We cannot rule out cuts to NHS 'sacred cow', says Cable

(TOM PILSTON)

The National Health Service faces the threat of cuts under a wide-ranging Liberal Democrat assault aimed at saving £20bn in public money, Vince Cable, the party's deputy leader, has warned.

In an interview with The Independent, he risked a backlash among Liberal Democrat activists by refusing to rule out reductions in health spending. He insisted the NHS budget was not a "sacred cow", hinting at plans to cut the multimillion-pound NHS computerisation programme and axe strategic health authorities.

Mr Cable will use the party's conference, which opens today in Bournemouth, to outline proposals to find £20bn savings from government budgets to fund tax cuts and spending priorities such as pensions, schools and police.

Nick Clegg, the party leader, hopes the plans will carve out distinctive ground for the Liberal Democrats and prevent it being squeezed by Labour and the resurgent Conservatives. But he faces a fight with activists when the plans are debated on the conference floor on Monday.

In a wide-ranging interview Mr Cable, the party's Treasury spokesman, said the Liberal Democrats needed to do better in the opinion polls. But he insisted Mr Clegg's ambition of doubling the party's 63 MPs within two general elections was achievable because of the prospect of "spectacular" gains through collapsing Labour support.

Mr Cable outlined plans to crack down on loopholes used to shield boardroom "golden goodbyes" from tax, citing the example of Adam Applegarth, who received a reported £750,000 pay-out when he stood down as boss of Northern Rock.

He also said he would publish proposals in the next few days for anti-avoidance measures to bring an extra £5bn tax from some of Britain's richest individuals. He also hinted at cuts to the "over-complicated" tax credits system.

The stance on health spending may hand ammunition to Labour and the Tories – who have pledged to match government spending on hospitals – but Mr Cable was adamant the NHS had to be part of his party's review.

He said: "In every department there are things which should be questioned. Take the sacred cow of the NHS – we take a very jaundiced view about the NHS IT scheme. I find it difficult to defend activities like the IT schemes and the functioning of strategic health authorities. These are not frontline services so the idea that there are some departments which must never be touched is not sensible."

Moving on, he said: "We are not questioning basic principles about schooling – we want to see smaller class sizes – we are not questioning the desirability about public spending on key areas like that or police officers, we want to see more not less, we want to see more generous pensions. But he declared: "It is psychologically important for the national debate and for us as a party to be saying some money is being returned to the taxpayer. It is not possible to talk about vast sums of tax cuts through public spending cuts Ten years ago, indeed five, there was a clear public mood we identified with, and led, that key bits of public services had been starved of resources and there needed to be an increase in taxation to pay for them.

"The situation has changed. There is a very strong sense of disenchantment that much of the public spending has been desirable but a lot of this money has not been productively spent."

The Liberal Democrat frontbencher was speaking on the eve of Mr Clegg's first autumn conference as leader, an event the party hopes will help break the two-party stranglehold. Mr Cable, the former Shell chief economist credited with predicting the housing slump and credit crunch years in advance, promised to continue boosting his party's ratings for economic competence through "persistence and hard grind".

He insisted the Liberal Demcrats' poll rating of about 17 per cent was a strong position, but acknowledged that their failure to break the two-party mould was a "perennial source of frustration". He said: "We clearly need more momentum. The Conservatives have momentum but they have the challenge of sustaining it in the context of a very vacuous set of commitments."