ConservativeHome's ToryDiary

Cameron points to importance of low council tax in last week's victories

The Spectator's Political Editor Fraser Nelson has interviewed the Tory leader for this week's edition.  Here are some of the things we learn from the interview (that isn't yet online):

"[David Cameron] has two mobile telephones, one for speaking and one for reading emails. One phone has the ring tone taken from 24 — the hit television show about a counter-terrorist agent who regularly escapes mortal peril. ‘It’s an in-joke,’ the Tory leader says."

"‘Asking people to change their government is a big decision, and that is why there is not an ounce of complacency from me after the local results,’ he says. ‘There’s an enormous amount of reassurance we have to give people — that we have the right leader, a strong team, that we will take no risks with the economy and that we have a clearly worked-out plan for public services.’" Interesting that the emphasis is all on reassuring, rather than energising voters.

"‘If you take the local elections, there was no doubt in my mind that it was easiest to campaign in those places where Conservative councils really did have a record of keeping the council tax down, or at least promising to limit the increase,’ he says. ‘I haven’t done the sums. But I’m pretty sure that the areas where we did best were those where we were able to say: look, we’re in government here, we are helping with the cost of living, we understand your problems and difficulties.’"  Encouraging.

Unthinking environmentalism costs taxpayers, costs jobs and costs lives

Great work by Tory Treasury spokesman Justine Greening has exposed the uselessness of Alistair Darling's 'green tax hike' on cars.  Her work has produced the main story in this morning's Telegraph:

"The "green levy" on motorists announced in Alistair Darling's first Budget will double car tax revenue to £4 billion but reduce vehicle emissions by less than one per cent, Treasury figures have showed... Justine Greening, a shadow Treasury minister who obtained the figures, said last night: "This is a massive tax hike which will have virtually no impact on the environment. Despite their claims, the Government don't expect this move to change behaviour at all - it is just another eco-stealth tax of the worst kind.""

The TaxPayer's Alliance's Matt Sinclair has already shown that we pay more than enough taxes to pay for our carbon footprint.  We need to be on high alert for more and more 'green action' that ends up costing taxpayers, costing jobs and - worst of all - costing lives.

Environmentalists have a history of putting their views before the interests of people in the developing world.  Attempts to ban DDT, for example, have only caused malaria infection problems to worsen.  Only this week the founder of Greenpeace explained why he left the organisation because of its anti-science biases.

The biggest side-effect of today's environmentalism has been the impact on food prices (again see Matt Sinclair).  Although far from the whole explanation for food price hikes Mary Riddell in The Telegraph notes how the current craze for biofuels is raising serious ethical questions:

"Filling a 4x4 fuel tank with ethanol uses enough maize to feed a human for a year. The EU quotas are a death sentence, and Brown should say so."

This week's Economist notes how higher food prices are hurting the world's poorest people:

"Famine traditionally means mass starvation. The measures of today's crisis are misery and malnutrition. The middle classes in poor countries are giving up health care and cutting out meat so they can eat three meals a day. The middling poor, those on $2 a day, are pulling children from school and cutting back on vegetables so they can still afford rice. Those on $1 a day are cutting back on meat, vegetables and one or two meals, so they can afford one bowl. The desperate—those on 50 cents a day—face disaster."

For those interested in these issues we recommend Nigel Lawson's new book - An Appeal to Reason - and also Iain Murray's new blog; The Really Inconvenient blog.  His new book exposes how liberal enthusiasms have hurt the environment and the poor.

Are the Conservatives planning a £700m rescue package for the 10p tax victims?

It's notable that George Osborne on BBC1's Andrew Marr programme and David Cameron on Radio 4's World at One both mentioned that it would cost £700m to combat the worst effects of Labour's abolition of the 10p tax band.  Up until now the Conservatives have avoided getting into any debate about what they would do to help the low income families clobbered by Gordon Brown's 2007 Budget changes.

Before today the Tory leadership has simply concentrated on attacking Labour.  George Osborne (on Marr) accused Labour of losing its moral compass and David Cameron (on TWTW) talked of a "premeditated attack" on low income Britons.  The attacks are now being complemented by mention of this £700m figure, however.  With Parliament returning this week and discussions underway about how the Conservatives might work with rebels like Frank Field to force the Government to review policy, we may be on the verge of a Tory plan to do something positive for some of the poorest members of society.  Now that really would be something to celebrate...

Ministerial aide resigns over 10p band

Laura Kuenssberg (above) has just broken the news on BBC 24.

