Margaret Thatcher: "You can't have stability without tax cuts"

So reports Fraser Nelson over at the Coffee House blog.

10pm, 21/9 update: Since this post, Fraser's 'scoop' has been picked up across the media. He tells the story.

Comments

[Radical Tory]

Of course Lady Thatcher is correct. Only if we cut tax will we have stability. I hope she says something similar during the conference.
Cameron is as good as finished.

[Frank McGarry]

It is a statement of the obvious.
Thank you, Margaret, for saying it.

[Felicity Mountjoy]

She (and more importantly her advisers) need to stop undermining her successors.

[support the strivers]

Well as ever, she's quite right but, at the same time, we need to get behind our current leader who has embarked on the entirely necessary job of changing the party and bringing it into this century.

And, for that,we need to be hungry and expect a great deal more from Assocations. It is not acceptable to be anything other than 100% committed to working for your PPC and EVERYTHING an association does should be geared to that. EVERYTHING.

We are in the business of winning elections. period.

[Traditional Tory]

She (and more importantly her advisers) need to stop undermining her successors.

This was something she said in the course of a private conversation. Do you think she should be gagged simply because her 'successors' have gone off on an unproductive frolic of their own?

[James Burdett]

Taking this to a logical conclusion, if you keep cutting tax you end up with no Govt income. You then per force have to have no Govt expenditure. Nothing in and nothing out is incredibly stable.

[Yet Another Anon]

You can have stability with a variety of levels of tax. On the other hand higher taxes slows growth, tax cuts without spending cuts or spending increases without revenue increases though increases instability and was the cause of big Budget Deficits in the 1970s and 1990s.

[Dale]

'We are in the business of winning elections. period.'

Well we are not very good at it.

I do not disagree with the whole 'modernisation agenda' or the fact that the conservative party needs progressive policies for 21st century britain, but team cameron is a joke! Uniting behind him will do nothing, we are heading for defeat at the next election and everyone knows it. Most have been quiet about the catastrophic mistakes that cchq has made over the past 2 years and where has it gotten us? Perhaps if more people were willing to speak their minds like mrs T then we wouldn't be in the rediculous position we now find ourselves in.

Constructive Criticism is not treason, as some on here would have us all beleive.

[Tony Makara]

I'm confident that tax cuts would come eventually under a Cameron premiership. However its important to remember that the first duty of a Conservative government will be a damage limitation exercize. When Labour are finally ousted there is no telling what state the public finances will be in. David Cameron and his team will have to takestock and cut their cloth accordingly. Once the books are balanced then the tax cut swill come. Everyone I talk to on a day to day basis bemoans the high level of taxation under Labour, so there is no doubt that cutting tax would be popular! However the national economy must come first.

[Traditional Tory]

Well as ever, she's quite right but, at the same time, we need to get behind our current leader who has embarked on the entirely necessary job of changing the party and bringing it into this century.

If she's right - which she is - why should we 'get behind our current leader' to promote a policy which is clearly wrong?

Are you suggesting that telling lies is an essential part of life in the 21st century?

[Chad Noble]

Clearly Mrs T has had enough of biting her lip. About time too.

[Judas Was Paid]

Hope Dave takes note. It'll mean we can stop crossing our fingers behind our backs when reciting the fiscally illiterate mantra of "no tax cuts at the expense of economic stability."

[Jon Gale]

"You can't have stability without tax cuts"

As long as tax cuts dont lead to increased borrowing - which is why sharing the proceeds of growth is so good.

[Jack Stone]

Its about time people whatever there achievements many years ago may have been kept there opinions to themselves and started showing the same sort of loyalty they asked of others in the party when they were trying to win elections.

[Conservative Man]

Of course we can have stability without tax cuts. What we can not have is growth. So if we are happy with a stultifying economy and an envious society, by all means, let’s pledge ourselves to Labour’s planned spending levels (and please no guff about our recent record of growth, we are at the end of a Keynesian boom, nothing more, little else).

As to those who want to extinguish all debate, why don’t you look at the Conservative Party official website. No debate there, and oh by the way, little of interest – that is why so many of us prefer ConHome!

[MrB]

Over what sort of time-period is Lady Thatcher thinking?

There have been no tax-cuts from this government in over 10 years. Most would agree the economy as been stable at least.

It should be the foundation of the economy upon debt that we should (and are, under DC)be targeting. Tax cuts can only come from sharing the proceeds of growth. The public will be scared off by anything else.

[David]

It's clearly wrong though, You can do nothing and have stability. You can raise taxes and have stability. You can lower taxes and have stability.

