rushed plan that cannot produce results".

Mr Brown insisted he had "no quarrel with business" - after some 64 leading industry figures publicly backed the Conservative plans - calling the National Insurance increase a "tax on jobs".

And he reined back from earlier comments that business leaders had been "deceived" - after criticism from the head of Marks and Spencer, Sir Stuart Rose: "to insult the collective intelligence of 60-plus chief executives is unhelpful", he said.

The Liberal Democrats also hit out at the Conservatives' economic plans - unveiling a new election poster claiming they'd be forced to put up VAT to pay for their National Insurance pledge and other tax breaks.

Nick Clegg said David Cameron's explanations had been "vague and unconvincing" - and warned of what he called a "Tory VAT bombshell". The Liberal Democrats, he said, were the only party that would cut taxes for people on ordinary incomes.

But David Cameron said another 13 business leaders had joined the Conservatives' campaign against the NI rise. And he said Labour had fallen out with the very people the country needed to revitalise the economy. "Why should we go on paying taxes for government waste?" he asked.

This was all after the Tory leader had unveiled his plan to introduce "national citizen service" for 16-year-olds - saying it would give young people "more to aspire to: some shape to their lives" - even quoting Ghandi to support his theme.

Failing Government schemes, he said, would be cut in order to pay for it all.

Analysis from economics editor Faisal Islam
So what does this all mean? It means that the current Conservative approach is not even a patch on its attempt at the last election. The 'flimsy four page press release' that the PM referred to, does have some good ideas. Not all of them overlap with existing government plans.

But they are a set of tactics, rather than identified savings, as outlined by the Tories in the past. The idea that they fund lower taxation through pain free public service spending cuts is totally unproven.

Yes George Osborne will cut anyway.

And he did tell me last week that 'I will not allow Cabinet ministers in a Conservative government to come to me with frontline cuts'. But the four pages do not go anywhere close to showing that these cuts will all be from waste.

The Tories also wheeled out some celebrity endorsement: in the form of veteran film star Sir Michael Caine.

He's already revealed he'll be voting for them - and threatened last year to move to the United States because Labour had introduced a top income tax rate of 50 per cent - condemning what he called "3.5 million layabouts on benefits". 

Today though, he was on-message to back the "national citizen service" plan - describing how family values and education had been the making of him, and saying he wanted to speak on behalf of youngsters who'd been forgotten by the system.

Plaid Cymru leader Ieuan Wyn Jones launched the Welsh party's election campaign. He pledged to stand up for the rights of the people of Wales and to "burst the Westminster bubble".

He said: "In this election Plaid is determined to burst that Westminster bubble. And with a balanced parliament our duty and the duty of the MPs elected for Plaid Cymru will be to negotiate the best deal possible for Wales, and the best deal for our communities.

"That means getting a good deal for our pensioners; Fair funding for the Welsh budget, so we can protect our jobs, our schools and our hospitals.

"Wales is currently being short-changed by the UK treasury to the tune of £300 million a year.

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