The Lib Dems are painting the Conservatives as the party of the rich. What's our response?

By Tim Montgomerie
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Yesterday, on LeftWatch, Matthew Barrett ran a rolling blog, listing the ways in which senior Liberal Democrats, including Cabinet ministers, were attacking the Conservatives. It's the same at every Lib Dem conference, of course. Chris Huhne and Tim Farron were at it last year. I Tweeted about this yesterday and was immediately told that it's a two-way process with Tory backbenchers regularly returning fire. That is certainly true but it is Tory backbenchers who attack the Liberal Democrats while it is Liberal Democrat frontbenchers who attack the Tories. Cameron cannot control his backbenchers but Clegg, if he chose, could control his ministerial team. He doesn't choose to.

I don't believe that the Lib Dem differentiation strategy is working. It's been a year now since they've been regularly poking the Conservative Party in the eye. Their poll ratings have hardly moved. If anything Nick Clegg's ratings are actually getting worse. Their attacks on their Coalition partners are inflicting collateral damage on the whole prized Lib Dem idea of coalition government in general. What the attacks do risk doing, however, is that they reinforce certain negatives about the Conservatives. The biggest danger is that the growing Lib Dem campaign for fairer taxation will underline the impression that we are a party of unfair taxation and of unfairness in general. Lord Ashcroft has noted that the perception that we are a party of the already rich, with inadequate understanding of ordinary people, is one of the biggest barriers to people voting Conservative. We need to counter that.

We can counter it in at least three complementary or alternative ways:

• First of all we can bust some myths about the existing tax system.
• Second we can improve the fairness of the tax system even further.
• Third, we could simply concentrate on economic growth.

Mythbusting: John Redwood has a go at mythbusting on his blog this morning. If you asked the average voter whether the rich paid their fair share of tax they'd probably say no. But do they actually know that the top 1% of income earners pay 28% of all income tax? As Mr Redwood points out, "as they earn 13% of all the income, that means they pay twice as big a share of the tax as their share of the income." Last year, City AM's Allister Heath put it more vividly: "The 14,000 people on £1m a year or more will pay £14.2bn in income tax this year. They will contribute almost as much to the exchequer as the total paid by the 13.93m people earning up to £20,000 a year, who will fork out £14.9bn." That's a big fact.

Fairer taxation, Conservative-style: If the Conservatives want to do more to win the blue collar vote that every successful Conservative leader needs there are still ways of improving the tax system, however. I've suggested we promise to reintroduce the 10p tax band as soon as resources allow. This, rather than a further increase in the income tax threshold, should be the priority. It is preferable to say a £12,000 starting threshold because we should want every person to feel part of the system and a small tax burden reminds people that public services aren't free. A 10p tax band would also be a distinctively Conservative idea while the Lib Dems claim ownership of the threshold policy. I also favour higher taxation of high value properties as long as all of the revenues are used to cut more economically harmful taxes. Britain does not, after all, have a problem of taxing too much but of spending too much.

The growth elixir: Finally Conservatives can ignore all these questions of fairness, distribution and who gets what slice of the cake. We can try and get out of the situation where voters resent welfare claimants, aid spending and the rich allegedly getting a free ride. We get out of that situation by growing the economy. When the economy was growing throughout the last decade people were relatively happy and didn't mind the growing welfare or development bills or, indeed, the tax treatment 'enjoyed' by the wealthy. There is much truth to this point but if the economy doesn't grow particularly quickly by the time of the next election and we don't develop our own fairness agenda then we are electorally vulnerable.