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The Osborne/Cameron economic muddle (I cannot call it the "Conservative policy" as it is neither) is an embarrassment to anyone of intellectual honesty.

I wouldn't be so bombastic in any other area just because I may happen to disagree, but the notion of "sharing the fruits of growth" and the opposition of tax cuts and stability - from the lips of Conservative Party leaders - make you want to cry.

Don't tell me it's just a strategy. I AGREE with the wider Cameron strategy of changing the image of the party, of winning permission to be Conservative again. But that permission cannot be bought at the expense of undermining the public's already small understanding of economics.

Cameron and Osborne are now constantly reinforcing the idea that tax cuts are about personal greed. How then can we ever win the argument that lower taxes are to enable the poor strugglers of this country to raise themselves out of misery?

The only stability being promoted by Cameron and Osborne is the slow, stable slide into mediocrity which will leave us all poorer while the rest of the world becomes more competitive. All, that is, except for those who are already rich and can afford to take action for themselves and their families.

One London huh?

Time for the One Europe party!

Time for the One Europe party!

Oddly enough, there used to be one. It's founder perished in a Berlin bunker in 1945.

(Godwin? Did someone mention Godwin?)

I think i've made a Prescott-gaff!

The question is not that we should aim to restore competitiveness and aim for lower taxes, a smaller state but are we only a party of tax cuts?

Tax is an important issue but its not the only one. We were successful leading on it in the 1980's and even in 1992 until the state of public services (and our reneging on the 92 promises) led the public to turn to an alternative that promised not cuts, but not to raise taxation and to deal with public services. We did manage the twin but unlikely feats of winning an election when the economy was in recession, then lose when the economy was healthy.

Labour changed the tone of public discourse, and I don't yet see taxation as the central issue will attract back those voters who deserted in the 90's.

Until we have at least parity with Labour in the public's view of our economic competence, which Gordon's policies may deliver as they are increasingly seen as Labour Tax & Spend, returning to low tax as our central promise is not sensible. Sharing the proceeds of growth between public services and lower taxation (or re-payment of public debt) might not be as exiting but it looks prudent.

The problem with the "sharing the proceeds of growth" argument is that it assumes that GDP growth proceeds are the Government's to parcel out to a grateful nation. They are not. They are the result of the wealth creation of the private sector.

We should look seriously at a zero-base budget approach. Start with a clean sheet of paper and then work out how we want to deliver a just society in the early 21st century. The tax rate required should be determined following this process. My bet is it would be significantly below the current level where waste and inefficiency are like barnacles growing on the hull of the ship of state.

What do you mean that Reform published an excellent bulletin on tax? Actually, it published an excellent bulletin on education, incapacity benefit, prison reform and tax! It didn't just stick to the one topic.

Taxwise Reform got it virtually spot on! Lots of other places are reforming their tax systems for the better, and making them flatter and lower. The impact of this is likely to be that business capital goes to places other than the UK, together with the many taxes, eg payroll, VAT, corporation tax, stamp duty that business pays. Evidence in Germany and France, which are in an even worse position than the UK, is that not reforming the tax system will actually cause instability as tax revenues ameliorate, making our tax system competitive will make revenues more certain, and based on Australian, Irish, Spanish, US and Slovakian evidence increase them.

Before people beat George Osborne up too much, it should be remembered that he has set up a Tax Reform Commission, headed by Michael Forsyth remember, to make the UK tax system more competitive. What George does need to do is a bit of historical research - the 1979 General Election Manifesto, and PPBs (all found on the Keele University website) were very strong on cutting income taxes, as were the winning 1970 and 1992 election campaigns. The one thing not mentioned in the 1979 campaignwas putting up the VAT rate to 15%!

"are we only a party of tax cuts? Tax is an important issue but its not the only one."

Completely right - BUT that doesn't mean our first outing into economics should be to renounce the low tax agenda and talk rubbish about "the proceeds of growth" (Ted, it may as you say "look prudent" but it ISN'T prudent).

