BRITISH Prime Minister David Cameron sought yesterday to defuse anger over welfare cuts with pledges of support to entrepreneurs, a warning to bankers and the hint of a sweetener to come.
In his first speech as prime minister to his Conservative Party’s annual conference, Cameron defended the decision to scrap a universal flat-rate payout to people with children.
“You can’t measure fairness just by how much money we spend on welfare,” he said, adding that at a time when the state needed to cut spending, those who were better off should shoulder part of the burden.
The coalition says its most urgent task is to avert a sovereign debt crisis by cutting spending to reduce the budget deficit from a record peacetime level of 11% of GDP.
But constant talk of cuts is affecting the government’s popularity before the cuts even come into effect. Polls show the Labour Party edging past the Conservatives for the first time in three years, while support for the Lib Dems has collapsed.
The fallout from Monday’s news of the child benefit cut has shown just how bumpy the road ahead is for Cameron, overshadowing all other issues at his party’s conference.
On Tuesday, he made a televised apology for failing to warn voters before the election that the controversial cut was coming.
The next deadline for the government is October 20, when it will announce the results of a comprehensive spending review.
It will give details of cuts worth some stg£83 billion (€94.7bn) by 2015-16 – in contrast with the child benefit cut, which will save only stg£1bn per year from 2013.
Critics also say the government is focussing too much on cuts to the detriment of the business climate. In his conference speech, Cameron sought to counteract that perception by pledging to support wealth creators.
“I don’t believe in laissez-faire. Government has a role not just to fire up ambition but to help give it flight. So we are acting to build a more entrepreneurial economy,” he said.
He cited new apprenticeship and university places, a state-backed Green Investment Bank to help develop future technologies, infrastructure projects including high-speed rail, cuts in regulation and in corporation and payroll taxes.
“And there’s another way we’re getting behind business: by sorting out the banks. Taxpayers bailed you out, now it’s time for you to repay the favour and start lending to Britain’s small businesses again,” he said.
A government source said failure to do so may lead to a “Financial Activities Tax” on profits and remuneration. This would be in addition to a bank balance sheet levy coming into force next year.
Cameron also made reference to “recognising marriage in the tax system”. Tax advantages for married couples, a cherished Conservative policy, have been on the back burner since May because Liberal Democrats object. <
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