We understand there is a sweepstake amongst senior Conservatives as when the first minister would resign after 1st May.  It's come earlier than anyone thought.

5.50pm: The Sheffield Hillsboro Angela Smith has quit - not the Basildon Angela Smith.

6.10pm: Jonathan Isaby - "The BBC is reporting that Angela Smith is resigning as parliamentary private secretary to Yvette Cooper over the impending abolition of the 10p rate of income tax. A principled stance, some may say, but it would seem that she has taken over a year to find her principles. Gordon Brown announced the change in his final budget as Chancellor in March 2007, and this how the Sheffield Hillsborough MP reacted to that Budget on her website at the time: "Chancellor Gordon Brown today delivered a Budget for British families," she said. "This budget is good for Sheffield, good for the country and good for ordinary working families.”

7.45pm: George Osborne responds - "Gordon Brown’s government is unravelling by the hour. Yesterday, the Chancellor of the Exchequer said the Government needed to sharpen up its act. Today a senior Labour peer has, in his own words, stabbed the PM in the front, and now a member of the government is to resign because Gordon Brown’s tax con is hitting Britain’s poorest families. At a time of economic uncertainty, the public are now asking whether Gordon Brown has the authority to lead the country through difficult times."

9.15pm: After talking to Gordon Brown, Angela Smith has decided not to resign.

10pm: Statement from George Osborne: “The astonishing news that a member of the government and aide to a Treasury minister can publicly threaten to resign over Gordon Brown’s tax policy and yet remain in the government is evidence of how his authority is disintegrating.”

McCain's economic prescription puts George Osborne to shame

The Sun gives a thumbs up to an article by George Osborne in today's Sun; The Shadow Chancellor outlines how he'd stop the credit crisis.

George Osborne offers good ideas (all from Monday's speech) but ConservativeHome continues to be struck by the tortoise posture of our frontbench team (and all UK politicians) in comparison with the hare-like boldness of American politicians.

Republican nominee John McCain set out his own economic plans yesterday:

"The McCain campaign put the cost of his tax cuts at roughly $200 billion a year, but its estimate did not include the cost of making the Bush tax cuts permanent, which would more than double that figure.  The campaign said it would offset the lost $200 billion by eliminating from the federal budget earmarked pork-barrel projects; putting a one-year freeze on discretionary spending in most federal agencies, later eliminating wasteful programs; broadening the tax base by eliminating loopholes; and spurring economic growth."

If only we had a politician in Britain willing to offer a similar remedy to Britain's (greater) economic woes.

Michael Forsyth warns that voters will be denied a choice at the next election if Tories match Labour on spending

Jonathan Isaby has two great stories in today's Telegraph: (1) Nick Clegg was a Tory at university and (2) Lord Forsyth's criticism of Tory tactics on the 10p tax band.

Lord Forsyth matters for a number of reasons - not least because George Osborne appointed him to chair his Tax Commission.

This is what the former Secretary of State for Scotland told The Telegraph:

"It would be mad to reinstate the 10p tax band.  What we should be doing is taking millions of low earners who are being hammered with extremely high marginal tax rates out of the tax system altogether.  That's why we proposed abolishing the 10p rate and raising the personal allowance to £7,185. That would mean two and a half million people being taken out of paying tax and is in keeping with the stated Conservative aim of making the tax system simpler and fairer. To retain something which adds complexity to the system would be daft. Rather than backing a Labour amendment to reinstate the 10p rate, the Conservatives ought to be tabling an amendment to raise the personal allowance."

ConHome's understanding is that the Tories are not necessarily in favour of restoring the 10p but oppose its abolition without something compensatory.  Lord Forsyth told us this morning that growing government spending more slowly than Labour plans to do - over the course of a parliament - would make changes to the allowance and some business-friendly tax measures affordable (also see here).  He told us:

"If the Conservative Party wants to demonstrate that it is on the side of hard-pressed taxpayers, it must reduce the overall burden of taxation. According to a recent YouGov poll 67 per cent of voters believe the government spends too much and taxes are too high. These hard-working people will not be offered a choice at the next election if we pledge to spend the same and tax the same as the Government."

It was notable that Philip Hammond, George Osborne's deputy, interviewed for the Week in Westminster on Sunday, emphasised that the commitment to match Labour's spending plans expired in 2010/2011.  We have long hoped that it won't be renewed then or only renewed for one year to blunt any attacks from Labour.  A first-term Conservative government will then have the freedom to bring public spending under control, reduce borrowing and introduce economy-boosting tax relief during the remainder of the parliament.