It's how you approach which ever option you take which determines whether the act will result in stability or not. And simply committing to tax cuts without any idea where the money will come from, or a clue about the state of public services and the economy will not equal stability.

[Given Up]

Seems that the Iron Lady has heard enough rubbish, from the Not the Conservative party.

[Yet Another Anon]

When Labour are finally ousted there is no telling what state the public finances will be in. David Cameron and his team will have to takestock and cut their cloth accordingly.
George Osborne has already committed the Conservative Party if elected to spend the same overall amount as Labour would if elected for the first 3 years and the Conservatives are committed to balancing the books faster, this really leaves very little scope for much difference in overall levels of taxation with Labour's plans during this time - it leaves at most 2 years of a parliament in which the Conservatives would have room to vary the Control Total from what Labour intended, and I assume David Cameron and George Osborne would be intending (in the unlikely event of them actually prevailing at the next General Election) to allow some margin for calling the election at the end of the parliament - usually 4 years being considered roughly an ideal time to aim for a General Election, this of course rather assumes an overall majority and avoidance of horsetrading with Labour, Liberal Democrat, Nationalist or DUP.

[Steve]

"Its about time people whatever there achievements many years ago may have been kept there opinions to themselves and started showing the same sort of loyalty they asked of others in the party when they were trying to win elections."

Don't remember Mrs Thatcher being shown too much loyalty by the wets right through her premiership...

[Scotty]

Margaret Thatcher: "You can't have stability without tax cuts"

And last week she stood shoulder to shoulder with Gordon Brown!!

[Radical Tory]

mR b - 'Tax cuts can only come from sharing the proceeds of growth'. What does this actually mean? Is it just some soundbite from some economic illiterate?

You seem to be putting the cart before the horse. We can only get sizeable and worthwhile growth by cutting tax so businesses can expand, innovate and employ more people. The result will be a larger revenue for the govt despite lower taxes because the size of the 'cake' has increased yet the share the govt takes has fallen. I suggest people read up on the Laffer curve. Ideally we should have a flat tax of 12-15%, perhaps lower. All those earning less than, say 15k, should not pay a penny in tax. Of course Cameron and Osborne won't like that after all it would actually help poor people and be popular. Couldn't have that now.

[Tony Makara]

Yet Another Anon, I'm confident that spending plans refer to front-line public services and that certain government gravy-train projects like the New Deal(3.4BN) will be scaled down or wound up completely. The cloth can be cut in different ways and savings may open up the door to tax cuts before too long. I hope so.

[Radical Tory]

Quite right Steve. The wets stabbed Lady T in the back, ushered in years of infighting, undermined Hague, ousted IDS and now they want loyalty? What planet are they on?

[dale]

I have never understood why we listen to two people that have never even balanced their own chequebooks instead of a woman that ran the british economy for 11 years, who founded the only economic model that has withstood the test of time (popular capitalism), a woman who won 3 general elections and has just been voted britains greatest prime minister.

[David]

i The result will be a larger revenue for the govt despite lower taxes

That only works when taxes are at a certain level to begin with, otherwise you are logically arguing that a tax rate of 1% brings in more revenue than one of, say, 25%. It's not called a "curve" for nothing.

[Yet Another Anon]

"Today, I can confirm for the first time that a Conservative government will adopt these spending totals.

Total government spending will rise by 2 per cent a year in real terms, from £616 billion next year to £674 billion in the year 2010/11.

Like Labour, we will review the final year’s total in a spending review in 2009.

The effect of the commitment is that under a Conservative government, there will be real increases in spending on public services, year after year”.” - written by a certain George Osborne recently and followed up with interviews on The Today programme re-affirming this.

This at least guarantees following Labour's spending plans through to the end of the 2010/11 financial year - I still think the General Election will be 11 June 2009, but I suspect that the idea of George Osborne is that the commitment probably be extended for the first 3 years of the next parliament, because his idea is to give an idea to the public of what they could expect from the Conservative Party in government as an election comes up and having a shorter commitment into the future as the election came up would be generally be seen by the General Public as starting to abandon the commitment.

[Radical Tory]

David - yes, it's called an optimal level. If I did not understand that I would argue for a lower tax rate than 12-15% quite obviously.

[Treacle]

Felicity, enough with the nagging - free speech undermines no one.

If David Cameron's team listened more and lectured less, if they didn't dismiss every piece of feedback from members with contempt, arrogance and spite then perhaps we wouldn't be in the god-awful mess we are in today.

