MSE leaders' debate: What will David Cameron do for your wallet?

With the General Election just over a week away, we asked the five major party leaders what they would do on the major MoneySaving issues you picked.

Of course, politicians are experts at avoiding questions, so make up your own mind on Conservative leader Cameron's (pictured, right) policies from his full answers below (with our questions in bold).

See the MSE leaders' debate guide for edited versions of Labour's, the Lib Dems', Plaid Cymru's and the SNP's responses.

Petrol Prices

MSE question: While the oil companies and retailers take a cut, 70% of the cost of petrol is made up of tax – so people are really paying the Government. Many consumers feel the price is crippling yet environmentally others argue it will be high. 

Do you believe it should be lower – and, if so, will you cut the tax to make it happen?

David Cameron's answer: "There's been a lot of pain at the petrol pump over the last few years and when I've filled my car up I've been confronted with some frankly astronomic bills.

"Labour have hit motorists hard – and they are planning to make things even worse by increasing fuel duty by a further 7p over the next four years. If you add that to the cheap way they have hammered people with stealth taxes and retrospective VED hikes, then it's clear that we've got to do things very differently and make life easier for motorists facing these sorts of sky-high bills.

"I'm convinced we can have a better, a fairer, and a more honest approach to fuel duty – and with a fair fuel stabiliser, that's exactly what motorists will get. It's simple: when oil prices rise, fuel duty will fall, and vice versa. So instead of the erratic and unpredictable situation we've got right now as we're battered about by the global oil markets, with our plan, prices at the pump would be more consistent and we can help families by cutting petrol taxes when global prices rise.

"That's the kind of real and responsible difference a Conservative government would bring about and if we win this election we're going to start consultations on this straightaway."

Energy Bills

MSE question: Energy prices have dropped by seven percent this year, but wholesale prices have dropped much more.  The average energy bill is now £1,150 a year for many people, making it the biggest regular bill after rent/mortgages. 

What will you do to cut costs and/or the profits of the energy providers?

David Cameron's answer: "High energy bills are a massive problem for millions of people and Labour have not done enough to help bring them down. Not only is the average fuel bill now more than £1,000 a year, but one in five families are living in fuel poverty; with pensioners, it's almost one in three. "So we need a new approach, and a Conservative government would start by giving every household in Britain a Green Deal – the right to have home energy efficiency improvements worth up to £6,500 at no upfront cost.

"It works like this: every household will be given an independent assessment of what improvements could be made to their homes to save energy and money. They would then get an entitlement worth up to £6,500 to have those improvements carried out – with more for hard to treat homes.

"The finance would be provided by banks and the commercial sector, and then the householder can choose from a number of retailers, energy providers, social enterprises and local authorities who will carry out the work. The banks will get their money back by taking a slice of the savings made in the homeowner's electricity bills. The rest of the saving goes straight into the homeowner's pocket.

"It's a really exciting policy because everybody wins. Families win, because their homes will be more efficient, they will be warmer in the winter, and above all their energy bills will come down – with a typical home seeing around £20 a month knocked off its energy bills.

"Businesses win, because we are throwing up open a whole new energy efficiency market, worth at least £2.5 billion a year and creating around 70,000 new skilled jobs. And of course our Green Deal will help the environment and save millions of tonnes of carbon by encouraging families to be more energy efficient.

"Getting this scheme started is a big priority for me and it would be a key part of my first Queen's Speech as Prime Minister. It's another sign of how if you vote blue, we can go green, save money, and get the economy moving, together."

Savings (Losings) Accounts

MSE question: The cut in base rate has left many savings accounts paying pitiful rates, leaving many savers losing money in real terms due to inflation. Will you introduce any NEW practical measures to help savers, especially those that rely on interest to boost their income? 

David Cameron's answer: "One of the worst things about Labour's recession has been the way that many of the people who were hit hardest were those who had done least to bring the crisis about. As I said last year, savers and pensioners have been the innocent victims of this downturn.

"We need to change all this and have a government which says very clearly: if you save for your retirement, we will support you. If you work hard and want to pass something on to your children, we're on your side.

"A key part of that is about sending the right signals to restore our savings culture and encourage people to save more for retirement. So we will restore the link between the basic state pension and average earnings – a change made possible because we will ask people to retire a year later, starting with men from 2016 and women from 2020.

"Over the longer term, we will also reverse the effects on pension savers of Gordon Brown's disastrous tax raid on pension funds. What's more, by raising the Inheritance Tax threshold to £1 million, we can reward aspiration and support people who want to pass something onto their children.

"And our Home Protection Scheme will end the scandal of people who have saved for their retirement having to sell their homes to fund long-term care. It's simple: if you put aside £8,000 when you are 65, you will have the guarantee that your home will be there for your children, because you've done the right thing."

