BIRMINGHAM: British finance minister George Osborne will promise on Monday to scrap a tax on inherited pension savings as he lays out the Conservative Party's economic pitch for next year's election.
Speaking to media before his speech, Osborne also sought to tackle the electoral threat posed by the UK Independence Party (UKIP) whose stance on immigration and Europe could draw votes from the Conservatives and benefit Labour at the election. Two Conservative MPs have defected to UKIP in recent weeks.
Asked about polls on Sunday showing UKIP have siphoned significant support from the Conservatives, Osborne said: "What people are going to realise as they approach the election is that a vote for UKIP is a vote for Labour... I don't think that's what people want in this country."
Ahead of what is expected to be a close-run ballot in May, Osborne will use a key speech on Monday to try to persuade voters that only Prime Minister David Cameron's Conservatives can be trusted to keep Britain's economic recovery on track.
The Conservatives, who have ruled in coalition with the more left-wing Liberal Democrats since 2010, are rated by voters much more highly than the opposition Labour party on the economy. But they lag narrowly behind Labour in opinion polls less than eight months before the election.
In a move aimed at the party's ageing supporter base, Osborne will commit to abolishing before the election a 55 percent tax levied on pension pots of savers when they die.
"People who have worked and saved all their lives will be able to pass on their hard-earned pensions to their families tax-free," he will tell the Conservatives' last conference before the election, according to advance extracts of his speech.
Osborne has focused on bringing down Britain's massive budget deficit since he took over the finance ministry in 2010. But with the public accounts still deep in the red, he has little room to offer major tax cuts ahead of the election.
The new pledge to be announced on Monday is expected to cost around 150 million pounds (244 million US dollar) a year, according to a Conservative briefing note.
Nonetheless, his offer to scrap the pension pot tax strikes a contrast with the latest ideas from Labour.
Last week, Labour promised to levy new taxes on homes worth more than 2 million pounds ($3.3 million) and on tobacco firms in order to pump cash into healthcare if it wins the election.
Britain's economy has staged a much stronger-than-expected recovery since mid-2013 and Osborne, in his speech on Monday, will seek to remind voters that keeping the economy growing will be vital to create jobs, build more houses, fund healthcare and raise living standards.
"That's why it's the economy that settles elections," he is expected to say, "The Conservatives are the only people in British politics with a plan to fix the economy."
Osborne has long sought to remind voters that Labour was in power during the 2007-08 financial crisis that plunged Britain into its deepest post-war recession.
Osborne says the increasingly left-wing ideas of Labour leader Ed Miliband threaten the push to eliminate the budget deficit before the end of the decade.
"The idea that you can raise living standards, or fund the brilliant NHS (National Health Service) we want, or provide for our national security without a plan to fix the economy is nonsense," Osborne will say.
Last week, Miliband gave a conference speech in which he forgot to mention the budget deficit. Labour's would-be finance minister Ed Balls has said the party will tackle the deficit with a plan that is less aggressive than Osborne's.
Labour dismissed Osborne's planned speech as failing to tackle the issues they say matter to ordinary Britons.
"George Osborne claims he has fixed the economy, but he's only fixed it for a privileged few at the top," said Chris Leslie, Labour's finance spokesman.
TAX ABOLISHED
Osborne's pledge to scrap the tax on pension savings has echoes of how, when in opposition in 2007, he promised to cut inheritance tax. That popular move was widely credited with dissuading the Labour prime minister at the time, Gordon Brown, from calling a snap election he had looked likely to win.
Osborne turned his attention to elderly voters again earlier this year, scrapping a requirement that most pensioners buy annuities on retirement and allowing them to spend their pension savings as they wanted.
The Conservative Party saw a small boost in opinion polls after those reforms were announced.
That shake-up hit shares in firms such as Legal & General , Aviva and Standard Life which sell annuities, and experts predicted the latest tax measure could also affect demand for such products.
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