When Margaret Thatcher spoke it was from the heart and principled and the country listened; all too often when our spokesmen speak today nobody listens because they look and sound like unprincipled time-share salesmen on the make

[mark]

Of course she is right.As for undermining.If you see a party you led succesfully and had great success of course you are going to be frustrated when it starts to flounder and the hard work you put in seems to be being undone.It's a sad state of affairs when a Labour Prime Minister has more respect for the great lady than our own leader.
Yes the party had to change.It had become out of touch with the people under Maggie's succesors it has to be said and Mr Cameron was right to try to energise the party but he is going way too far way too quickly and i can see even staunch traditional Tories giving Mr Brown a chance and that will be devestating for the party.

[Roger Helmer]

She is absolutely right. That is why it is so disappointing to hear the Party saying "We won't put tax cuts before stability", as though they were mutually exclusive.

When Labour ask "So which schools and hospitals will you close?", the answer is NONE, because there is overwhelming evidence that low tax rates lead to higher tax revenues.

We want low taxes, flat taxes, simple taxes, fewer taxes. And we want them now.

[David Sergeant]

I think some people in the above contributions maybe a bit to young to be taken seriously. For information Margaret Thatcher did not promise tax cuts in 1979, she said more or less what Cameron has been saying about the general intention. Also, one of Margaret Thatcher's main points from the begining was that the books should balance, anyone taking over from Brown and whatshisname will be confronted by sky high government debt. Surely, anyone looking at the last few days should realise that stability first is a good idea.

[Realism]

And we want to be an independent nation again.

[Comstock]

Roger, that depends where we are on the Laffa curve. I accept we were above optimum in 1979, but we are surely below it now.

And flat taxes benefit the rich most- is that what you believe in?

[John Coles]

Remarkable, isn't it, how it takes a reported comment from Margaret Thatcher to start a real debate on ConservativeHome? For the most part the anodyne nonsense coming out of CCHQ is so fatuous that I, for one, (and I suspect many others) can't even be fiddled to make any sort of comment.
Of course Margaret Thatcher is right. But Mr Osborne won't thank her for the observation. He's too busy "sharing the proceeds of growth" to consider either tax reform or tax reductions.
His silence throughout the recent bank run has been shameful. I am quite convinced that being Shadow Chancellor is way beyond his capabilities.

[Chad Noble]

David Sergeant (18:29),

If high taxation is the very *cause* of instability then how can anything but tax cuts restore balance?

Clearly in such a situation, maintaining the high taxation (or even increasing) that is causing the instability could cause irrevocable damage to our economy.

So the big question is; is the current overall level of taxation too high?

What are the chances of getting a yes or no answer from Cameron or Osborne on that one?

(The answer is 'yes' btw - no peeking Gids)

[Radical Tory]

''And flat taxes benefit the rich most- is that what you believe in?''

The poor would not pay any tax on their income while the rich would continue to but at a lower rate plus govt revenue increases so helping public sevices. A flat tax helps rich and poor alike.

[Traditional Tory]

David Sergeant - I think some people in the above contributions maybe a bit to young to be taken seriously.

Including Roger Helmer, David?

[Moral minority]

COMMENT OVERWRITTEN.

I'M TIRED OF PEOPLE ACCUSING OTHERS OF BEING TROLLS SIMPLY BECAUSE THEY HOLD DIFFERENT VIEWS.

[Comstock]

"The poor would not pay any tax on their income while the rich would continue to but at a lower rate plus govt revenue increases so helping public sevices"

Less tax paid by the rich, no tax paid by the poor, more money coming in..... For it to work we would have to be way, way above the peak of the laffa curve, and I see no evidence that we are.

Even if a short term economic boom resulted, we all know what follows boom, don't we? And when 'bust' came, taxes would have to go up, prolonging the recession.

In short, this doesn't add up.

[Jon Gale]

Its a matter of pragmatism (and we are supposed to be the pragmatic party): We all want tax cuts, but there are several possible ways to achieve them:

1. Cut taxes and cut spending - Allows Labour to claim "Tories will slash NHS", and besides we do need to increase spending in many areas like the armed forces, building prisons, cambridgeshire police, nuclear power plants, more hospitals, etc.

2. Cut taxes and borrow shortfall while waiting for the lower taxes to stimulate the economy - Bush's tax cuts took about 4 years to achieve a net increase in govt income - Meanwhile increased borowing increases interest rates.

3. "Sharing proceeds of growth" a.k.a. Growing spending at a slower rate than the economy is growing.

As economy grows (and it has been growing even under the tax and regulation Chancellor Brown) and treasury revenue increases use some of that revenue to cut taxes and some to increase spending. Therefore more money can be spent on armed forces, etc. while we also get tax cuts to stimulate the economy. Also avoids increasing interest rates or giving Labour a "Tory cuts" stick to beat us with. Over time the percentage of state as part of GDP decreases. Whats not to like?