I'm sure Steve Hilton is terribly clever and brilliantly modern and was once quite a good brand consultant - but such consultants never care about long-term consequences, they are paid by quick-hit-effects. I AGREE with the broad strategy of going beyond our older narrow image. But if the only way we can dream up to do that is to undermine what is right, to destroy our ultimate purpose of building a better world, then it's not at all clever after all!

GDP growth proceeds are the Government's to parcel out to a grateful nation. They are not. They are the result of the wealth creation of the private sector.

Indeed. And there are real and unprecedented problems looming with the next economic downturn (Gordon Brown thinks he has abolished the economic cycle; he will find in due course that it has abolished him). Something like this:

1. The ratio of public sector / private sector (already quite unacceptable for a healthy economy) will become markedly worse as the private sector ‘naturally’ shakes out jobs, while the public sector does nothing of the sort. Thus, even if the public sector stops growing, it will still require higher taxes just to stay at its current level;

2. downsizing the public sector is extraordinarily difficult to do, even when the government is ideologically disposed to do so (Thatcher). With Labour it is politically impossible;

3. when the public sector is finally ordered to cut back, it will not tackle its own bureaucracy first but will simply cancel its largest contracts with the private sector. This will actually worsen the public/private ratio, requiring yet higher taxes or borrowing and thus deepening the recession. And so on…

Judging from the upwardly creeping unemployment figures the downturn may already have begun. When it does so in earnest the vicious circle outlined above will cut in (yes, the model is simplistic, but in broad terms it’s probably what we are going to experience over the next few years).

So what are conservatives to do? As a right winger I’d theoretically like to see us far more ambitious in our tax cutting proposals. In practice I think the most we can credibly say over the few years is that “Taxes should not rise” and then lambaste the government for its inefficiency when it raises them. It’s more important that Cameron exudes character traits such as confidence and boldness (which he appears to have in abundance) rather than putting forward policy detail at this stage. NuLab is going to lose the next election all by itself – we shouldn’t give it solace by frightening the BBC’s horses and making them stampede because of our lack of ‘compassion’.

the problem I have is that I agree with a low tax agenda but cannot see that it is at all sensible to make it the core of our strategy. Thats why I used the word look in "looks prudent".

Low tax seems to be like a lamp to the moth - it attracts us all and makes us blind to other issues. We become the Knights of the Holy Grail (though more Pythonesque than Mallory) chasing this to the detriment of thought through policy elsewhere.

Let's accept it as read that the public knows we are at heart a lower tax party than Labour, as we are more eurosceptic than the LDs or Labour. So let's not be tied to targets or promisises and spend the time between now and the next election developing convuluted ways of trying to beat off attacks on our committments to education, health, the environment, quality of life on the basis we are going to cut things because our main objective is lower tax.

In the first PMQs Gordon was shouting "ask him where's the money to come from" so we can see how the ex-Chancellor PM intends to attack. Labour in 1970 & 1979 were openly for higher taxation (I'll squeeze the rich till the pips squeak) and had an obviously failed economy. Gordon has been good at the stealthy approach, at re-announcing small eye catching initiatives, at targetted bits of spending (sudden subsidy on council tax the year before an election) so that he keeps the feel good factor. We need to be clever in our strategy, think ahead to the traps he'll lay.

IMHO tax is the biggest snare in our path - and he knows it.

The extent of Labour's failure is set out in the Independent
£9 of every £10 in increased NHS spending went on covering pay increases and price inflation. Add to this the impact of PFI bills (GBs attempts to keep spend off the books) and you can see a crisis in government funding isn't far off. Brown is about to find out that his Visa card patments are due and hes got to cut something or increase taxation.
If he's clever of course (and TB agrees) then Tony will decide to join the lecture circuit next year, GB will call an election in early 2008 (before the final demands come in) and scrape a victory. Then with a 'mandate from the people' he'll cut & tax, play constitutional games to distract the media and hope that before the five years are up he'll have found the get out of jail free card.

