Osborne makes spending cuts top Tory priority

Author: PA

Mr Osborne refused to rule out tax rises, but said cutting spending was his
preferred route to restoring public finances.

Ahead of the publication of Tory plans for regulation of the City, he sounded
the death knell for the Financial Services Authority, pledging to abolish
the body if the Conservatives win the next general election.

In an interview on BBC 1’s Andrew Marr Show, Mr Osborne said there would be a
greater role for private firms and charities in providing education and
welfare services as a future Tory government would attempt to do “more for

On defence spending, Mr Osborne said there was a “clear obligation” to ensure
troops on the front line in Afghanistan had the equipment they need.

But he said there would be “difficult decisions” to be made about major public
spending projects such as the replacement for the Trident nuclear deterrent
and the £5 billion aircraft carrier programme.

He said Whitehall would have to change to take account of the fact the
“cupboard is bare” and endless money would not be poured in to the public

“That whole culture change, which has to start in the Cabinet and ends up at
the front line of all of our services, is the big change that is coming.”

He continued: “I have not ruled out tax rises… but I do think after a decade
of over-spending, people should not be over-taxed because of that mistake.

“The bulk of the strain in dealing with this debt crisis has to be cutting
public spending, restraining public expenditure growth.

“That is where we have got to look for the bulk of the effort in dealing with
this national debt crisis bequeathed to us by the Prime Minister.”

Tomorrow, the Conservatives will publish a paper promising the end of the
tripartite regulation system set up by Gordon Brown.

Mr Osborne said: “We are going to abolish the Financial Services Authority, we
are going to put the Bank of England in charge of regulating our banks, our
building societies, other significant financial institutions because we
think the system Gordon Brown created patently failed.”

He said a new consumer protection agency would be created with the “clout” to
make sure the public were treated fairly.

“Given everything that has happened, it would be bizarre to stick with a
system of regulating the banks that failed so spectacularly,” he said.

Mr Osborne said retail banks engaging in risky investment activity would have
to set aside “very large amounts of money” as an insurance policy to protect
the taxpayer from the cost of a bail-out in the event of a failure.

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