If the economy needs a boost for 'sharing the proceeds' to work then even while maintaining Labour's overall spending Osborne can cut the £14 billion of red tape Redwood suggested, and make business more competitive, or restistribute the tax burden.

[Radical Tory]

Comstock - for it to work we simply have to adopt it. With the state taking something like 44% of wealth of course we need to reduce tax. Do you really believe businesses would not expand if say their tax was cut in half? You think people would not invest more or spend more if they had more money?

Btw busts are caused be state interference.

[Simon Denis]

Flat tax may benefit the rich, but that is only because they are rich in the first place. Flat tax also benefits everybody else - at least to some degree. Has the whole population got to suffer just to make sure that the wealthy are inconvenienced? Whoever thinks like that has no place in a conservative forum. Whoever thinks like that is an envious, puritan, socialist moron.

As for Lady T, everything she says is reported. She can't help it and she is entitled to her opinion. Besides, nothing the old lady could do or say will save smarmy Dave. It would take a miracle to do that. He has lost the war before it has even been declared. Worse, he has lost by a process of appeasement and surrender. In the process he has disheartened his finest troops and demoralised his home front. He has lost the Czech fortresses of academic selection and simplified tax. The Brown Reich, meanwhile, celebrates its unity and purpose in choreographed mass rallies.

I know that Brown is a disaster. I fully comprehend the damage he has done. But first, why should I or anyone else support a party which is so unnecessarily agrees with that damage and flatters the vandal? It may choose to twit and insult him on a personal level, but it swallows his attitudes and his plans without a murmur.

As for the argument that our position is like that of some embattled conservatism which must perforce make concessions, I reject it as the exaggeration of cowardice. We are not like the Kadets of 1918 or the Gaullists of 45. We have absolutely no need to pander to some sort of mass collectivist hysteria. More importantly, doing so has demonstrably got us nowhere, so naturally the emetic Cameron pill is everywhere being vomited up by disgusted tories.

In conclusion, if Cameron loses I shall shed no tears. The last shreds of all that I hold dear will doubtless be dismantled by Brown, but Cameron looks eerily and unforgivably as though he would do the same.

[Moral minority]

I AM TIRED OF THE EDITOR BEING A CENSORIOUS AUTHORITARIAN.

[Comstock]

"busts are caused be state interference."

Would you like to explain to us all just how state interference caused the depression of the 1930s?

[Radical Tory]

''Would you like to explain to us all just how state interference caused the depression of the 1930s?''

Yes I would. It started with the US government's creation of the Federal Reserve in 1913. It undertook to free banks from ‘limitations’ by the amount imposed on them by their own individual reserves. Banks were no longer limited in making loans by the amount of gold reserves. Credit was to remain available until the Fed said so. Throughout the 1920s banks were compelled to keep interest loans artificially low thus money was poured into every type of speculative venue. If there had been free banking credit would have been reduced. Things were made worse by statist polices so much that by 1937 in the US business activity fell to the low point of 1932.

[Yet Another Anon]

nuclear power plants
There is no reason why the state should spend Treasury money on investment in power or water infrastructure - there are commercial charges for using the services provided for such things and indeed higher charges will ration use reducing the neccessary investment. There are environental reasons for restricting use through a price mechanism and this is the way it should be done. On other things there is considerable scope for extending charging for services to cover costs, whether something is provided in the public or private sector and whether it is considered to be suitable for regulation or not, revenue can still be made by charging for services provided.

[Patriot]

Simon Denis@September 20, 21:34

Simon, your post was well put and struck a chord. Your last paragraph eerily echo's my own feelings - but things could so easily be different. It could all change in a heartbeat if only I and I'm guessing many others who seem to feel the same started hearing some real Conservative policies again and saw some engagement worthy of the name.

I'm tired of still seeing the daily hand wringing and hearing the apologies for having been a party which had policies I believed in passionately - BUT, I will never vote Labour, and I will never give up hope that someone will suddenly see the light and understand why Conservative voters have sat on their hands at so many elections since '97.

BTW Tim - this isn't intended as a negative post - but it is a cri de coeur -I KNOW we will win by a landslide at the next election IF we can only bring ourselves to start offering what a huge number of Conservative voters are aching for - and it isn't windmills and "green" taxes.

[James Maskell]

Scotty, Thatcher stood with Brown deliberately as a kick in the groin to Cameron. Shes been long unhappy at Camerons changes to the party and his pulling back from Thatcherism.

[Jon Gale]

How has he pulled back from thatcherism?