British PM Cameron tries to shrug off Europe schism with tax cut pledge

Reuters News
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Posted: Oct 01, 2014 5:29 AM

By Andrew Osborn and William James

BIRMINGHAM England (Reuters) - British Prime Minister David Cameron promised to push through sweeping tax cuts if re-elected next year, a pledge he hopes will refocus debate away from a schism over Europe inside his party and win over millions of voters.

Addressing his Conservative party conference, the last before a national election in May next year, Cameron said he wanted to secure a majority so his party could govern alone and not in a coalition as is now the case.

He promised to lift 1 million workers out of tax if re-elected by allowing them to earn more before they pay any income tax. He also pledged to ease the burden on the middle class by raising the threshold for the country's 40 percent rate of income tax.

"I want to take action that's long overdue and bring back some fairness to tax," Cameron told delegates.

"With the Conservatives, if you work hard and do the right thing we say you should keep more of your own money to spend as you choose."

The overall cost of implementing the tax cuts will be 7.2 billion pounds (11.65 billion US dollar) a year by April 2020, Cameron's advisers said.

Cameron's tax pledge was a calculated gambit to try to woo voters and shift the narrative from one which has focused on the damage the anti-EU UK Independence Party (UKIP) is doing to his re-election hopes by siphoning off voters and lawmakers.

Hours before Cameron delivered his keynote speech, Arron Banks, a businessman who electoral records show has given tens of thousands of pounds to Cameron's party, said he was switching his support to UKIP.

His move followed that of two Conservative lawmakers to UKIP, which wants an immediate British EU exit and sharp curbs on immigration, and ratcheted up fears in Cameron's party that UKIP will split the centre-right vote and allow the opposition Labour party to win.

Nigel Farage, UKIP's leader, hailed the latest defection as a sign his insurgent party was attracting big financial backers to bankroll what he has described as an earthquake in British politics.

"The other parties are losing Councillors, MPs and backers to UKIP, not only voters, and they are all playing their part in changing the course of politics in the UK for good," he said.

Cameron's party played down the defection with William Hague, a senior Conservative lawmaker, saying Banks was not a senior figure in the party.

"It’s certainly not going to overshadow the prime minister’s speech today that someone we haven’t heard of has gone to UKIP," William Hague, a senior lawmaker, told BBC radio.

Trailing the opposition Labour party in most opinion polls, Cameron is straining to pacify the Eurosceptic wing of his own party which wants him to offer firmer commitments on changing Britain's relationship with Europe.

He has promised to renegotiate Britain's EU ties if re-elected before holding an EU membership referendum in 2017, but has been coy about spelling out what he wants to change with some Conservatives sceptical about the strength of his resolve.

Cameron used his speech to try to calm those jitters, saying he was steadfastly committed to overhauling Britain's EU ties and would seek to alter the bloc's freedom of movement rules to curb intra-EU immigration.

"Britain, I know you want this sorted so I will go to Brussels, I will not take no for an answer and when it comes to free movement – I will get what Britain needs," he said.

"Anyone who thinks I can’t or won’t deliver this – judge me by my record."

Increasingly Eurosceptic rhetoric has stoked concerns among some big business leaders who largely support Britain's EU membership.

Conservative lawmaker John Redwood even cautioned big business to keep out of the EU debate, saying its job was to keep shareholders, employees and customers happy rather than playing politics.

"Big business, recognise you have not been good at judging the best interests of the UK," Redwood said in a statement.

(Editing by Guy Faulconbridge)