7 Oct 2012

David Cameron rules out ‘mansion tax’

David Cameron dismisses Liberal Democrat demands for a “mansion tax” and benefit cuts for wealthy pensioners as part of efforts to tackle the deficit.

But the Prime Minister signalled that the coalition would be targeting the rich with new measures to help balance the books.

Interviewed on the BBC’s Andrew Marr Show as the Conservatives kicked off a potentially tricky conference in Birmingham, Mr Cameron dodged questions about whether the economy was finally recovering from its double dip recession.

He also insisted it was “too early to say” whether the government would miss its key target for public sector debt to be falling by 2015.

“I’m not an economic forecaster so I cannot tell you exactly what is happening in terms of the day-to-day growth, but I can tell you that our economy is rebalancing,” he said.

Asked whether the debt target was set to be missed, he replied: “The figures for this year, it is too early to say where they are going to end up.”

Another £16bn of spending cuts

Mr Cameron said his party would “level” with the public about the need for another #16 billion of spending cuts in 2015-16.

“We have to find these spending reductions and if we want to avoid cuts in things like hospitals and schools, services that we all rely on, we have to look at things like the welfare budget,” he said.

The PM insisted he was looking at “working age welfare”, and would stand by his pre-election promise to protect universal benefits for pensioners – such as free bus passes and winter fuel payments.

But he said the overall deficit reduction effort would be “fair”.

“You have got to make sure that as you do this you are fair and seen to be fair. And under this Government we have always done this,” he said.

“We will make sure that the rich pay their fair share… We are going to take further action to make sure the wealthiest people in our country pay their fair share towards deficit reduction.”

Ruling out mansion tax

Chancellor George Osborne also kicked off the conference by ruling out the Liberal Democrats’ cherished “mansion tax” proposal for a levy on expensive properties.

“We are not going to have a mansion tax or a new tax that is a percentage value of people’s properties,” he told The Mail on Sunday.

“We don’t think people who have worked hard, saved up to buy a home, should be clobbered with a mansion tax.”

Mr Osborne also said the government would be extending the council tax freeze for a third year in a row while rises in regulated rail fares would be capped at retail price inflation (RPI) plus 1%.

Meanwhile, Mr Cameron sought to rally restive Tories with a pledge to use Britain’s veto to block the European Union budget if it is not in the UK interest.

Speaking to the Sunday Telegraph, the Prime Minister also proposed a “bold thinking” plan for the EU to have separate budgets – one for the 17 eurozone nations and another for the 10 – including Britain – outside the single currency.

In a further overture to the right, Home Secretary Theresa May called for a review of the EU’s freedom of movement directive in order to prevent a new influx of immigrants from the continent.

“We are looking at this whole area of the abuse of the freedom of movement. But we will go further on this, and the issue of free movement will be part of the review,” she told The Sunday Times.

“It will be looking at where the decision-making powers are between the EU and the UK, how they are operating and what the impact of those are.”