Bux, it's nice to have you back from your retirement!

Yes Bux- good to see you back

On tax policy, as I've said before, Cameron's Conservatives just ain't going to lead us anywhere. Their top priority is election, and having decided that campaigning for tax cuts is a big turn-off for that centreground, they're not going to budge from DC's "sharing formula" whatever Reform or others say (Gordo's PMQ stage-prompts probably reinforced their feeling).

We small staters just have to work outside the Party (Taxpayers Alliance etc) to shift the centregound view. I'm sure it can be done in time, and then who knows? The Party's polling/focus-grouping might even persuade them to be a little bolder. Although you wouldn't want to hold your breath.

Wat - how did Trevor McDonald's programme go last night? I got the email from TPA saying that The Bumper Book Of Waste was being discussed but (being in the USA) wasn't able to watch it.

You've been in America an awfully long time now, Tim. Have you taken up permanent residence or something? ;o)

Back on the 11th Alastair! I've had a great time here but ready to come home now.

A tax cutting agenda alone has never won a UK post war election.

Constant protestations that Tory victories in the past have been based uniquely on such promises is reading only the alternate pages of the history book.

In 1979 there was a lot in the manifesto about controlling unions and lower taxes, as well as promises about the environment, education, working within the EU, selling council houses and developing social service enhancements. But it was all contextualised by the statement that,

We make no lavish promises. The repeated disappointment of rising expectations has led to a marked loss of faith in politicians' promises. Too much has gone wrong in Britain for us to hope to put it all right in a year or so. Many things will simply have to wait until the economy has been revived and we are once again creating the wealth on which so much else depends.

And as CTWE above says, that overall caveat made the tax hikes, let alone interest rates and nationalised industry price rises, during that first term at least defensible.

The 1979 manifesto presented a balanced programme for its time, just as DC and George Osborne are trying to do now for the start of this new millennium. Promises of massive and immediate tax cuts and radical economic policy changes would only ensure we were never in a position to put any of our policies into practice. Voters would stay away in droves as they have done in the past twelve years. Out of touch would be the kindest epithet that would be hurled at us – again.

We certainly need, and must be open in seeking, a low tax, flexible and meritocratic economy and a society where people have real control over their own lives and their public servants. But we cannot create that out of office. In 2006, as in 1979, we must reassure the electorate that we are sane, knowledgeable and (above all) responsible custodians of their economy - they do own it and depend on it and want to share in its wealth creation. We need to convince the electorate that we understand that. We did that in the past and it paid massive dividends.

In 2010 we must, as in 1979, take the longer view. Demands for instant reductions in tax or the size of the state are fruitless because unless we can take the people with us we shall leave no permanent legacy and soon be out of office.

Blue2win - to an extent you're just re-treading several previous threads. I think it's pretty much accepted that the 1979 manifesto did not promise a specific quantified timetable of tax cuts. BUT it was made pretty clear over the previous four years that cutting taxes was an objective of a Conservative govmt AND the case was made repeatedly for lower taxation as an abstract policy (putting it at its blandest).

So - no, nobody is demanding that David Cameron now unveil specific promises to slash income tax by x% (yawn). There's concern in some quarters that "sharing the proceeds" is a little vague as a formula, and some people (not including me) have queried whether it's a camouflage for not cutting taxes at all.

The overwhelming majority of people posting on this site, irrespective of who they supported last year, could live with "sharing the proceeds" alongside a campaign to explain the merits of lower taxation which made it clear that it is, at least, a Conservative value. There's no need to keep re-interpreting the 1979 manifesto as a proxy for a different sort of discussion.

It's not just that David Cameron isn't promising to cut taxes (which is disappointing in itself), it is that he and his people either don't seem to understand or -- what's worse -- are too cowardly to articulate the benefits of lower taxes.