Labour MP Frank Field told ConservativeHome that the Commons clerks are unlikely to allow a motion that proposes an alternative to the 10p tax band.  The best motion will be one that comes from a Labour MP and requires the Government to bring forward a compensation package for those affected by the abolition of the 10p band.  He understood the arguments for raising the allowance but he favoured simultaneous clawbacks from higher earners so that it was genuinely lower-paid households who benefited. 

Tories put abolition of 10p band at heart of May elections campaign

The above image appears in today's Sun - accompanying an article by Trevor Kavanagh entitled PM hits hard-up Labour voters hardest.

From today's David Cameron press conference it's clear that the Conservatives are determined to hit Labour councillors again and again with the issue in the run up to 1st May.  A leaflet (a pdf of which is here) will be distributed throughout the country over the next few weeks detailing the impact on low income households.  The leaflet is great - it's just a pity it can't include the Sun graphic!

At this morning's press conference David Cameron promised to try and get the Government to think again about the 10p band.  He said there would be parliamentary opportunities at the end of the month to force the Government to change policy.

Question after question from the press pack focused on what the Conservatives would propose to pay for the restoration of the 10p band or for other measures that would protect lower-paid workers.  David Cameron repeatedly refused to answer this saying that it was for the Government to correct its error.  Channel Five's Andy Bell was surely right, however, when he said that a Commons defeat of Labour was more likely if the Tories propose a realistic alternative.

Related link: David Cameron promises to investigate why MEP selection data on turnout and spoilt ballot papers isn't being published

What Brown's abolition of the 10p band means for 5.3 million families

The above list comes from a research note just produced by CCHQ.  A senior political editor told ConservativeHome only two days ago that the Conservatives were now producing the best research material of the three political parties. 
Download a PDF of the whole research paper... and let's hope it appears in lots of newspapers tomorrow.

Too many straw men, too few bold political voices

Francis Maude scores a hit in today's Sun - pointing out Labour's misuse of the Communications Allowance.  His Implementation Office is also vital for Conservative success.  It was the tenth reason for voting Conservative in our list of last Monday.  But why does Mr Maude have to give interviews of the kind he has given to today's Telegraph?  His interview includes these two points:

"The idea that offering tax cuts is an instant route to electoral success is utter rubbish."

"There are those who think that if you commit to massive tax cuts then people will automatically vote for us, but people are not impressed these days with politicians promising tax cuts that look like us serving our electoral self interest by appealing to their self interest."

We'd like Francis to identify these people who think that tax cuts are "an instant route to electoral success".  While he's at it we'd like to know who is in favour of "massive" tax cuts that will lead people to "automatically vote for us".

We know lots of people who want tougher control of public spending so that we can begin to find room for economy-boosting tax relief.  We know people who want tax relief to be part of a Conservative manifesto that also includes measures to tackle poverty, improve our schools and clean up politics.  We don't know anyone who thinks that tax cuts will "automatically" produce victory.

One of the lessons of the grammar schools row was that internal party tensions need to be handled sensitively.  Last weekend's Spring Forum address by David Cameron was notable for its tributes to grassroots activists.  This website doesn't agree with the party's policy on taxation but, on Wednesday, we attempted to explain it respectfully.  Francis Maude really does noone any favours by misrepresenting the views of those who think that tax relief should be part of a Tory plan to get UKplc back on track.

Mr Maude's misrepresentation of his own side is a long way from meeting Matthew Parris' cry from the heart in his must-read Times column of today.  Matthew Parris is desperately searching for a big political voice characterised by "bold advocacy", an "impatience to persuade" and an "urgency of argument" that is proportionate to the challenges of our time.  We are with Matthew Parris in that search as we explained last week:

"It's time for David Cameron to tell the British people that Britain is going in the wrong direction.  He needs to say that we're living beyond our means.  We're spending too much and borrowing too much.  We have surrendered our streets to yobbery and incivility.  Britain's schools are failing the poorest members of society.  He needs to promise a government that will put things right and he should tell the British people that it won't be easy or painless.  We need to forget the focus groups and the polling for just one minute and tell the truth about a nation that is in trouble.  Mr Cameron might be surprised at voters' reaction.  Our hunch is that the first  politician to tell the British people 'how it really is' will form a bond with many millions of them."

