Savings are 'do-able', says Cameron

David Cameron insisted today that his plans to save money in the public sector were "do-able and deliverable" without compulsory redundancies.

And the Conservative leader outlined plans to cut top salaries in the public sector, by ensuring that bosses earn a maximum of 20 times what the lowest-paid person in their organisation receives.

The Tories' adviser Sir Peter Gershon disclosed today that his proposed efficiency savings would involve slashing £2 billion from the public sector payroll, which experts estimate could involve a reduction of 20-40,000 jobs.

Mr Cameron declined today to put a figure on the job losses that would result from his decision to spend £6 billion on avoiding Labour's National Insurance rise, but said that the savings could be made by not filling vacancies when they arise, rather than by imposing redundancies.

Speaking to the BBC Radio 4 Today programme, Mr Cameron said that 400,000 vacancies arise in the public sector each year as people move on.

"If you don't fill all those jobs as they become available, that's one way of saving money relatively rapidly," he said. "If you are doing that, not in the front line but in back-office jobs and management jobs, that means you can save money without anyone losing their job."

Mr Cameron accepted that measures announced so far - including £6 billion in efficiency savings, a public sector pay freeze, raising the retirement age and cutting Government programmes like ID cards and regional assemblies - are "still not enough" to deal with Britain's record national deficit.

But he said that it was not possible from opposition to set out full details of how a Conservative government would fulfil its pledge to cut the deficit deeper and faster than Labour.

"Of course some of them will be difficult savings to make," he said. "We have never claimed all of it comes from efficiency savings."

He floated the idea of charging tolls on new roads, saying: "We should be looking, when we build new roads, at road charges and tolls, because we need to find a way a building essential infrastructure in the country where - because we have had a bad Labour government - we have run out of money."

Asked if charging could be extended to the existing road network, he replied: "I think it should start with new roads."

Mr Cameron suggested that his plan to stop the highest-paid executives in the public sector from earning more than 20 times as much as their lowest-paid staff would "set a lead" for private companies to follow.

"The public sector can take a lead on this by not paying outrageous multiples of income to the highest paid and instead recognise that we are all in this together and we need greater equality of pay in the public sector," he told Today.

"The public sector and private sector chase each other's tail in endlessly increasing top people's pay. We are saying this roundabout needs to stop.

"Let's start wit the public sector and say in the public sector that bosses shouldn't be paid more than 20 times more than the people who are paid the least.

"That would make a real impact not just in saving money, which we need to do to address the public deficit, but in tackling inequality in pay."

The Tories will today accuse the Government of squandering £30 billion on fraud and error in the benefits system since 1997.

They will promise tougher punishments for fraudulent claimants, which could see them lose rights to benefits for up to three years after "three strikes".

However, the commitments are unlikely to prevent more bitter wrangling between the parties over Labour's planned hikes in National Insurance.

Gordon Brown is to use a speech this evening to step up his attack on Tory claims that £6 billion of efficiency savings can fund reversing the bulk of the planned increases.

And the Tories' opponents were quick to seize on Sir Peter Gershon's suggestion in a Financial Times interview that controls on public sector recruitment - including "driving down the use of agency and contract staff" and not filling empty posts - would save "perhaps £1 billion to £2 billion" in 2010/11.

Lib Dem Treasury spokesman Vince Cable said: "It is fast becoming clear what Tory efficiency savings actually mean.

"Claiming that they are the party that will support jobs is entirely undermined when their efficiency chief is looking to immediately slash employment throughout the public sector.

"The Tories are guilty of the worst type of salami slicing - cutting with no regard for what is useful or wasteful spending."

The Tories welcomed a report from Deutsche Bank suggesting that an outright Conservative victory would be good for share prices and the value of sterling and could help keep interest rates low.

The investment bank's analysis, reported in the Daily Telegraph, suggested that the price of state borrowing may increase if Labour remains in power after the election, because of market concern that Gordon Brown will not cut public spending quickly enough.

The report said: "The best result for UK equities is likely to be an outright victory for the Conservative Party.

"Although an outright Labour victory would help create certainty, the lack of urgency in their deficit reduction plans may be negative for gilt yields."

And it added: "If the Conservatives receive a comfortable majority, a more pre-emptive tightening of fiscal policy seems likely.

"In this case, the Bank of England could find itself constrained in its ability to tighten monetary policy, and rates could well remain on hold for longer than we currently think."

The shadow chief secretary to the Treasury, Philip Hammond, said: "The clear message is that a Conservative victory and Conservative policies to start getting the deficit down in 2010/11 will reassure investors and keep interest rates lower for longer.

"The main risks to Britain's recovery are the lack of confidence among investors and businesses and the threat of Labour's jobs tax. A Conservative government with a clear and credible plan to deal with both will put Britain firmly on the road to sustainable economic recovery."

Chancellor Alistair Darling said: "David Cameron's interview is very significant, both for what he says and what he doesn't say.

"He has confirmed his intention to make a very expensive tax cut costing £30 billion over a five-year parliament in cancelling the NIC increase but he has now contradicted George Osborne in admitting today that efficiency savings won't be enough to pay for this.

"So it is now clear from the interview on Today - and he was unable to deny this - that additional heavy cuts will have to be made in public sector spending and jobs from this year onwards and that tens of thousands of jobs will be lost, not just in the public sector but in the private sector as well, where they depend on Government contracts."

Speaking as he embarked on a fourth day of campaigning across the UK, Mr Cameron said Labour"s case against his NI policy had " collapsed".

"They got it completely wrong and their case has collapsed again," he said as he arrived to talk with young people who have just completed a six-week employment training course run by the Spear charity in Hammersmith, west London.

Mr Cameron, who will later travel to Scotland, was flanked by local General Election candidate Shaun Bailey, who co-founded another youth work charity.

He would need a 4.2% swing to take the new Hammersmith seat from Labour MP Andy Slaughter.