KEY POINTS:
Conservative leader David Cameron ditched his party's pledge to match Labour's public spending totals yesterday in a significant u-turn that will allow him to offer "permanent" tax cuts at the next general election.
The Tories changed tack after being outflanked by Gordon Brown, who is seeking big tax cuts in Tuesday's pre-Budget report to soften the impact of the looming recession.
An Ipsos MORI poll showed the Conservatives' lead has slumped to just three points. It puts the Conservatives on 40 per cent (down five points on last month), Labour on 37 per cent (up seven points) and the Liberal Democrats on 12 per cent (down two points).
Admitting that parts of his economic strategy were "obsolete" because of the downturn, Cameron promised to spend less than the £680 billion ($1848 billion) pencilled in by the Government for the 2010-11 financial year.
Previously, the Tory leader had matched Labour's plans for the next three years to insulate his party against the allegations of "Tory cuts" which have damaged it at the last two elections.
At the next election, the Tories will contrast their desire for permanent tax cuts with the tax rises they say would inevitably follow a Labour victory. A Tory government would allow state spending to grow by less than the 2.3 per cent real terms increase planned by Labour, through savings in government programmes and cutting waste.
However, the Cabinet is already moving to curb the Conservatives' room for manoeuvre. Yesterday ministers identified Whitehall efficiency savings of a few billion pounds on top of the £30 billion ($82 billion) already in the pipeline over the next three years.
The Chancellor, Alistair Darling, is expected to announce on Tuesday that the savings will be used to limit the increase in borrowing.
Cameron's refusal to offer upfront tax cuts since becoming Tory leader angered many in his party and left him dangerously isolated both at home and abroad as countries backed a "fiscal stimulus" to boost their flagging economies.
Labour claimed the Tories would give the British economy "a slap in the face" rather than "a shot in the arm".
Gordon Brown said: "The only group that is setting their face against necessary help for families and businesses now is the Conservative Party."
In a setback to the Tories, the Confederation of British Industry said: "There is a case for a well-targeted, controlled and time-limited fiscal stimulus in the immediate future."
The Tories denied a u-turn but admitted they had made an "adjustment" to their policy, saying there were now "clear blue lines" between the two main parties.
Tory sources suggested that Labour's health and overseas aid budgets would not be cut but declined to make the same pledge on education or defence. Final decisions will be made after the pre-Budget report.
Cameron said Labour would tell "lies" about "Tory cuts" but insisted that spending would merely rise more slowly under a Tory government. He said that Labour's "unsustainable" rise in borrowing meant the Tories could no longer justify matching its spending plans.
- INDEPENDENT