A very political tax policy

The other day we described the Tory policy on tax as economic disarmament - conceding at the same time that the policy might work politically.  The Conservatives believe that neutralising Labour's fifteen year long advantage on economic competence (plus their traditional advantage on the NHS where we have also 'disarmed') might be enough to persuade voters to be tempted to vote Conservative - because we have other attractive policies on crime, welfare and schools, for example.  George Osborne has decided that the lesson from last year's inheritance tax cut isn't that tax cutting is necessarily popular again but that a relatively inexpensive but well-targeted tax cut can have all the political advantages of a much larger tax cut without the danger of being accused of wanting to slash public services etc etc.  All this does, we concede, amount to a credible political strategy.  It will only work, however, if we are hare-like in other policy areas.  Over at The Spectator, James Forsyth agrees.  Winning the next election remains a big ask.  Voters unhappy with Labour need potent reasons why they should choose us rather than stay or home or vote for 'that nice Mr Clegg'.  We still believe that a low tax policy can work electorally but respect the politics of George Osborne's position.

But if the Tory policy on tax is politically understandable it remains wrong for the economy.  On Monday Danny Finkelstein had fun pointing out that Margaret Thatcher wasn't the big tax cutter that Ben Brogan and Stephen Pollard had suggested.  She was a tax reformer, he noted.  Putting aside the obvious question as to whether George Osborne is anything like as seriously committed to tax reform as the Iron Lady we are left wondering whether comparisons with Margaret Thatcher's time are besides the point.  The real issue is comparing Britain's tax burden with those our competitors today.  In 2001 the combined corporate and income tax rate across major economies was 32.5%.  It was 4.1% lower at 28.4% in 2006.  Britain's rate stayed flat over that period at 30.0%.  In a difficult global economic environment stressed businesses are likely to be  more and more sensitive to advantages that they can gain by moving to lower tax jurisdictions - like Yahoo!.

Matthew Sinclair, Policy Analyst at the TaxPayers' Alliance, told ConservativeHome:

"Britain has done extremely well out of cuts in corporation tax in the past and could see huge returns from moving towards Irish rates today.  Other countries have learned that lesson just as we appear to have forgotten it."

Economic disarmament

Tomorrow morning we are going to list ten reasons to vote Conservative at the next General Election.  There are many reasons to be enthusiastic but the party's economic policy is certainly not going to be on our list of ten.  A little while ago we warned against the 'politics of small promises' as the route to restoring voter trust.  On economic policy our promises couldn't be smaller.  This is what David Cameron told BBC1's Politics Show earlier (hat tip to Iain Martin for identifying it):

“I cannot sit here and promise we’re going to cut the cost of living and make everything easier for Britain’s families. But what we can do is say we will stop making it worse.”

There is a good political argument for disarming Labour economically.  By matching them on tax and spend it will be hard for Labour to paint us as economically irresponsible.  The strategy might work electorally if the tortoise position on economic issues is coupled with hare-like boldness on crime and schools, for example.  But the tragedy is for the British economy.  We are sliding down the economic competitiveness league table.  The state is squandering the resources it has gobbled up in recent years.  The real disposable income of millions of Britons is flat or falling.  And there is not one single political party pledged to change course in a serious way.

But with that depressing message, good night.  There will be sunshine on ConservativeHome in the morning.  That positive list of ten reasons will be posted by 9am.

Further proof that the public mood on tax has shifted

Further to the debate on tax sparked by Philip Hammond's Sunday Telegraph interview, within the detail of today's YouGov poll with the 16% Tory lead there are some numbers that will hearten the 79% of Tory members who want tax relief funded by tougher control of public spending:

Tory tax cuts ARE on the agenda (but not until 2014)

An interview that Philip Hammond, Shadow Chief Secretary to the Treasury, has given to The Sunday Telegraph suggests that the Tories may not deliver any significant tax cuts in the first term of a Conservative government.  See the quote in the graphic above.

Instead a Tory government will use a first term to eliminate waste, make savings and then promise fully-funded tax cuts at the subsequent General Election.

A leader in The Sunday Telegraph finds Mr Hammond's approach very disappointing:

"[Conservatives] will fight the next election not merely on the promise to maintain Labour's level of spending on public services - and therefore presumably its policies of wealth redistribution - but also on the pledge that they will not attempt to reduce personal or any other form of taxation in their first term in office. It means that voters will have to wait at least six years before they have any real chance of seeing their tax bills reduced."

George Osborne is considering, however, how he can repeat the equivalent of his inheritance tax cut which so electrified the political scene last October.  He believes that the lesson of that tax announcement - which was funded by a controversial levy on non-doms - is that a relatively modest-in-size tax cut can have as big a political effect as much more costly promises.  Canada's Conservatives have found that very small but very targeted tax relief measures can be more politically potent than broader tax measures.

