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Liam Fox to urge public spending freeze in speech Liam Fox to urge public spending freeze in speech
(about 2 hours later)
Former cabinet minister Liam Fox is to use a speech to call on the government to freeze the level of public spending for five years and spend the money saved on cutting taxes and the deficit.Former cabinet minister Liam Fox is to use a speech to call on the government to freeze the level of public spending for five years and spend the money saved on cutting taxes and the deficit.
The ex-defence secretary will say such a change in economic policy is needed.The ex-defence secretary will say such a change in economic policy is needed.
He will say it would change the "terms of trade in the political debate".He will say it would change the "terms of trade in the political debate".
Ahead of the Budget, Mr Fox has become the latest senior coalition party figure to urge the government to radically change its economic strategy.Ahead of the Budget, Mr Fox has become the latest senior coalition party figure to urge the government to radically change its economic strategy.
A freeze of all public spending - as against the current freeze for Whitehall departmental budgets - would cut spending in real terms by 2.5% a year. The current plan is for a 1% annual cut.A freeze of all public spending - as against the current freeze for Whitehall departmental budgets - would cut spending in real terms by 2.5% a year. The current plan is for a 1% annual cut.
Mr Fox calculated that this would save a total of £345bn that could be used to cut taxes - starting with the temporary abolition of capital gains tax - at the same time as cutting the deficit.Mr Fox calculated that this would save a total of £345bn that could be used to cut taxes - starting with the temporary abolition of capital gains tax - at the same time as cutting the deficit.
Mr Fox will urge an end to the ring-fencing of budgets for the NHS, schools and international development and as well as of universal benefits such as the pensioners' winter fuel allowance.Mr Fox will urge an end to the ring-fencing of budgets for the NHS, schools and international development and as well as of universal benefits such as the pensioners' winter fuel allowance.
BBC political editor Nick Robinson said a leading representative of the Tory right was matching one part of the call made last week by Liberal Democrat Business Secretary Vince Cable to think the previously unthinkable on public spending.BBC political editor Nick Robinson said a leading representative of the Tory right was matching one part of the call made last week by Liberal Democrat Business Secretary Vince Cable to think the previously unthinkable on public spending.
Our correspondent said there was no prospect of the chancellor adopting such policy in the Budget but the speech was part of the battle being waged increasingly in public about the pitch the Conservatives should make at the next election if they are to avoid defeat. He said there was no prospect of the chancellor adopting such policy in the Budget but the speech was part of the battle being waged increasingly in public about the pitch the Conservatives should make at the next election if they are to avoid defeat.
Mr Cable warned that serious damage would be done to industry if only certain government departments were subject to spending cuts. Tory backbencher Eleanor Laing told BBC Radio 4's Today: "There are some people who are clearly positioning for what might happen after the next general election and there are some people who are openly talking about challenges to the leadership
He questioned whether departments such as health and development should be protected. "They should all be quiet. They should all get their heads down and work together as one Conservative Party for the good of the country."
Mr Cable repeated his call for more capital spending and called for pensioners' benefits to be taxed. On the same programme Mr Cable warned that serious damage would be done to industry if only certain government departments were subject to spending cuts.
Such an approach has already been rejected by the prime minister. He questioned whether departments such as health and international development should be protected, saying that he had gone along with 80% of spending being ring-fenced for this parliament, but did not think it would be right "in the long term".
Mr Cable, who repeated at the weekend his call for more capital spending and for pensioners' benefits to be taxed, said he might back a Labour motion in favour of a "mansion tax" when it is debated in the Commons on Tuesday.
Chancellor George Osborne's Budget - his fourth - is just over a week away, on 20 March.Chancellor George Osborne's Budget - his fourth - is just over a week away, on 20 March.
The chancellor has said spending cuts must continue if the government is to retain credibility.The chancellor has said spending cuts must continue if the government is to retain credibility.
Speaking in an interview at the at the World Economic Forum summit in Davos in January, he said deficit reduction was necessary to show that the UK could "pay its way in the world".Speaking in an interview at the at the World Economic Forum summit in Davos in January, he said deficit reduction was necessary to show that the UK could "pay its way in the world".