Daniel Finkelstein won’t know this, but I sometimes tell the key supporters of the TaxPayers’ Alliance that our mission will be complete when the Comment Editor of The Times writes an article in favour of lower taxes. Judging from the sub-headline of his latest piece – “those calling for tax cuts are out of their mind” – we still have a considerable amount of work to do.
Our central disagreement is over our respective diagnoses of the Conservative Party’s recent defeats. Daniel argues that the Conservatives lost the past two elections on the basis of tax cuts and will lose a third should they pursue a similar strategy again.
I half agree with him on this. If they repeat an indecisive approach to tax (think Michael Portillo’s slow reaction to the Fuel Tax protests in 2000, or Oliver Letwin’s “believe me, no tax cuts” speech in 2004), they don’t deserve to win. Or if they unveil plans for tax cuts a matter of weeks before election day, as Letwin did in 2005, or during the election campaign itself, as he did before going into hiding in 2001, then it is certainly true that the electorate won’t take them seriously.
Basically, the last two election campaigns were a case study in how not to make the case for lower taxes. In 2001 nobody - including most MPs and candidates - understood the manifesto commitment to cut £8billion in taxes. They were warned about this by ICM, but the party's official pollster was ignored. Then, in the middle of the campaign, the revelation in the Financial Times that the tax cuts would actually amount to £20 billion, stripped the final vestiges of credibility that the policy had.
Daniel writes, “It is preposterous to suggest that the reason for this failure was that the party did not try hard enough to sell the [tax] package.” However, it is not a question of “trying hard enough” or “shouting louder”, it is a question of communication professionalism, which was absent from both the 2001 and 2005 campaigns. Does Daniel really think that if Roger Ailes or Tony Schwarz had designed a tax cutting campaign, it would have looked like the Tories' 01 and 05 campaigns? Surely not.
Lynton Crosby, the Australian election strategist, famously says that you can’t fatten a pig on market day. This doesn’t mean that the Conservatives need to unveil precisely what George Osborne would do as Chancellor. But it does require a long term strategy to make the moral and economic case for lower taxes. Margaret Thatcher did not reveal every last dot and comma of her privatisation plans before 1979, but Keith Joseph (who was as in the loop on Thatcher's thinking as Daniel is on Cameron's thinking) was delivering talks up and down the country on the case for radical reform.
Some Conservatives reply to Lynton Crosby's argument by saying that the public don't believe that any party, including the Conservatives, can deliver lower taxes. People believe that taxpayers' money is wasted and that taxes could be cut without hitting front line services, but they don't believe that politicians are able to achieve this. This is true. People don't trust Westminster politicians. However, polling provides an answer; voters are far more likely to trust a politician who is running from 'outside the beltway'.
This is why David Cameron's shift in strategy last week was so significant. If he can sustain and build on his new anti-politician approach, this could give him more room for maneuver on issues such as tax. Rejecting taxpayer funding of political parties and cutting the number of MPs, for example, combined with making education central to his personal brand, would increase even further his moral authority, allowing him to approach tricky issues such as taxation with credibility. The current Conservative position of saying (a) that taxes have gone up too much and (b) we will not cut them, just confirms the image of the Tories as being typical politicians who want to have their cake and eat it.
It is becoming fashionable to regard the Conservatives' pledge in October 2007 to cut inheritance tax as some sort of brilliant insight that appeared in August or September but which could never have been known in advance to be as effective as it proved. This is false. In 2006, the TPA published a long and detailed poll analysing public opinion and arguing that a cut in inheritance tax would be popular. For a year, many Conservatives rejected our argument. I would humbly suggest that the TPA's advice was vindicated and, were the Conservatives to follow the anti-politician approach outlined above (which is also based on detailed market research), then they would find themselves surging up in the polls.
Daniel is right that tax cuts are no silver bullet. But he is wrong to argue that the Conservatives should therefore completely avoid them as an issue. The middle way is to present tax cuts as part of the mix. How about tax cuts for the poor? The Party’s social justice agenda could be reinforced by advocating tax cuts targeting the poor. Increasing the personal allowance to £10,000 would not require cuts in spending only freezing it in real terms for a Parliament. Too often, Conservative spokesmen concentrate on lower taxes for businesses, which many voters see as being “tax cuts for the rich”. Just think how a ‘tax cuts for the poor’ campaign would change people’s perceptions of the Conservative Party.
Politics in 2008 is very different to politics in 2001 or 2005. The tax burden has increased massively and people are starting to feel the pinch. Our 2007 polling indicates that 64% of people think that the Government spends and taxes too much against 18% who think the balance is about right, and just 4% who would support more tax and spending. Just as significantly, David Cameron has the charisma and credibility to sell lower taxes. When the TPA convinces Daniel Finkelstein of this, an important part of our mission will be complete. Many people - I will name no names - said we were out of our minds when we advocated radically increasing the threshold of inheritance tax. Not many say that now.