Voters back Darling's taxes on drinking and driving

Just appearing on The Times' website is the first poll on Alistair Darling's budget.  596 people were questioned by Populus.

Populus found that there was 55% to 39% approval of the higher duties on alcohol.

There was even more support (68% to 28%) for higher taxation of so-called gaz-guzzling cars.

In both cases though - particularly in terms of taxation of cars - the majorities are unlikely to vote for Labour because it has taxed someone else.  The parents paying higher taxes on their large family car may, however, remember that large showroom tax when they come to cast their vote.

Do voters think the Budget would have been better if we had been in power?  Apparently not, according to Peter Riddell:

"Moreover, most voters do not think the Budget would have been better if the Conservatives were in Government now. More than two-fifths think it would make no difference. The public thinks that only on helping the wealthiest people (by 36 to 9 per cent) and big business (33 to 8 per cent) would the Tories do better than Labour. By contrast, more people think a Conservative Government would be worse than Labour on helping the poorest people, small and medium sized businesses, motorists and “people like you”."

Which is probably why the TaxPayers' Alliance constantly recommend that if the party offers tax relief that it is concentrated on the lower paid.

You're £110 worse off because of this Budget

George Osborne's video response to what he's calling Labour's Bad News Budget.

David Cameron's response to Budget: The Prime Minister who got us into this mess cannot possibly be the man to get us out of this mess

Highlights, Not verbatim:

This was a budget of reannouncements.

It was delivered with all of the excitement of reading out a telephone book.

This Government is not living in the same world as the rest of us who are paying more for our petrol and mortgages.

As this country enters troubled time we could not be less prepared.

We have the highest tax burden ['So what?' interjects Ed Balls!!].  The worst budget deficit.  The highest interest rates in the G7.

This Government did not use the good times to prepare Britain for bad times.

Debt is £100bn more than planned leaving no room for manoeuvre.

Other countries have room to cut taxes to help them out of recession.  Britain could not be less fiscally prepared for these bad times.

Whatever measure you take inflation is higher than in 1997.  The real inflation rates paid by families in Britain are much higher than the Government acknowledges.

Taxes are being raised on the very businesses and enterprises that we need to grow the economy.

He didn't mention the abolition of the 10p income tax band. But because of that low-paid NHS workers will pay more tax. Part-time teachers will pay more tax. Soldiers fighting in the heat of Afghanistan will be paying more tax.  5.3m of the lowest paid will be paying more tax.

What would we do?

Higher green taxes would be used to help all families.

We'd scrap complex business tax allowances to reduce corporation tax on all businesses.

We'd target higher taxes on alcohol on those drinks used by binge-drinkers.

[After another Balls' interjection, Cameron responds: He may be minister for children but he doesn't have to behave like one].

The City may be having a credit crunch but this Government is having a credibility crunch.

All over Britain people are wondering: I'm paying more tax post so why is my post office closing? I'm paying more tax but my maternity ward is closing? I'm paying more tax but I see so much waste?

The Prime Minister who got us into this mess cannot possibly be the man to get us out of this mess.

Live blog: 'Highlights' of Darling's Budget

Chancellor sits down.

1.22pm: Winter fuel allowance up from £200 to £250  Nine million pensioner households will be better off.

1.20pm: Above inflation increases on alcohol announced.  4p on a pint of beer.

1.19pm: 11p increase in duty on a packet of 20 cigarettes.

1.16pm: Transport accounts for a third of our carbon footprint. Aviation duty will rise 10%. From 2009 vehicle excise duty will be radically reformed. Cars emitting less than the 100g European emitting standard will pay no duty in the first year but a higher rate will be introduced for those emitting more in the first year.

1.14pm: Legislation will be used to discourage single use plastic carrier bags if voluntary action does not end their use.  Money raised will go to green charities. 

1.10pm: Will investigate how Britain can move to an era where long-term fixed term mortgages are the norm.

1.05pm: Confirmed investment plans for Crossrail.  Stated that more capacity is needed on our roads.  Money will be set aside to investigate possibilities for a road pricing scheme.

1.03pm: £10m for the next three years to provide access to high quality development training for science teachers.

1pm: From April non-dom taxation plans will be introduced and there will be no further changes to that taxation regime in this parliament or the next.

12.57pm: £60m extra borrowing aid for small firms.

12.55pm: Promise of voluntary and statutory action to help 5 million electricity customers who overpay because they pre-pay.

12.54pm: Long section on child poverty with targeted assistance via housing benefit and tax credits. 

12.51pm: The focus of the last ten years has been repairing underinvestment in public services. The next ten years will be about delivering world class public services.

