Today's 10p £2.7 BILLION climbdown will not simply be remembered as an unprecendented humiliation for the Chancellor and Prime Minister or the most expensive by-election bribe in history. It has shifted the terms of debate.
For the first time in over a decade the over-riding political imperative has been to reduce the tax burden, with all other considerations (how will it be funded? what services will you cut?) taking second place. It's no longer evil selfish, unfunded Tory tax cuts. Sensible, listening, responsive tax relief is the priority now.
Yes, Labour has gone about this with the incompetence that has become the hallmark of the new regime. It costs £2.7 billion, lasts for one year only, is funded by increased borrowing rather than cutting out waste, still leaves 1.1 million of the poorest people in Britain worse off than they were before the abolition of the 10p rate, benefits millions of people who hadn't lost out at all, and won't take effect until September. After Northern Rock and now this, it's clear that this government is happy to spend whatever it takes to get out of a short-term problem, to ensure survival for another day or another week. As Guido and Danny Finkelstein say, Labour won't get away with "unfunded Tory tax cuts" at the next election.
That's secondary though. The enduring point is that pressures on household incomes now mean that reducing the tax burden has taken precedence over everything else. We can see that the tipping point has been reached.
I won't say this often, but Ed Balls had it right in his celebrated press conference yesterday, when he said that priority should have been given to income tax rather than inheritance tax. Inheritance tax has great totemic and aspirational significance. But lifting the IHT threshholds does nothing to relieve the day to day burdens that so many people are experiencing.
It seems that every day brings further evidence that the cost of living is soaring. In the news just now, food inflation over 12 months: bread and milk up 13%, butter up 32%.
The Conservatives led the way on IHT. George Osborne was quick to call Brown's 2007 budget the tax-con budget. But we have been behind the curve on offering solutions that will ease the squeeze on family finances. That's one of the reasons why, although we are well ahead in the polls at the moment, there's still an "enthusiasm gap".
One last thing. If you saw Alistair Darling being savaged on Channel 4 News and then Newsnight this evening, you may also be wondering how long this decent-looking man can continue to take the murderous flack for Brown. At what stage will self-respect force him to say "enough" and resign?
