Cameron's pledges unwise or costly or both, says Lawson

David Cameron has been accused by Lord Lawson, former Conservative chancellor, of making a flurry of promises that are "expensive or unwise or both", as criticism mounted of the prime minister's pre-election policy announcements.

Economists lined up to bemoan the latest pledge: a law that would ban a Conservative government from raising income tax, value added tax or national insurance.

They said Mr Cameron's plan would tie the hands of the Treasury in the event of an economic shock, while Labour dismissed the proposal as a "desperate gimmick".

The series of Conservative party announcements on the economy appear to have one thing in common: they run counter to the sober fiscal message preached since 2010 by George Osborne, chancellor.

Mr Osborne has lectured Labour repeatedly for lacking fiscal credibility yet during the election campaign he has set out plans for about £20bn of unfunded spending on the National Health Service, tax cuts and a freeze in rail fares.

The idea of passing a law to ban a Tory government from raising income tax, VAT and national insurance comes straight from the strategy manual of Gordon Brown, the former Labour prime minister.

In 2009, while still in opposition, Mr Osborne mocked Alistair Darling, then chancellor, for proposing a law requiring the Labour government to meet its targets for cutting the deficit.

"No other chancellor in the long history of the office has felt the need to pass a law to convince people that he has the political will to implement his own Budget," Mr Osborne said.

So why are the Conservatives proposing to do the same? The simple answer is that Mr Osborne believes he has so much political capital in the bank from restoring the British economy to health that he can afford to spend some of it.

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The Conservatives insist they have shown in the previous parliament that they can reduce the deficit while preserving spending on the NHS and cutting taxes; they believe voters will take them on trust that they will do it again.

The fact that Mr Cameron began making these spending commitments ahead of the official Tory manifesto launch on April 14 gave the impression of a party starting to lose its discipline.

Lord Lawson, writing in the Spectator magazine, said: "I am somewhat detached nowadays, but it does seem to me that the Tories have been mistaken in making a flurry of promises, many of them either expensive or unwise or both, which has detracted from their central message of economic recovery based on careful stewardship."

But Lord Lawson added: "George Osborne has done an excellent job in sticking to his uncomfortable course and succeeding despite the confident predictions of Labour and much of the media that the inevitable result would be failure and mass unemployment. The Tories deserve a second term."

The flurry of Conservative announcements since the manifesto launch has prompted suggestions by Ed Miliband, Labour leader, that the campaign is in a state of "panic".

<>Conservatives say this is "rubbish". They point out that their promises on issues such as the NHS and rail fares were timed to coincide with the arrival of postal voting forms.

The policy announcements of recent days "were always in the grid": the campaign plan, they say. "All parties hold back announcements for after the manifesto - there is still three weeks of the campaign [between manifesto launch and polling day] to go," said one Tory official.

The latest announcement of a "five-year tax lock" was intended to highlight the party's commitment to lower taxes and to reassure voters that unlike some politicians - namely Nick Clegg with his tuition fee promise - the Conservatives would honour their pledges.

Michael Saunders of Citi said: "I don't think it is very sensible. It is either a slippery snake-oil salesman sort of thing, ruling out certain tax rises but leaving plenty of scope to raise taxes in other areas or, if real, it reduces your fiscal credibility because you want the ability to raise taxes if your most important objective is to eliminate the deficit."

Jonathan Portes, director of the National Institute of Economic and Social Research, said: "The charitable explanation is that it's completely vacuous and doesn't add anything to the pledges already made by the Conservatives, but the potential danger is that it removes the flexibility to adjust tax if things don't turn out as we hope or expect."

In the event of persistently lower growth because productivity did not improve as much as expected, the Conservatives would have few remaining options for raising taxes to make up for a shortfall in revenue because the pledges cover more than two-thirds of total tax revenues, the economists said.Paul Johnson, director of the Institute for Fiscal Studies, said: "This is 70 per cent of revenues. It makes it even more likely [a Conservative government] would do silly things - screw up pension taxation even more, look at corporation tax and tax avoidance - it really doesn't leave anything except opaque hidden stuff." But Mark Littlewood, director-general at the Institute of Economic Affairs, the rightwing think-tank, said: "Taxpayers should be aware of what this pledge doesn't cover. There are already substantial increases in highly regressive duties pencilled in for the next parliament as well as large increases in stamp duty revenues."

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