12.50pm: £30bn of annual savings have been identified by departments from 2010 that will be reinvested in public services.

12.46pm: Spending grew by 3.4%pa on average from 1997 but now will grow by 2.2%pa.

12.42pm: Lots of Tory laughter as Chancellor says that borrowing picture is good.

12.41pm: Scheduled petrol rise delayed until October.

12.40pm: Darling repeats lie of £10bn unfunded Tory promises. Rebutted here.

Inflation: Reaffirmation of 2% CPI target.

Growth forecast: 1.75% to 2.25% next year.

In The Red

A look at the context of Alistair Darling's first Budget.  Data supplied by the Tory Treasury team.

The proceeds of a civil service recruitment freeze should be shared between taxpayers and the defence budget

Later this morning George Osborne and Boris Johnson will be addressing the cost of living in London.  They have chosen a good day to do so.  A report in this morning's Times notes that "British workers will be taking home an extra £44 a month on average after this year’s pay rises, but families are facing an increase of £148 a month in essential living costs".  Tory Treasury spokesman Philip Hammond tells the Daily Mail that "Gordon Brown's legacy to Britain's hard-working families is falling take-home pay, soaring food and fuel costs."  All true Mr Hammond but what are you going to do about it?

As long as our party is shackled to Labour's spending plans we have very little room to offer some relief to Britain's hard-pressed families.  It is true that the public sector is facing a tight spending settlement but that settlement comes after years of largesse and it is nowhere near as tight as the settlement facing poorer British families on fixed or falling incomes.  Who is on their side?  Conservative MP Michael Fallon is.  Yesterday, over at The Spectator, he recognised that "proper spending control is the key to fairer, lower taxes".  On his blog John Redwood outlines steps necessary for that control.  Mr Redwood calls for a curtailment of government IT projects, a civil service recruitment freeze and a war on absenteeism in the public sector.  Edward Leigh understands, too.  He describes huge productivity failures in the NHS and calls for the spending splurge to end and for a new emphasis on efficiency.

The back of the envelope calculation below (click the graphic to enlarge it for easier reading) outlines how the kind of civil service recruitment freeze suggested by John Redwood could save about £6bn a year by its third year of operation...

George Osborne sets out five hopes for Darling's first Budget

In an article for The Sunday Times, George Osborne sets out his five hopes for Alistair Darling's Budget, due to be delivered in three days' time:

1. A restoration of stability to the public finances.  This will necessitate independent evaluation of tougher fiscal rules and spending control over the course of the whole economic cycle.
2. Lower taxation of businesses.  Britain has slumped from the 4th best corporate tax regime to a lowly number 19 in Europe.  Corporation tax should be reduced to 25p; paid for by scrapping complex capital allowances.
3. A reversal of course on CGT and non-dom taxation.  Instead, Darling should adopt the less intrusive Tory plans for the taxation of non-doms and eliminate stamp duty for nine out of ten first time homebuyers.
4. No more stealth taxes.  We need an end to the Budgetary small print that is corroding public trust in politics.
5. Fund welfare-to-work programmes.  This will deliver long-term savings to the taxpayer and reduce child poverty.

Mr Osborne does not mention his proposal - from Friday - of a shift in duties on alcohol or ideas on green taxation.  Other Sunday newspapers are reporting that Mr Darling intends to raise the overall taxation of alcohol and on gaz-guzzling new cars.

11.45am: Just caught up with George Osborne's Andrew Marr interview from this morning.  Mr Osborne said that he didn't have a principled objection to higher taxation of dirtier cars and alcohol but these should be 'replacement taxes' that would fund other tax cuts of equal size.  Stephanie Flanders, the BBC's new economics editor, offered a depressingly biased comment at the end of the programme - offering sympathy to George Osborne for his difficult task of controlling spending as tightly as Labour.  Margaret Thatcher struggled to match such stringency she told viewers.  No Stephanie.  The TaxPayers' Alliance have already shown that the Iron Lady was very good at controlling spending.

Tories propose higher taxation of binge drinkers' favourites and reduced taxation of lower strength drinks

Ahead of next week's Budget George Osborne has unveiled his own plans to raise the price of alcoholic drinks that, he believes, are fuelling the problem of binge drinking while protecting the 'guy in the pub enjoying a pint'.

The Conservatives will raise tax on super-strength beer, cider and alcopops but revenue raised will be used to reduce tax on low-strength beer and cider.  There will be no overall increase in the tax receipts from alcohol duties.

