Prepare for public sector pain, warns Cameron

Tories offer to cut bureaucracy in return for cooperation on pay costs

David Cameron warned public sector workers to prepare for a painful pay squeeze from next year because an incoming Tory government would have to take "incredibly tough decisions" to cut Britain's debt mountain.

The Conservative leader said the financial crisis was so severe that Britain needed to undergo "massive change" as it entered an era of belt-tightening.

"We have got to replace Labour's spendaholic government with a new government of thrift," he said, in a gloomy address to the party's spring conference. He promised to target the "quangocrats" and Whitehall mandarins who had been "getting rich at the taxpayer's expense" but admitted the pay and pensions of public sector workers would have to reflect "the realities of our economic situation".

Mr Cameron – whose party enjoys a double-digit lead over Labour in opinion polls – said: "We will honour existing pay deals, including existing three-year pay deals. But many of them end next year and this is the deal we'll be offering you then: We will help you by getting rid of the central direction and bureaucracy that undermines your morale and professional autonomy.

"And in exchange we will ask for your help in solving Labour's debt crisis by keeping the cost of public sector pay only as high as our country can afford."

Mr Cameron repeatedly stressed the extent of the economic problems a Tory government would face if it won the election expected to be held in May 2010. He acknowledged that his success or failure would be judged on his ability to reduce the nation's debts.

"I totally get that," he told the conference in Cheltenham, but he also said that it could take at least a decade for the complete impact of the necessary overhaul of Britain's finances to be felt.

"If we win the election, we may not see the full fruits of our labours in the lifetime of our government. But if we stick together and tackle this crisis, our children and grandchildren will thank us for what we did, not just for themselves but for our country."

He challenged Gordon Brown to start reducing government spending immediately and he set out a series of programmes that he would axe.

To applause, he called for the planned identity cards scheme and the ContactPoint database storing children's records to be scrapped. He pledged to end the payment of tax credits to people earning more than £50,000 a year, which would affect 100,000 people.

Mr Cameron signalled a crackdown on escalating salaries for the senior officials who run "the swarm of unaccountable quangos that has infested our country under Labour".

He promised to publish information about all public sector salaries over £150,000, as well as details of Government spending over £25,000.

"In the age of austerity, where we'll be asking frontline public sector workers to help us keep pay levels down we cannot leave the pay of public sector bureaucrats untouched."

The shadow Chancellor, George Osborne, criticised the new 50p tax rate for top earners in his speech to the conference. He said he did "not need convincing that higher tax rates discourage enterprise and damage economic activity", and insisted he had higher priorities for action.

He also announced that a Tory cabinet would take spending decisions collectively, rather than allowing ministers to bid against each other.

But the Liberal Democrat Treasury spokesman, Vince Cable, said: "What I find depressing about today is that all we have had is just more Tory rhetoric with little clarification of what they would actually do and the hard choices that they would take.

"The Tories seem to think that they can coast their way to Downing Street because the Government is so unpopular, but at some point, they are going to have tell the British people just what they have up their sleeves.

In an interview in The Independent today, the Mayor of London, Boris Johnson, calls for the Tories to oppose the 50p rate. "If you tell [the best talent] you are going to take considerably more of their money away than they could expect in the competitor capitals, that's a poke in the eye for London," he says.

He also attacks the number of CCTV cameras in London. "We are the most surveiled society in the world," he says.