Cameron:Budget U-turns a sign of courage

UK Political Editor

Monday 4 June 2012

IMPLEMENTING Budget U-turn after Budget U-turn is a sign of courage, David Cameron insisted yesterday after admitting he had been wrong on the charity tax, the pasty tax, the caravan tax and the church tax.

DAVID CAMERON: His Government has made 21 climbdowns -- some claim 34 -- but he says no-one believes it lacks resolve. Picture: PA

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MICHAEL SETTLE UK POLITICAL EDITOR

The Prime Minister insisted the UK Government had taken some tough decisions on trying to tackle the record budget deficit and public-sector pay, claiming: "Nobody thinks this Government lacks resolve, strength and grit.

"It has all of those things and it also has the courage to say if we've got something wrong, let's change it, let's not keep ploughing into the brick wall."

Last week, the Treasury changed its mind on, firstly, the pasty tax, deciding to maintain the VAT exemption on hot savouries; secondly, on the caravan tax, reducing the planned 20% VAT hike to just 5%; and then, scrapping the cap on tax relief for donations to charity. Last month, it about-faced on the proposed church tax, saying it would offer full compensation to places of worship facing a tax hike on improvements and alterations. Unlike one of his predecessors, Mr Cameron is proving to have a penchant for U-turns. Since taking power in May 2010, the Coalition has made at least 21 prominent climbdowns; some critics put the figure at 34.However, the PM stressed the two key Budget changes – raising the tax-free threshold and cutting the top rate of income tax – remained untouched.He added: "There have been difficulties in the Budget and we've had to make some changes. When you've got something wrong, there are two things you can do in government: you can plough on regardless or you can say – no, we're going to listen, we're going to change it, we're going to get it right. And that's what we've done and that's the right thing to do."Labour, which branded the Budget an "embarrassing shambles", suggested Mr Cameron's ability to perform multiple changes of tack should extend to the general thrust of his economic policy and enable him to adopt a Plan B for growth and jobs."How can the Prime Minister claim to be listening when 'ploughing into the brick wall' is exactly what he and the Chancellor have done with our economy?" asked Christopher Leslie, the Shadow Treasury Minister."Despite the chaotic U-turns of recent days, there is no change of heart on the major mistakes George Osborne and David Cameron have made."We are in recession with over a million young unemployed thanks to George Osborne's failed plan, which is seeing us borrow £150 billion more than planned. We desperately need a change of course on the economy."Yet still the Government will not give the country a real plan for growth and jobs."And there is no sign of any regret for a tax cut for millionaires at a time when families with children are being hit by an average of £511 a year this year alone," he added.Meanwhile, on Thursday the Bank of England is expected to consider another dose of quantitative easing (QE), the emergency printing of money, if evidence emerges of a further deterioration in the economy.Analysts believe the Monetary Policy Committee will leave interest rates at their record low of 0.5% and probably leave the stock of QE untouched at £325bn.However, if a closely watched survey of the important services sector released hours before members make their decision shows a contraction, it could prompt the Bank to fire up its money-printing presses again.A contraction of the services sector would add weight to fears the economy is deteriorating after the manufacturing sector suffered a shock contraction in the second biggest decline in the 20-year history of the Markit/CIPS survey.Industry data, such as the Markit surveys, have until recently painted a much more upbeat picture of the economy than official figures, which is why last week's manufacturing data came as such a shock and a contraction in the services sector may be crucial to the Bank's decision.

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Cameron:Budget U-turns a sign of courage

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