George Osborne on his proposal to treble duty on alcopops:

"These drinks are targeted primarily at young women. They disguise the taste of alcohol by putting very sweet mixtures in so they taste like lemonade.  Let's make the price of that very difficult for people and then use all the money to cut the taxes on the low alcohol products.  They've done this kind of thing in Germany and Australia and it has had dramatic effects."

According to the BBC a £2 can of super-strength beer would rise in price to £2.38, while a £1.25 litre of strong cider would rise to £1.66.

We would not object to a small increase in the overall taxation of alcohol if it was used to fund the kind of alcohol and drug treatment programmes favoured by the Centre for Social Justice.  Most Conservative Party members object to such higher taxation but may be happy to accept this shifting of the distribution of alcohol duties.

Related link:Westminster Council works with supermarkets to tackle street drinking

3.30pm: PDF of Tory press statement on announcement

Tories DO NOT plan to spend more on health than Labour

Lots of excitement this morning across the blogosphere about an interview that Andrew Lansley gave to The Times.  Both The Times and Telegraph have interpreted Mr Lansley's remarks as a commitment to increase NHS spending even faster than Labour and to increase spending as a percentage of GDP - perhaps by as much as £28bn.

This morning ConservativeHome has spoken to people in the health and Treasury teams - as well as CCHQ - and have been told that there are no plans for the Tories to spend more on health than is planned by Labour.  The Tory commitment is to match Labour until 2011 and further intentions have not been decided.

We've read and re-read Mr Lansley's remarks and can see why The Times made the conclusions that it did but are satisfied with the assurances we've received from party insiders.  As Peter Hoskin writes at Coffee House: "If ten years of Blair and Brown have taught us anything, it's that increased inputs don't necessarily equate to improved outputs. Today's National Audit Office report only serves to underline this."

What we're told Lansley does believe is that without big improvements in public health - Cameron has promised him that he will be Secretary of State for Public Health - and improvements in NHS productivity there is a real danger that the NHS will swallow up a much bigger slice of the national economy.  The aim, however, is to harness more private resources and know-how in order to help avoid this.

Lord Forsyth backs ConservativeHome on public spending

Lord Forsyth, the man George Osborne appointed to run his Tax Commission in 2005, has backed ConservativeHome's campaign for tighter control of public spending.  Speaking to the IEA today Lord Forsyth, Former Scottish Secretary, has said that a slower rate of spending growth - 1.5%pa - would mean that all of his tax relief recommendations could be implemented over the course of a Parliament:

"Matching Labour’s plans to increase spending by 2.1 per cent a year in real terms for the next three years was a mistake, but one which the Conservative Party is unlikely to have to implement as the Prime Minister will almost certainly go to the wire before calling a General Election.  Far more important is whether any subsequent pledges to match the Government’s spending plans are made – if they are, they tie the Party into spending promises that could mean higher taxes or higher borrowing in a downturn.  It is not enough to pledge that things will improve over the course of an economic cycle.  If the next economic cycle lasts ten years like the last one, that is far too long to wait for the tax competitiveness that Britain’s economy so urgently needs.  The Institute of Directors has in previous Budget submissions called for total public spending to be increased by 1.5 per cent a year in real terms.  That would seem like a much more sensible target to aim for. It would be sufficient to allow all the Tax Reform Commission proposals to be implemented over a parliament, which on a static basis would have reduced tax revenue by £21 billion."

Download the full text of Lord Forsyth's IEA speech.

6.15pm: Iain Martin at Three Line Whip has also welcomed Lord Forsyth's intervention.

67% tell ICM that their taxes are too high

The regular monthly ICM survey for The Guardian shows a largely unchanged picture.  Labour are 3% behind the Conservatives - 1% more than last month's ICM poll for The Guardian but 2% more than the more recent ICM survey for The Sunday Telegraph.  Taken before the nationalisation of Northern Rock it's probably best not to read too much into these headline numbers.

More interesting are ICM's questions on tax.

The Guardian suggests that voters prefer "continued spending at the next election over tax cuts" by 51% to 36%.  We'll need to look at the exact question ICM asked but that seems a pretty useless finding if that was the question asked.  What really would be interesting would be to identify voters' reactions to pledges of specific promises of, say, a reduction in council tax, paid for by slower growth in spending.  We would like to think that CCHQ was conducting some intelligent polling on tax but we have received reports in recent weeks about the poor quality of CCHQ's polling operation.  We will be posting on this subject very soon.