George Osborne's speech in which he prioritised "stability" before tax cuts, was especially worrying, as it plays into the hands of our opponents. They have promulgating the notion for years that tax cuts mean cuts in services; this is something we need to debunk, not cave in to.

John Hustings: It's not just that David Cameron isn't promising to cut taxes (which is disappointing in itself), it is that he and his people either don't seem to understand or -- what's worse -- are too cowardly to articulate the benefits of lower taxes.

With respect, John, we don't know that at all. He's only been in the job for 2 months, so it would be better to give him a chance first.

Osborne certainly needs an economics lesson--and Reform is the right bunch to the teach it. One of the problem with "moving to the centre" is that Tories end up ignoring economic reality to stay within the boundaries set by the conventional wisdom.

Someone like Osborne, who has rubbished the flat tax behind closed doors as recently as last year and even advocated renationalising the railways while working as an assistant to Hague, is too obsessed with playing political games and too much in awe of that other fan of "moving to the centre," Tony Blair, to be that interested in the simple fact that tax cuts are the ally, not the enemy, of economic stability.

What we need is a Shadow Chancellor who knows what he or she is doing, has some understanding of the life of British voters (translation: is not the heir to a vast inherited fortune), and knows economics, rather than someone who owes his job to being friendly with Michael Howard and David Cameron.

"With respect, John, we don't know that at all. He's only been in the job for 2 months, so it would be better to give him a chance first."

With respect, William, we do. Saying that you prioritise stability over tax cuts is not an argument that would be made from anyone who seriously plans to outline their benefits.

The Taxpayers Alliance documented over 80 billion pounds in Government waste. This ought to be a national scandal but nothing is said about it. By constantly bringing up this figure, the Tories will find it much easier to make the political case for tax cuts.

We've had umpteen threads on the need for tax cuts.
How many times do you need to be told; promising tax cuts NOW is electoral suicide.
The New Labour Spin Machine would chant the mantra: TORY CUTS, TORY CUTS, from here to the next election.
That means one thing to the electorate: The bloody Tories are going to cut provision for hospitals and schools.

John Skinner, the point I'm making is that Cameron is not just *not* making the case for tax cuts, he is reinforcing the perceptions put forward by the left that tax cuts mean cuts in services.

i.e. he is surrendering the argument.

That is even more depressing that not offering specific tax cuts.

"How many times do you need to be told; promising tax cuts NOW is electoral suicide"

How unreasonable and obstinate of people not to just shut up and do what you want.

Your unsupported assertions and bullying persona contribute nothing to the debate.

William Norton Can the truth ever be over told?

I am sure you have absorbed the lessons of the past, and have digested them.

It would be far too easy to simply ignore the unpalatable truth.

Do we want twenty more years of Labour, LibDem or their joint government?

That is what we will get if we slide into the comfortable nihilistic fun of second guessing and providing everlasting opposition inside the party?

That is not for me.

Being right, even if one were, is not enough. If a party can't take the voters with it how will it create the Erehwon to which it aspires?

John Hustings: Saying that you prioritise stability over tax cuts is not an argument that would be made from anyone who seriously plans to outline their benefits.

With unbounded and over-flowing humility, John: we don't yet know. We can imagine two distinct alternative strategies for this Parliament:

(A) We will prioritise stability over tax cuts - schools and hospitals must come first - to convince you we mean it we commit to match Brown's spending plans - here are a few reforms for running the Blairite Settlement a bit more efficiently - goodness gracious, it's election year and the public finances are worse than we thought - we will cut tax when it's prudent

(B) We will prioritise stability over tax cuts - schools and hospitals must come first - but that's no reason for the state to undertake too much outside core areas - it would be irresponsible to make spending commitments at this stage - lower taxation is a good thing and we will cut tax when it's prudent - here is evidence of the shocking waste in public expenditure - waste introduces instability into the system by forcing up the amount the state needs to raise in taxes - XYZ is wasteful and we will scrap it - because of our reforms we expect to have scope to cut taxes but pledge only to hold them down

And if in doubt there's always the old favourite: (C) - fudge between (A) and (B) depending on how the opinion polls and focus groups are playing.

