Tackling the Decifit

Gordon Brown's debt, waste and taxes are holding us back and threatening the recovery with higher interest rates. A Conservative government will act now on debt to get the economy moving. We will deal with the deficit more quickly than Labour, so that mortgage rates stay lower for longer with the Conservatives.

We will ensure stability, build a more balanced economy, reform public services to deliver better value for money, create new jobs and make Britain open for business again.

Ensuring stability and creating a more balanced economy

Reducing the deficit.
We will deal with the deficit more quickly than Labour, so that mortgage rates stay lower for longer with the Conservatives.

Cutting waste.
A Conservative Government will take immediate action to start cutting Government waste, in order to spend 6 billion pounds less in 2010-11 than Labour's plans.

Cutting government spending.
We will protect health spending in real terms and honour our commitments on international aid. But because of Gordon Brown's mismanagement of the economy, there will have to be cuts in other areas of government spending, including:

   -  A one year public sector pay freeze in 2011 (this won't affect the one million lowest paid workers);
   -  Bringing forward the date at which the state pension age starts to rise to 66, to no earlier than 2016 for men and 2020 for women;
   -  Stopping tax credits to families with incomes over 50,000 pounds;
   -  Cutting spending on Child Trust Funds for all but the poorest third of families and families with disabled children;
   -  Capping the biggest public sector pensions above 50,000 pounds;
   -  A 5 per cent pay cut for Ministers followed by a 5 year freeze, and a 10 per cent reduction in the number of MPs.

Restoring trust in forecasts
We will create an Independent Office for Budget Responsibility to restore trust in Treasury forecasts.

Supporting a savings culture
We will restore our savings culture and encourage people to save more for retirement by:

   -  Working with employers and industry to introduce auto-enrolment into pensions for those on middle and lower incomes.
   -  Restoring the link between the basic state pension and average earnings.
   -  Rewarding those who have saved for their retirement by ending effective compulsory annuitisation at age 75.
   -  Raising the Inheritance Tax threshold to 1 million pounds.
   -  Permanently taking 9 out of 10 first-time buyers out of stamp duty by raising their threshold to 250,000 pounds.
   -  Over the longer term, reversing the effects on pension savers of the 1997 abolition of the dividend tax credit for pension funds.
   -  Promoting responsible consumer finance by creating a powerful Consumer Protection Agency, launching Britain's first free national financial advice service, capping excessive store card interest rates, and ensuring that consumers are given much clearer information on credit card bills and advertising.

Making Britain open for business

   -  Stopping Labour's tax rise on working people. Having identified savings to make in 2010-11 we can now commit to stop Labour's tax rise on working people and jobs at the same time as reducing the deficit faster. Seven out of ten working people will be better off under the Conservatives than under Labour.
   -  Cutting corporation tax. Our ambition is to create the most competitive corporate tax environment in the G20. To begin with, we will cut the headline rate of corporation tax to 25p or lower and the small companies' rate to 20p, funded by reducing complex reliefs and allowances.
   -  Simplify the tax system. We will restore the tax system's reputation for simplicity, stability and predictability.
   -  50p tax rate. We do not regard the new 50p tax rate as a permanent feature of the tax system, but we could not even think of abolishing the 50p rate on the rich while at the same time asking many of our public sector workers to accept a pay freeze.

Supporting new business. Any new business started in the first two years of a Conservative Government will pay no Employer National Insurance on the first ten employees it hires during its first year.
   -  We will build a network of business mentors and provide loans to would-be entrepreneurs, supporting self-employment and franchising as a route back into work.
   -  We will reduce the number of forms needed to register a new business - moving towards a 'one-click' registration model - with the aim of making Britain the fastest place in the world to start a business.
   -  We will end restrictions on people starting a business in social housing, to enable social tenants to become entrepreneurs.

Helping small businesses. We will reduce the burden of red tape on business with a 'one in one out' rule for new regulations, mandatory sunset clauses and regulatory budgets for departments.
   -  We will open up government procurement to small and medium-sized businesses by reducing administrative requirements, with an ambition that 25 per cent of government contracts go to SMEs.
   -  We will make small business rate relief automatic to reduce admin costs and encourage take up.
   -  We will use Government guarantees to create more diverse sources of affordable credit for SMEs, building on our proposals for a big, bold and simple National Loan Guarantee Scheme.
   -  Labour are planning to raise employer and employee National Insurance by 1 per cent in 2011. We will stop more than half of this rise for employers.

Higher productivity. We will reform central government and our public services in order to deliver higher productivity and better value for money for taxpayers. We will expect productivity improvements to match the best of the private sector.

Value for money. We will improve financial discipline by introducing a fiduciary obligation to taxpayers in civil service employment contracts, strengthening the role of Finance Directors within government and implementing clear financial performance targets for senior civil servants. The Treasury will return to its core role of ensuring value for money for taxpayers.

Reform the financial services: a plan for sound banking
   -  Strengthened Bank of England to Call Time on Debt. We abolish the failed FSA and will make the Bank of England responsible for macro-prudential regulation, judging and controlling risks to the financial system as a whole. This will restore the Bank's historic role in monitoring the overall level of credit and debt in the economy.
   -  New Consumer Champion. We will create a powerful new Consumer Protection Agency (CPA). The CPA will take a much tougher approach to consumer protection and will be given a mandate to act as a consumer champion. It will be a far more consumer-orientated, transparent and focused body than the FSA.
   -  Risky Bonus Structures. Conservatives have argued since the start of the recession that this is a credit crunch which needs credit solutions to get lending going again to save existing jobs and create new ones. The money that taxpayers have provided to support bank lending must not be diverted into significant cash bonuses. The banks have to understand that we are all in this together.