This is what UK Polling Report says about the ICM question on tax:

"Forced to chose between tax cuts and reduced services or sustained spending, 51% said they would chose sustained spending with 36% backing tax cuts. What to make of this question depends largely on the wording - it is implied in the Guardian’s coverage that people were presented with the choice of existing spending or tax cuts even if it meant cuts in spending for services like the NHS. In practice no party will ever go into an election promising tax cuts at the expense of the NHS: parties promising tax reductions will present them as being funded in more acceptable ways, while judging from past election campaigns their opponents will try to paint any promised cuts as being funding out of whatever public spending is most popular. How popular tax cuts actually are will depend upon which of these various claims the public actually believe."

The reason we remain encouraged that the public mood is changing on tax comes with the finding that 67% agree that their tax is too high.  65% do not think that the Government makes good use of the money it receives.  If the Conservatives can promise tax relief that is backed up by reasonable restraint in public spending - and specific measures to reduce waste - we strongly believe that targeted, economy-boosting tax relief is a vote winner.

Related link: We did not lose the last election because we promised tax cuts

The importance of George Osborne

In his column for the Daily Mail, Peter Oborne argues that a split is emerging between George Osborne and David Cameron:

"For the past few weeks have seen the emergence of a dangerous divergence of opinion between the shadow chancellor George Osborne and David Cameron over tax cuts and the size of the State.  Osborne believes cutting taxes has become a vote winner rather than a political minefield. He is backed by Andy Coulson, the Conservative Party Director of Communications.  David Cameron, whose analysis is supported by his highly paid political consultant Steve Hilton, takes a much more cautious view.  Indeed, I am told that relations are 'strained' between the two most senior members of the Conservative Party, and that it was a relief to all concerned that both men set off for family holidays a week ago...

The key item at issue between the two is, at first sight, bizarre. It concerns the interpretation of George Osborne's dazzling announcement at the Tory Conference last autumn that a Conservative Government would double the inheritance tax threshold to £1million.  The Shadow Chancellor and his supporters maintain the announcement marked a tipping point in modern British politics.  They claim that the massively enthusiastic reception which met the inheritance tax pledge was a signal that tax-cutting is now a winning issue.  David Cameron's analysis of the party conference triumph is more sombre. The Tory leader has noted that the second half of Osborne's proposals - the tax on foreign residents which Chancellor Alistair Darling must now bitterly regret copying - has since collapsed.  I am told that Cameron now considers that the Tories only got away with Osborne's party conference stunt by the skin of their teeth."

A senior member of David Cameron's team told ConservativeHome that the story was "tosh".  It is understandable that Peter Oborne's story appeared.  There is something of a tension over strategy as ConservativeHome first reported three weeks ago.  But it is a gentle debate, not a split.  It is also far from clear that George Osborne has definitely sided with 'the hares' on tax or other strategic issues.  He and Mr Cameron were recently completely united with David Davis and William Hague, for example, in resisting some very strong internal calls for much more radical overhaul of arrangements for MPs' pay and accountability.

Why then has Peter Oborne written this story?  We offer two theories:

• There are nearly always tensions between Chancellors and Prime Ministers (Shadow Chancellors and Leaders of the Opposition).  Think of Lawson and Thatcher.... John Smith and Neil Kinnock.  Portillo and Hague... and, the biggest of them all, Brown and Blair.  The fact is that Cameron and Osborne are very, very close and only a few days before Christmas, David Cameron confirmed that George Osborne would be his Chancellor of the Exchequer.  Nonetheless journalists who have lived through the TB-GB years are now looking at DC-GO through the same template.
• Journalists may be tempted to look at DC-GO through the same template because George Osborne is a very powerful figure in today's Conservative Party - comparable to Gordon Brown's role in mid-90s Labour.  As we noted on 1st January, George Osborne operates far beyond his brief.  He recruited Director of Communications Andy Coulson.  He forced changes to the Boris Johnson campaign at the end of last year.   He led the decisive break from uber-modernisation ahead of last autumn's party conference.  He is General Election coordinator.  We recently learnt that his private office has been funded to the tune of £500,000.  His office isn't just the office of the shadow chancellor, it is an office that undertakes much of the work that a party chairman and, indeed, leader would normally undertake.  He examines other shadow cabinet ministers' portfolios, for example, and is regularly on the phone to leading political editors and journalists.  This level of power is probably the main reason for a story like Peter Oborne's but ConservativeHome gets the impression that Mr Osborne acts with the leader's full blessing.  David Cameron spends more time with his family than any recent Tory leader and is happy for Mr Osborne to 'mind the gaps'.  There is no "new Tory feud" to use the Daily Mail's words.