Pre Budget report

Written by Vince Cable MP on Wed 10th Dec 2003

This week is a major set piece parliamentary occasion: the Chancellor's pre-budget report. It is my job to respond to Gordon Brown as the Liberal Democrat Shadow Chancellor.

In many respects, Gordon Brown has a good story to tell. There has been steady growth; unemployment has fallen to historically low levels; inflation and interest rates are low; and the government's finances area reasonably sound by the standards of countries like the USA, Germany, France and Japan.

But one growing problem is a rising budget deficit. The war in Iraq is a major factor. It has cost £2 billion so far and the costs of occupation are rising by £200 million a month. Wars are expensive and the taxpayer is due to get a big bill.

I am also concerned about spiralling household debt. Many families are borrowed to the hilt, much of the debt secured against house prices, which are precarious. The Chancellor should be acting to curb the aggressive, unsolicited, lending by banks and credit card companies. One leading bank recently sent a £10,000 credit offer to a dog. Madness.

Lastly the chancellor must reduce the unfairness in the tax system. The poorest 30% of the population - many of them pensioners - pay more of their income in tax than the top 30%. We need a fairer system than council tax, which is highly regressive; that is why I favour a local income tax. And, instead of high charges on personal care for illnesses like Parkinson's and dementia and the new tuition fees on students, there could be a higher rate of tax on personal earnings over £100,000.

And, of course, the government must top wasting taxpayer's money. I have committed myself to identifying £5 billion in cuts and will find them.