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  1. Business
  2. Economics
6 October 2009

The void in Osborne’s speech

The shadow chancellor has no plan for growth

By George Eaton

From the Conservative conference

There was a disturbing void in George Osborne’s speech today. His address to the conference lacked a single positive proposal to stimulate economic growth. The announcement of a one-year public-sector pay freeze, a rise in the retirement age to 66 and cuts to baby bonds and tax credits left us in no doubt that the Tories will reduce the deficit. But Osborne forgot what Gordon Brown correctly identified in his TUC speech: “growth is the best antidote to debt”. There was no evidence of anything like a coherent Conservative strategy for growth.

Worse still, the shadow chancellor derided those measures Labour has taken to stimulate the economy. His claim that the VAT cut failed entirely is not supported by research. In February, three economists from the Institute for Fiscal Studies found that the cut had raised real consumption by 1.2 per cent.

The refrain of Osborne’s speech was “We’re all in this together”, so how fair were the pledges he made? He was right to resist calls from the Thatcherite right to scrap the 50p income-tax rate. His threat to use the tax system to punish banks that refuse to curtail extravagant bonuses was wise. And it was reasonable of him to remind voters that it was the Tories who first proposed action against non-doms.

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But elsewhere, Osborne’s attempt to clothe himself in progressive garb did not succeed. He reaffirmed his party’s grossly regressive pledge to raise the inheritance-tax threshold to £1m within the life of the next parliament. He relished the cheers for the Tories’ tax break for married couples, yet this remains an example of the unfairness he attacked elsewhere in his speech. A tax that would give the wealthy husband on his third marriage priority over the struggling single mother cannot be justified. It is also at odds with the Tories’ questionable but progressive plans to means-test tax credits and to scrap child trust funds for better-off families.

After this speech, there is nothing to suggest that Osborne would deliver either a more prosperous economy or a fairer society.

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