Cameron dismisses Lib Dem demands for 'mansion tax'

Prime Minister David Cameron appearing on BBC1's The Andrew Marr Show. (PA)

David Cameron today dismissed Liberal Democrat demands for a “mansion tax” and benefit cuts for wealthy pensioners as part of efforts to tackle the deficit.

But the Prime Minister signalled that the coalition would be targeting the rich with new measures to help balance the books.

Interviewed on the BBC's Andrew Marr Show as the Conservatives kicked off a potentially tricky conference in Birmingham, Mr Cameron dodged questions about whether the economy was finally recovering from its double dip recession.

He also insisted it was "too early to say" whether the Government would miss its key target for public sector debt to be falling by 2015.

"I'm not an economic forecaster so I cannot tell you exactly what is happening in terms of the day-to-day growth, but I can tell you that our economy is rebalancing," he said.

Asked whether the debt target was set to be missed, he replied: "The figures for this year, it is too early to say where they are going to end up."

Mr Cameron said his party would "level" with the public about the need for another £16 billion of spending cuts in 2015-16.

"We have to find these spending reductions and if we want to avoid cuts in things like hospitals and schools, services that we all rely on, we have to look at things like the welfare budget," he said.

The PM insisted he was looking at "working age welfare", and would stand by his pre-election promise to protect universal benefits for pensioners - such as free bus passes and winter fuel payments.

But he said the overall deficit reduction effort would be "fair".

"You have got to make sure that as you do this you are fair and seen to be fair. And under this Government we have always done this," he said.

"We will make sure that the rich pay their fair share... We are going to take further action to make sure the wealthiest people in our country pay their fair share towards deficit reduction."

Chancellor George Osborne also kicked off the conference by ruling out the Liberal Democrats' cherished "mansion tax" proposal for a levy on expensive properties.

"We are not going to have a mansion tax or a new tax that is a percentage value of people's properties," he told The Mail on Sunday.

"We don't think people who have worked hard, saved up to buy a home, should be clobbered with a mansion tax."

Mr Osborne also said the Government would be extending the council tax freeze for a third year in a row while rises in regulated rail fares would be capped at retail price inflation (RPI) plus 1%.

Meanwhile, Mr Cameron sought to rally restive Tories with a pledge to use Britain's veto to block the European Union budget if it is not in the UK interest.

Speaking to the Sunday Telegraph, the Prime Minister also proposed a "bold thinking" plan for the EU to have separate budgets - one for the 17 eurozone nations and another for the 10 - including Britain - outside the single currency.

In a further overture to the right, Home Secretary Theresa May called for a review of the EU's freedom of movement directive in order to prevent a new influx of immigrants from the continent.

"We are looking at this whole area of the abuse of the freedom of movement. But we will go further on this, and the issue of free movement will be part of the review," she told The Sunday Times.

"It will be looking at where the decision-making powers are between the EU and the UK, how they are operating and what the impact of those are."

Mr Cameron ruled out Lib Dem proposals for a mansion tax, saying they were "not going to happen".

"I don't actually believe we should be a country where if you work hard, you save, you buy yourself a house, you try to pay down the mortgage, you save and invest into that house, I don't want to be a country that comes after you every year with a massive great tax. So that is not going to happen.

"What we have put extra tax (on) is when people buy very expensive property."

The Prime Minister defended the decision to reduce the top rate of tax from 50p to 45p - seized on by Labour as a "tax cut for millionaires".

"The richest 10% in our country are not only paying more in income tax, they are paying a greater percentage of the total income tax take than they ever did under Labour," he said.

"That top rate of tax had to go, because it was higher than France, higher than Germany, higher than Italy. You cannot run an enterprise economy, a free market economy, where you want investment, you want jobs, you want growth, if you have got a top rate of tax that is completely uncompetitive - and by the way raising virtually no money."

Pressed on the issue of universal benefits for pensioners, Mr Cameron indicated they would not be up for grabs in the spending review for 2015-16. "Let me be absolutely clear, the promise that I made at the last election to Britain's pensioners when I said we are not going to take away your winter fuel allowance, your free TV licences, your free bus passes - that promise stands."

Mr Cameron said he was ready to wield Britain's veto to prevent "massive" increases in the EU's long-term budget from 2014.

But asked whether he would use the veto to block any rise, he declined to give precise details of his negotiating position.

He repeated his position that voters should be given an opportunity - either in a referendum or a general election - to give their "fresh consent" to a new settlement for Britain's position in Europe.

But he said he did not favour a straight in-or-out referendum and believed that it was in Britain's interest to remain in the EU.

The Prime Minister told the Andrew Marr Show: "Europe is changing, the single currency is integrating rapidly.

"I think this presents a great opportunity for Britain to get the sort of deal we have always wanted in Europe. Let's be at the heart of a free-trading open-market Europe, but we don't want this endless political integration.

"I think the opportunity will open up over time to get a new settlement, and when we get that new settlement - after the general election - we should have new consent for that settlement."

He made clear that he expected this position to be a dividing line with Liberal Democrat coalition partners as the general election approaches.

"New settlement, new consent - that is what you will get with a Conservative government."

He added: "The trouble with a straight yes-or-no (referendum) is that, frankly, I am not happy with the status quo, so I don't want to say Yes to the status quo, but I also don't think it would be right to leave now.

"I think most people in our country don't want to leave the EU or just accept how it is at the moment. They want a change now. I want a change now. A Conservative-only government after the next general election can go and change it, can have that renegotiation."

He dismissed the prospect of eurosceptic Tory voters switching to the UK Independence Party, as the only party offering an in-out vote, saying: "I think Ukip is a complete waste of time, obviously."

Asked whether he would use the UK's veto to block an increase in EU budgets, Mr Cameron said: "If necessary, yes."