Bank Charges Future and Past

MSE question: What will you do to stop unfair bank overdraft charges in the future? Plus do you support helping those who've been charged them in the past, including low income and vulnerable consumers, to get their money back?  If you do support reclaiming what will you do to make it happen?

David Cameron's answer: "Martin Lewis and I were in touch about this last year when the Office of Fair Trading was carrying out its investigation. Like Martin and many Money Saving Expert subscribers, I thought the Supreme Court ruling in December was a huge blow for consumers and we called for the OFT to look at other ways of getting a fair deal for consumers.

"For me, this issue highlights precisely why we need a new, powerful consumer champion to stop these sorts of problems from arising and fight even harder for consumers when they do. Our proposed Consumer Protection Agency would provide this kind of protection.

"It would take on the OFT's powers for regulation and be given a clear mandate from government to protect consumers and punish banks who do the wrong thing. So for example, it would require far more transparency over bank charges, it will name and shame banks that break the rules and it will levy significantly larger fines that we have seen in the past.

"What's more, we have also called for a competition review of the banking sector, including a close examination of bank charges. We need much more fairness and transparency when it comes to these issues, and a Conservative government would work to bring that about."

Existing Mortgage Holders

MSE question: The supply of mortgage deals for existing customers is limited for the millions with a loan-to-value (LTV) of 75% or above.

House prices have dipped in many areas pushing even some who once had decent equity into this bracket, leaving many people languishing on their standard variable rates or locked in to trackers at 3-4% over base.  

If interest rates rise back to 5% levels this will leave many on 8-9% mortgages. What will you do now and in the future to ease this potential financial disaster?

David Cameron's answer: "I absolutely understand your concern about this issue, and this is one of the reasons why we have made tackling the deficit such a big priority.

"Unless we start cutting the deficit this year, confidence in the economy will be undermined, our credit rating could be downgraded, and interest rates – and mortgage rates – will rise.

"That would be a disaster for the people concerned and a huge setback to our recovery. And as we've been warning, it's hard to see how a hung Parliament would stop this from happening.

"Another thing we want to do to stop people losing their homes is to prevent lenders from forcing families to sell their homes in order to pay off credit card debts. If we win this election, we will prevent lenders from forcing families to sell their homes in order to pay off credit card bills, or other unsecured debts, of less than £25,000.

"Families, who never realised their home was a risk when they took out the credit card, should not be forced out of their homes by aggressive lenders."

First Time Buyers & House Prices

MSE question: Many first time buyers are finding it increasingly difficult to get on the ladder, not just due to the cost of mortgages, but the huge deposits needed. 

What practical steps will you take to help them? Plus, is it wise to encourage people into the property market at the moment? And in five years would you like to see house prices higher or lower than they are now?

David Cameron's answer: "I've lost count of all the times over the last few years that young people have come to see me in my constituency surgeries and said 'just look at my salary, just look at the cost of buying a house – how on earth will I ever own my own home?'

"Under Labour we have had ten Housing Acts and nine Housing Ministers – but home ownership is now at its lowest rate for nearly twenty years and the number of first-time buyers is at its lowest rate since modern records began. In fact, the average age of a first time buyer is now 36.

"And what's Labour's response to all of this? The Labour Housing Minister gives a speech saying it doesn't really matter at all: 'home ownership had been dropping since 2005', he says, 'and I'm not sure that's such a bad thing'. That tells us everything we need to know about this government.

"But I want everyone to achieve their dream of owning their own home, so if we win this election, we're going to build a new property-owning democracy – and we'll start by permanently raising the stamp duty threshold to £250,000 for first-time buyers. This means that nine out of ten first-time buyers will pay no tax at all on their first home purchase, helping everyone to get their foot on the housing ladder.

"Another idea we have, which I'm very excited about, is our plan to create new Local Housing Trusts. The idea is that local communities in villages and towns would be able to come together and form a new kind of community-led body which will have special planning powers to develop local homes for local people, provided there is strong community backing. Local Housing Trusts will allow communities to provide affordable homes specifically for local people in their own area.

"This might include offering below-market rate housing to local people, so that everyone who was brought up in the community has a much better chance of buying a home in that area too.

"It would be up to the Local Housing Trust to decide what kind of housing they want – it could be anything from sheltered housing for elderly local residents to low cost starter homes for young people in the area. But the crucial thing is that benefits of development will remain in the community.

"So any affordable housing that is sold at below market rates to local residents could not be sold on to the open market – but only back to the Trust so that this great source of local housing stays within the control of the local community."

Credit Cards

MSE question: Thousands of credit card customers across the UK are receiving letters hiking their interest rates by up to 10%. How will you prevent excessive interest rates rises and what other plans do you have to change the credit card industry?