I gather you've come to a view as to which strategy is being planned. You might well be right. But you don't yet know that you're right. Besides, it spoils the surprise if you tell us how the story ends.

My previous post crossed with Blue2win's.

I seem to have achieved the interesting feat of attracting disagreement from both the tax-cuts-or-death and the tax-cuts-are-death lobbies.

How's that for triangulation, then?

In the time-honoured tradition of the BBC (an institution I have revered all my life): I think this must prove that I've got it about right.

One really wonders at the motivation of some people writing to this blog. When pointing out that talking about tax cuts is electoral suicide (which it has become) is bullying one can only wonder if someone is all there.

I don't recall people writing that Osboure is "economically illiterate" for not promising latge tax cuts ever saying Brown is economically illiterate for putting taxes up.

I suspect voters hear these hysterical bitching at Tory party leaders by people who are rather more careful about Brown and think the right wing must be full of pretty nasty cowards.

Personally this tired debate about tax cuts turns me cold, but then, as I've said before, I am to economics what Margaret Thatcher is to basket ball.

I wouldn't object to taxes not being cut if it is what is required for our public services to be run responsibly and effectively.

Having said that, it would be useful to have some tax cuts up our sleeves at the election, because as sure as a puppy shitting on a newly-laid carpet, Gordon Brown will do his usual trick of unveiling his once-in-every-four-years-only Gordon's Giveaway, and without anything similar to this bonanza to offer the electorate, we will achieve the extraordinary feat of looking even meaner than that tightwad, who has brought new meaning to the term parsimony.

"When pointing out that talking about tax cuts is electoral suicide (which it has become)"

What evidence do you have to make such a bold assertion that tax cuts are electoral suicide? When was the last time we consistantly made the case for significant tax cuts and made that case effectively, instead of unvailing tiny tax cuts weeks before an election?

My own belief is that we've not made the case for tax cuts properly for a generation. We should sell tax relief over the life of a parliament - they should be painted as essential for economic competitiveness and should be targeted on small businesses and low income families and to eliminate unfairnesses like the marriage penalty.

Sold properly - within the context of a Conservative Party that also cares for the global poor and the planet's ecology - I think they can be sold.

We should also use language carefully. We should always talk about economy-boosting tax relief, for example. The "Tax cuts" expression should never be used.

"When pointing out that talking about tax cuts is electoral suicide (which it has become)"

It's worrying when members of our own party are duped by Labour party propaganda.

"because as sure as a puppy shitting on a newly-laid carpet, Gordon Brown will do his usual trick of unveiling his once-in-every-four-years-only Gordon's Giveaway" - Daniel Vince-Archer

Once again, I marvel at your eloquence of expression, Daniel! Mr Brown doesn’t just have a giveaway every four years; it’s now 24/7, 365 days. He creates and pays for meaningless public sector jobs at the expense of the taxpayer. The Labour party don’t like social mobility because it means that their vote could decrease when people actually have the opportunity to move out of the social cesspit of comprehensive education and minimum wage jobs.

It will be interesting to see what John Redwood comes up with and if he intends to sway Mr Cameron and George Osborne. Further, I wonder how many Conservative MP’s are in favour of tax-cuts vs. sharing the proceeds of growth?

"Gordon's Giveaway" - Gordon Brown is, without doubt' very generous with other people's money. His biggest offers to his people were the NMW, guaranteed paid holidays etc. Polly Toynbee cries for more - it makes no difference she shrills - we have more jobs than ever. I wonder how many members of staff she hires? I wonder if she pays them the same hourly wage that she gets? The NMW pushes up pay differentials so she's correct that the jobs at the bottom will remain and will be hypothetically better remunerated (however each persons costs of living go up by the same rate, bar importing cheap goods that we have exported British jobs to create) but what she isn't looking at is the number of jobs higher up that are leaving this Country. It's taken Companies a couple of years to re-locate, train staff in other Countries and slowly wind down their operations over here, not replacing staff that leave to cut down on their redundancy commitments.

