Coalition Government to Accelerate Deficit Cuts
The Conservatives and Liberal Democrats have agreed to accelerate plans to cut the deficit and promised an emergency Budget within 50 days, after forming the first post-war UK coalition government, writes Kate Horstead.
The new Prime Minister, David Cameron, and deputy prime minister, Nick Clegg, said that although they represented different political parties with different ideas, they were united in their purpose to rebuild the economy. The two parties agreed to make £6 billion of public spending cuts this year.
In his inaugural speech the Prime Minister said:
“Our country has a hung Parliament where no party has an overall majority and we have some deep and pressing problems, a huge deficit, deep social problems and a political system in need of reform. For these reasons, I aim to form a proper and full coalition between the Conservatives and the Liberal Democrats.”
At a joint press conference, Nick Clegg added:
“We need to build a new economy from the rubble of the old one. We need to take on new ideas, new forms of growth and investment, and a vision for a new kind of economy.”
The Prime Minister quickly began allocating Cabinet seats, including George Osborne as chancellor, Vince Cable as business secretary, William Hague as foreign secretary and Theresa May as home secretary.
Details of the agreement between the parties have been published and include:
- Next year’s one per cent National Insurance rise to be partly scrapped. The threshold at which employers must pay National Insurance Contributions (NICs) will be raised, but the increase of employees’ NICs will go ahead as planned.
- An increase in capital gains tax on non-business assets, bringing the top rate of tax to at least 40 per cent. There will be exemptions for entrepreneurs.
- A “substantial increase” in the personal tax allowance from April 2011 with further steps to raise it to £10,000 as a long-term objective.
- An emergency Budget to be drawn up over the next 50 days, outlining £6 billion of public spending reductions to be made within this financial year.
- Parliament to last for a five-year fixed term, so the next election will not take place until May 2015.
- A referendum on any further transfers of power to the EU, and a commitment from the Liberal Democrats not to adopt the euro for the lifetime of the next Parliament.
- A referendum on moving to the Alternative Vote system.