David Cameron's answer: "This is a real problem, and the Consumer Protection Agency which I mentioned just above, would take make sure that consumers are given much clearer information on credit card bills and advertising. What's more, we will introduce new legislation requiring all credit card statements and adverts to contain standardised information about borrowing costs.

"This will include exactly how much the credit will cost if only minimum repayments are made every month – and how long it will take to repay. Millions of credit card users will benefit from this clearer information, which will help protect consumers and encourage more responsible borrowing, while also delivering legislative simplification and greater legal certainty for the financial services sector.

"Another important step we will take is to introduce a cap on excessive store card interest rates. The CPA will be given new powers to define “excessive”, and based on earlier OFT findings, we expect this could apply to store cards with interest rates of 25 per cent and over. 

"We also want to see a new seven-day cooling off period for store cards, so that if a consumer signs up for a store card, the credit cannot be used for seven days. This will give consumers a bit of breathing space and time to think about whether other forms of credit, such as an overdraft extension or conventional loan, might be less risky.

"Finally, a Conservative government would encourage consumers themselves to be more responsible about their personal finances, including by launching Britain's first free national financial advice service. This will provide impartial and independent guidance on financial issues to people, including by personal meetings, telephone advisers and online information.

"This national financial advice service will be rolled out across Britain within twelve months of a Conservative government coming to office, and it will be funded by a new social responsibility levy on the financial services sector."

Council Tax and Water Rates

MSE question:  The current council tax banding system has been in place since 1991 in England and Scotland. It's time for a fair update so that 400,000 homes are no longer in the wrong band. How will you address this?  

Plus, many people still pay water rates based on a valuation of their homes done in 1989 yet they can't appeal it. Will you change that?

David Cameron's answer: "I know that council tax bandings are a big MoneySavingExpert campaign. Conservatives have been leading the way in highlighting how the Government's tax inspectors, the Valuation Office Agency, have been covering up errors to save money and save face.

"Our Parliamentary scrutiny has revealed how Labour Ministers have the ability to correct these errors, but they've chosen to sit on their hands. We've pledged a full and open investigation to restore confidence in the system.

"But a wholesale revaluation isn't needed to fix this, and would make things worse for many people. The 2005 council tax revaluation in Wales saw four times as many homes move up one or more bands as down. That revaluation was also littered with errors – bands are still being retrospectively corrected after the revaluation.

"In Northern Ireland, Labour Ministers under direct rule have introduced an intrusive house price tax which directly penalises people for home improvements. We know that Labour have been preparing for some form of property tax revaluation after the election, building a Big Brother database of every home in England. Conservatives are pledging to scrap these revaluation plans.

"What's more, a Conservative government will work with councils to freeze council tax for two years, funded by additional central funding by cutting spending on government spin and consultants.

"And we'll give local residents a new power to veto high council tax rises, to provide a direct democratic check and balance to protect the interests of local taxpayers."

Financial Education

MSE question: Financial education was due to become a compulsory part of the curriculum in September 2011 but was scuppered due to disagreements over sex education.  

Will you commit to legislation to put compulsory financial education on the curriculum by September 2011 as planned?

David Cameron's answer: "Financial education is a great idea, and with a Conservative government, financial literacy will continue to be part of the PSHE curriculum. But the best way to help young people is raise school standards right across the board – and we'll do that by giving teachers more power to restore discipline, and giving people more power to set up new, smaller schools.

"At the moment, four out of ten kids are leaving primary school unable to read, write and add up properly – so that's hardly a good platform for young people to start making decisions about money and personal finances.

"The free national financial advice service that we are proposing will also help boost financial literacy amongst young people. And our plans to by forcing banks and credit card companies to provide much clearer information to customers will also help to protect young people from unscrupulous lenders."

Stamp Duty

MSE question: The way stamp duty works is ludicrous. When you cross a boundary you pay the tax on the entire cost, not just the marginal rate. It creates an unbalanced and unfair system. Are you brave enough to change it?

David Cameron's answer: "The truly ludicrous thing about the housing ladder is that so many people just can't get on it. That's why our plans to raise the stamp duty threshold to £250,000 for first-time buyers are important.

"It will mean nine out of ten first-time buyers will pay no tax at all on their first home purchase, helping everyone to achieve the dream of owning their own home."

Further reading/Key links

Cut fuel costs: Cheap Petrol and Diesel, Cheap Gas and Electricity Top accounts: Best Bank Accounts, Top Savings Accounts Reclaim cash: Council Tax Rebanding, Bank Charges Reclaiming Housing tips: Cheap Mortgage Finding, Free House Price Valuations, Stamp Duty Calculator

Discuss this MSE news story: MSE leaders' debate: What will David Cameron do for your wallet?