When we're talking about sharing the proceeds of growth with whom are we sharing them? The ever growing public sector and their pension requirements, massive holiday (duvet) days, full sick pay for every day of sickness et al. Or do the Conservatives mean that the private sector employees will get a little of their hard earned cash back to support their retirement, sickness?

We all know frontline public sector workers work hard, but so do many in the private sector for less income, perks and benefits and it's taking money from the private sector workers that is supporting the heavy weight of burden imposed by the state.

"I wonder how many Conservative MP’s are in favour of tax-cuts vs. sharing the proceeds of growth?"

Would be just as interesting to see how many members on this site are in favour of tax cuts vs. sharing the proceeds of growth. Something for the next Conservativehome survey?

"Mr Brown doesn’t just have a giveaway every four years; it’s now 24/7, 365 days. He creates and pays for meaningless public sector jobs at the expense of the taxpayer."

Quite right Chris. I was, of course, referring to Gordon's Great Gimmicky Giveaway, aimed at Johnny Taxpayer in the last budget before elections, rather than the ongoing pork-barrelling giveaway of publicly funded jobs for the boys.

Excellent post by the Editor above, with some very good thoughts for consideration

Thanks to my age,being married and the reduction of my Eguitable life pension by nearly 50% I now no longer pay income tax. But i still remember the high tax rates of the past, I would urge David Cameron to remember this.Nothing is worse than seeing a decent wage ravaged and then seeing the tax wasted by incompetant government.

Having read all the comments above on tax cuts etc, I find it interesting that the idea of funding the public sector appears to be the main bug bear. Unfortunately, whether we like it or not, the public is the largest employer in this country and any decrease in funding will lead to the late 1980s/early 1990s fiasco which left us with high interest rates and even higher unemployment. Plus the private sector whilst generating wealth is also open to overseas ownership with its consequent probelms of poor investiment as demonstrated by Thames water (owed by Germany) and threats to supplies of gas and electricity currently owed by France and German (and soon by Russia if things are stopped). I think what is required is an increase in the personal level of tax (especially for people on the PAYE system who are less able to offset costs as is possible with self-assessment) and a system of compulsory auditing of the public sector to ensure that monies provided are spent on the ground floor and not on such things as luxurious offices for management and "conferences and fact finding runs" as happens at my workplace. This would lead to better spending application and responsibility. After all the economy only grows when employment + income + consumer confidence is high and that after all is what is best for England, and if the Tories would implement this as a policy and also stop the selling of our resources overseas, then I as a labour supporter would seriously consider voting them in. But to cut spending in the public sector, reduce employment and allow businesses to buy and sell unchecked would not get mine nor any other PAYE individual's vote.


It's so disappointing when people try to launch a lesson or lecture on cutting taxes, and then try and lump all tax cuts together. It's as if they believe that cutting taxes per se (not mattering which ones) will have the same economic effects. They won't. Cutting taxes on business for example, would have a faster and bigger effect on the economy than cutting inheritance tax or income tax.

Perhaps the best way forward is to actually look at what's wrong with the system at the moment.

1) There are a shocking number of people who receive benefits in some form from the government - you can claim working family tax credit when you earning £50k. Should the economy actually go belly up finances could spiral out of control very rapidly.

2) The tax system is horrendously complicated, incentivising tax avoidance and evasion.

3) Business taxes are high in this country - twice what are they are in places like Ireland and Finland.

4) There is a dirty great deficit in the government finances at the moment - and we're not even in recession. It risks stoking inflation if left unchecked, and creating real problems should we actually see an economic downturn.

So far as I can see Osborne and Cameron acknowledge these points. The headbangers aren't even aware such problems exist. Now, who was it who needs an economics lesson?

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