David Cameron stands defiant as Liam Fox launches latest assault
David Cameron made clear last night that he will resist pressure to abolish the protection afforded to the NHS, schools and overseas aid, after calls from former lieutenant Liam Fox.
Little more than a week ahead of the Budget, critics of the PM’s approach have set their sights on the so-called “ring-fence”, arguing that it is forcing justice, transport and the Home Office to bear the brunt of cost-cutting.
In a speech calculated to appeal to the Tory right, North Somerset MP and former defence secretary Liam Fox questioned whether shielding particular areas “makes sense in a period of prolonged austerity”.
He called for a five-year freeze on all public spending to pay down the UK’s national deficit and fund tax cuts.
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Dr Fox said that a three-year public spending freeze would save the Government £70.4 billion a year. Extending the freeze over five years would save £345 billion, he said, adding: “As a Conservative, such a commitment doesn’t scare me.”
Speaking to the Institute of Economic Affairs, Dr Fox also called for a “systematic dismantling of universal benefits and turning them into tax cuts”.
Withdrawing benefits such as the winter fuel allowance from wealthy pensioners could pay for a £2.7 billion abolition of income tax on savings, he suggested.
And he called for a stamp duty discount for under-30s to help young people get a foothold on the housing ladder, while withdrawing housing benefit from the majority of those aged under 25 to save up to £1.8 billion a year.
“I believe that the country will be at its best when the Government is small and people are left to enjoy the fruits of their own labour,” said Dr Fox, who also advocated a temporary Capital Gains Tax holiday to encourage business investment.
“I believe that in leaving money in people’s pockets, economic activity will follow. People will buy houses, invest for their future or just go shopping.
“Whichever is the case, it is creating a society that is sustainable for the future in a way that our current welfare-dependent and debt-ridden economy is not.”
Dr Fox’s intervention will fuel speculation about a challenge to Mr Cameron’s leadership of the Conservative Party. The former defence secretary himself said a contest before the 2015 general election would be “madness”, but did not rule out a second bid for the leadership.
It follows a weekend speech by Home Secretary Theresa May in which she prompted speculation that she may be lining herself up for a bid, by roving across a number of government briefs.