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3 October 2011
Last updated at 07:45 ET
By Brian Wheeler
Political reporter, BBC News, in Manchester
Chancellor George Osborne has said taxes will only be cut when the government can afford do so, in a speech to the Conservative conference.
Mr Osborne has found £805m to freeze council tax in England in 2012-13 - saving people £72 a year.
But he stressed that money is still tight and there will be no deviation from his deficit reduction plan.
He said solving the eurozone crisis remains the most important factor in kick starting growth in the UK.
The chancellor has been under pressure from Labour to cut VAT to inject money into the economy - and from senior figures in his own party to scrap the 50p top rate of income tax.
'Debt crisis' But in a sober speech to party activists, the chancellor said it would be wrong to borrow money to fund temporary tax cuts or increase public spending.
He said he had "thought hard" about what more can be done to boost growth and explored "every single option" - but "borrowing too much is the cause of Britain's problems, not the solution".
Continue reading the main story ANALYSIS
The most significant announcement in the chancellor's speech is also the one fewest will understand.
It is his pledge that the Treasury will engage in "credit easing" - ie some as yet unspecified way to underwrite loans to small businesses who are struggling to get credit now.
The speech that they are quoting at the top of government is by Adam Posen (a member of the Bank of England's interest rate-setting committee).
Although I'm told that his proposal for a new bank may take too long to implement.
"We would be risking our nation's credit rating for a few billion pounds more, when that amount is dwarfed by the scale and power of the daily flows of money in the international bond markets, swirling around ready to pick off the next country.
"Conference, we will not take that risk. We are in a debt crisis, it is not look a normal recovery. You can't borrow your way out of debt."
And he added: "I'm a believer in tax cuts - permanent tax cuts paid for by sound public finances.
"Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed - more debt that has to be paid off."
Mr Osborne said Britain's current economic troubles were caused by the "catastrophic mistakes" of the previous Labour administration, as well as banks which "let down their customers, let down their shareholders and let down this country".
'Underspend' He said the government is helping businesses by keeping interest rates low - "the most powerful stimulus that exists" - but borrowing billions of pounds more would put that at risk.
Mr Osborne's speech comes as the Institute of Directors called for a fresh effort to boost economic growth in the UK.
The chancellor announced increased investment in scientific research and the extension of mobile phone coverage to six million people - as well as extra cash from a Whitehall "underspend" to fund a council tax freeze.
The government cannot force councils to freeze bills but it is offering to give those that limit spending rises to 2.5% the money they need.
Money would also be offered to the Scottish and Welsh administrations, which will choose how it is spent.
Speaking earlier to BBC News, Mr Osborne said a solution to the eurozone debt crisis must be found by the time the Group of 20 nations meet next month and failure to do so would be "terrible not just for Britain, not just for Europe, but for the entire world economy".
He told BBC Radio 4 that the 17 eurozone nations meeting in Luxembourg on Monday must decisively figure out how to handle Greece's debts, and urged them to extend the size of their bailout fund.
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Mr Osborne has found £805m to freeze council tax in England in 2012-13 - saving people £72 a year.
But he stressed that money is still tight and there will be no deviation from his deficit reduction plan.
He said solving the eurozone crisis remains the most important factor in kick starting growth in the UK.
The chancellor has been under pressure from Labour to cut VAT to inject money into the economy - and from senior figures in his own party to scrap the 50p top rate of income tax.
'Debt crisis' But in a sober speech to party activists, the chancellor said it would be wrong to borrow money to fund temporary tax cuts or increase public spending.
He said he had "thought hard" about what more can be done to boost growth and explored "every single option" - but "borrowing too much is the cause of Britain's problems, not the solution".
Continue reading the main story ANALYSIS
The most significant announcement in the chancellor's speech is also the one fewest will understand.
It is his pledge that the Treasury will engage in "credit easing" - ie some as yet unspecified way to underwrite loans to small businesses who are struggling to get credit now.
The speech that they are quoting at the top of government is by Adam Posen (a member of the Bank of England's interest rate-setting committee).
Although I'm told that his proposal for a new bank may take too long to implement.
"We would be risking our nation's credit rating for a few billion pounds more, when that amount is dwarfed by the scale and power of the daily flows of money in the international bond markets, swirling around ready to pick off the next country.
"Conference, we will not take that risk. We are in a debt crisis, it is not look a normal recovery. You can't borrow your way out of debt."
And he added: "I'm a believer in tax cuts - permanent tax cuts paid for by sound public finances.
"Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed - more debt that has to be paid off."
Mr Osborne said Britain's current economic troubles were caused by the "catastrophic mistakes" of the previous Labour administration, as well as banks which "let down their customers, let down their shareholders and let down this country".
'Underspend' He said the government is helping businesses by keeping interest rates low - "the most powerful stimulus that exists" - but borrowing billions of pounds more would put that at risk.
Mr Osborne's speech comes as the Institute of Directors called for a fresh effort to boost economic growth in the UK.
The chancellor announced increased investment in scientific research and the extension of mobile phone coverage to six million people - as well as extra cash from a Whitehall "underspend" to fund a council tax freeze.
The government cannot force councils to freeze bills but it is offering to give those that limit spending rises to 2.5% the money they need.
Money would also be offered to the Scottish and Welsh administrations, which will choose how it is spent.
Speaking earlier to BBC News, Mr Osborne said a solution to the eurozone debt crisis must be found by the time the Group of 20 nations meet next month and failure to do so would be "terrible not just for Britain, not just for Europe, but for the entire world economy".
He told BBC Radio 4 that the 17 eurozone nations meeting in Luxembourg on Monday must decisively figure out how to handle Greece's debts, and urged them to extend the size of their bailout fund.
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