Watch Out

But the Institute for Fiscal Studies (IFS), an independent think-tank, warned that, while an effective way of directing money into the pockets of particular groups of savers, the Tory proposals risked reducing growth by cutting the amount of money spent in the economy.

The plans would inflict “a very sharp slowdown in the rate of spending growth” by Whitehall departments whose budgets are not protected, but beneficiaries of the new tax reliefs may choose to save their extra cash rather than spend it, explained IFS deputy director Carl Emmerson.

Mr Emmerson told BBC Radio 4’s The World At One: “It is a good way of putting money in certain groups of people’s pockets...

“The issue is that the Conservatives are proposing taking money that definitely would have been spent in the economy on public services and putting it in people’s pockets. To the extent that those people save that money, it will be taken away from the economy next year.”

George Osborne, the Shadow Chancellor, said that the Tories were not proposing to reduce public spending, just to bring forward planned restrictions on its growth by one year.

He told the programme: “We would increase government spending next year by £25 billion, instead of £30 billion. I think that’s a perfectly reasonable saving to make at a time when every family is looking at how they can save money and every business is looking at how they can save money.

“The Government, in the year 2010, is proposing to slow the growth rate of spending. The Government tells us there are £5 billion of efficiency savings we can make in the future.

“The Conservatives are saying let’s do that now, let’s have prudence now, not wait until after the election, let’s use that money to help the innocent victims of Labour’s recession - pensioners and the savers who have been penalised by what Gordon Brown has done to the country.”

Yvette Cooper, Chief Secretary to the Treasury,said: “David Cameron is making empty promises to hide the fact that the Conservatives would do nothing to help the British economy, and once again would turn their backs on the British people in difficult times.

“The cruellest of his empty promises is a loans scheme to business when he also rules out providing the money to fund it.

“The fact is every economy in the world will face real challenges in 2009.

That’s why it’s so important to provide British families and businesses with real help to get through the downturn sooner and stronger.

“Labour is determined to provide real help - including the VAT cut which will save households on average £275 a year, and £60 for every pensioner this month - all opposed by David Cameron.

“David Cameron talks about the 1970s. The truth is the Conservatives are returning to the worst of Thatcherism in the early 80s, with no support for jobs or the economy and cuts in public services as well.

“The Conservatives are repeating their mistakes of the past: if a timely fiscal stimulus of similar scale had been applied at the beginning of the 1990s recession, around 300,000 fewer jobs might have been lost.”

How to get 6 per cent on your savings

Times Recommends

• Should Knox’s trial even have reached the courtroom?
• All that glitters is not sold in Wright’s world
• Believe it or not, Big Brother is your friend