He added: "My approach is very simple. If we can't get a deal which has proper control of that budget, if they put forward ideas for massive increases, I won't say Yes to it."

But asked whether he was ready to invoke the veto to block any rise at all, Mr Cameron responded: "I am not going to lay out my negotiating tactics in front of you, but let me be clear - people in Europe know I mean what I say.

"They know I am capable of saying No and if I don't get a good deal, I will say No."

He added: "When you have got a single currency with a single bank behind it and more transfers between their countries, there will come a time, I believe, when you are going to get two European budgets - one for the single currency, because they are going to have to support each other much more, and perhaps a wider budget for everybody else.

"I don't think we will achieve that this time, but it is an indicator of the way Europe is going and we should be welcoming this."

The Prime Minister said that migration by workers within the EU was an issue being considered as part of the examination of the "balance of competences" between Westminster and Brussels currently being carried out by Foreign Secretary William Hague.

He voiced concern that factories were employing more than 50% of their staff from outside the UK, at a time of rising unemployment among home-grown workers.

"I think it is absolutely right to look at this balance of competences, to go through every topic and see what is in Britain's interests," said the PM.

But he added: "I believe in the single market, and I believe in free movement."

Mr Cameron played down the boost in the polls enjoyed by Labour following leader Ed Miliband's well-received "One Nation" speech at its conference in Manchester last week.

"What I would say is that the central question of British politics right now is how do we get out of the difficult straits we are in, how do we deal with the debt and deficit and get the economy growing, how do we back aspiration amongst all our people?" said Mr Cameron.

"The Conservatives are absolutely talking that language and taking that action and I didn't hear anything from Labour about any of those issues.

"As far as I'm concerned, it's not the speech that matters, it's what you are going to do.

"And this week here in Birmingham, you are going to hear in huge detail how we get behind people who want to get on and want to make something of their lives. That's what it is about."

Mr Osborne said he believed the "economy is healing", and the Government had the "right balance" on the pace of spending cuts.

But he refused to be drawn on whether he would have to abandon the public sector debt target, pointing out that the Office for Budget Responsibility (OBR) is due to produce more forecasts in December.

"Our progress against those targets are now measured independently by an independent body," he told Sky News' Murnaghan programme. "What I can be absolutely clear about is that we are absolutely committed to dealing with Britain's debt and deficit problems, growing our economy and creating private sector jobs.

"Our entire economic policy is an enterprise policy. If you don't deal with the debt then the interest rates go up, that clobbers business, it hits families and leads to the kind of mess that, frankly, we inherited from the last government."

Mr Osborne said debt "has been increasing because the deficit has been very high", and the country still faced "huge challenges".

"That is precisely why we are continuing on the path that we are continuing on," he added.

"I think we are getting it about right. We've got the right balance."

The Chancellor reiterated that the "wealthiest will bear the greatest share" of the cost of dealing with the deficit.

But he said there would be no mansion tax, or any other type of 'wealth tax' that was levied annually on assets.

"Other countries have tried that and it hasn't worked, it's driven enterprise investment abroad," he added.

He also rejected "synthetic" criticism over the 50p rate cut.

"The people paying the price for the 50p tax rate were the poor looking for work and not the rich who were not in fact paying it," he went on.

Mr Osborne said he would consider naming wealthy individuals participating in "morally repugnant" - but legal - tax avoidance schemes.

"I am perfectly prepared to consider that idea," he said. "Of course I have also got to respect the fact that we have in this country taxpayer confidentiality, which is a very important part of a free and democratic system."

Despite strong opposition from Tory traditionalists, the chancellor confirmed that he would be backing the introduction of same-sex marriage when a free vote is held in the House of Commons.

"I support gay marriage, I support gay marriage because I believe Conservatives support the institutions of commitment," he said.

Labour shadow Cabinet Office minister Michael Dugher said: "David Cameron can't be a One Nation Prime Minister. He says one thing, but time and again does another.

"He says those at the top will need to pay more, but he is the man whose top priority is to cut taxes for millionaires, giving 8,000 people earning over £1 million a tax break of £40,000 this April.

"On the deficit he says it's coming down, but the truth is that it's going up. So far this year the Government has borrowed 20% more than last year.

"He promises to get immigration down. But all we get is reheated rhetoric while his Government gives us chaos at the borders, illegal immigration out of control and immigration remaining high.

"Britain needs a One Nation Prime Minister to deliver real change. Instead we've got one that asks millions to pay more and millionaires to pay less."

Responding to Mr Cameron's comments, Ukip leader Nigel Farage said: "Since Cameron has become leader, membership of the Tory party has halved. Since he last abused Ukip, our poll ratings have doubled.

"The Prime Minister is once again showing his legendary lofty disdain for ordinary voters who rate Ukip higher than the Lib Dems - who must be an even a bigger waste of his time, obviously.

"The Prime Minister's blueprint for a new EU settlement is very confused.

"His claims to be able to change the EU rules on freedom of movement will be derided by anybody who knows how the EU works."

Responding to the proposal to extend the council tax freeze, chairman of the Local Government Association Sir Merrick Cockell said: "Any help for councils is a good thing, but we have to be clear that this is a short-term offer. It doesn't address the huge long-term pressures councils are facing including bigger cuts than any other part of the public sector and an immediate and growing crisis in funding care for the elderly. Councils could now have to budget for a further future shortfall.

"It is only right that councils take a longer-term view on budget planning and that decisions on the level of council tax are made by councillors who will then rightly be held to account through the ballot box.

"Councils care for the elderly, look after vulnerable children and collect the bins from our streets and in order to carry on doing this effectively local authorities need local discretion to consider the long-term interests of their residents before deciding if they will take up this Government offer."

PA