Public expenditure control (not tax) is now the number one challenge for George Osborne

It's funny really. Just as I'd given up any expectation of lower taxation from the Conservatives, George Osborne hints at a trio of "funded" tax reliefs.

I'm clearly not the only Tory member who had come to believe that the scale of Labour's borrowings meant that early hopes for tax relief were over.  These are two stand-out results from the 22-28th December survey of more than 1,800 Tory members:

Two-thirds of Tory members believe that higher taxation is inevitable but nine-tenths fear that it will only create a new 'brain drain' of talent.

Everything must now be done to avoid higher taxation and the consequences for our economy.  A whopping 89% of Tory members agreed that "The next Conservative government should cut public expenditure if necessary before contemplating increases in taxation."

We put a range of public expenditure measures to the ConHome Members' Panel and all enjoyed majority support:

• 94% supported "An end to ID cards".
• 90% supported the "Scrapping of projects such as the New Deal and Regional Development Agencies".
• 88% supported "Real cuts in most budgets to force public sector management to reduce waste".
• 86% supported the "Negotiation of a rebate from the EU".
• 82% would welcome "An end to supercomputer projects as in the NHS".
• 81% agreed with "A recruitment freeze across the public sector".
• 70% agreed with "A reduction in the transfer of money from England to other parts of the UK".

At the moment there is not enough clear blue water between the Tories and Labour on public expenditure.  Polling suggests voters are tired of Labour's bloated state and will embrace a Conservative Party that restores balance between the public and private sectors.  That is George Osborne's number one challenge for 2009.

Tim Montgomerie

Comments

[Malcolm Dunn]

Been saying all this for ages. We have to cut spending and I think it would be both morally and tactically right to advise the public where reductions should be made.
Obviously this may cost us some votes but after 11 years of lies from Labour I think the majority in the country would react well to some straight talking.

[Mike]

Also, if you look at the details of polls taken nationally the public are against mortgaging our children's future.

Perhaps look at it this way - if a Tory government wouldn't be willing to cut public spending when the country is on the brink of bankruptcy then when would they?

[John Moss]

Looks like the penny has dropped with Joe Public. Endless increases in soending do not add up to improvements in quality of service or of outputs.

I have been arguing for some time that we should pledge to freeze public spending overall in cash terms for three years - equivalent to a real terms cut of around 3% or £18bn per annum. If we cannot find 3% savings year on year, we're not much of a Government!

Cumulatively, that adds up to £90bn injected back into the economy over three years, directly into people's pay packets or in allowances for capital investment by business. A far better approach than tinkering with VAT!

[Backbench Warrior]

The most popular economic policy at the moment whoever I mention it to, would have been to have taken VAT totally off of gas and electricity - but of course the European Union prohibits us doing this. Just another example of why we would be Better Off Out.

[rugfish]

Direct tax cuts is the only way to revive the economy and to restore moral purpose to government policy.
More money in people's pockets will generate more sales and higher spending. It will dampen personal liabilities as people save and repay loans and mortgages quicker and feel more confident by doing it. More tax revenue would result by more people being employed as a result of higher sales.

Tax cuts make sense both economically and politically as people will vote for them if they are given with commonsense by showing cuts in nonsensical Labour policies, stupid bureaucracy and unaffordable Labour waste.

Invent a Tory 'waste bin' approach please and tell us what you're throwing in there !

Tell us that you will restore the 10% and the 22% tax rates because it is the RIGHT thing to do.

Close tax loopholes too.

And for god sake, block the drain on taxpayers money by forcing banks which cannot operate without taxpayers money, to merge or be nationalised.

Make 2009 the year of reckoning and one of honesty with the British public. They NEED it.

I predict a year of reckoning in 2009.

This will be the year we see businesses reckoning the cost of their attempts to stave off lost sales by slashing prices instead of reckoning their profits and guarding their cash-flows for January which will see further declining sales. We'll see businesses going into administration as they find their VAT bills, set aside by government, being called to account and having no funds to meet them.

It will be the year many reckon the cost of failing to set money aside but having chosen instead to carry on spending money which is running out and taking credit they can no longer afford.

It will be the year banks are reckoning with insurmountable losses which cannot be recovered and holding their hands out to taxpayers, whilst government reckons with a severe loss of revenue caused by lower VAT receipts as a result of bankrupted businesses which can't pay, and spiraling costs to maintain a welfare state which will explode with the unemployed, leading to yet higher government borrowing.

It is a year of reckoning for the Conservative Party, which must grapple with the economic problems caused by Labour, and seek to distance itself whilst showing a new way forward with its policies.

John Redwood writes this morning of looming losses for RBS, to the tune of £20 to £28 billion of OUR money whilst directors pay themselves salaries as if there's a bottomless pot of taxpayers money they can grab in to.

In any other walk of life this would be criminal.
Why is it not criminal of a government to blindly throw taxpayers money down a drain, and for bankers to take money on personal account from a business which is in all but name bankrupted?

Government decisions to recklessly throw our money away stinks of moral turpitude. Bankers being paid fat salaries and bonuses, knowing the only way they remain in business is as a result of government stupidity which compounds their own, is sufficient reason to hold an enquiry and order it to be repaid or their assets made forfeit.

Talk of banks getting back on their feet and our money being safe is just garbage. They are bust without our money, they have our money and they should be nationalised and forced to merge.

Government claptrap and spin must end so we can move forward in 2009 with honesty and integrity and with moral considerations which have been sorely lacking these last 12 years under a Labour Government.

Banks and Government should be made to pay, and the Conservative Party has to be the one to tell them !

George Osborne, David Cameron, John Redwood, Kenneth Clarke, David Davis, come out of your hiding places and speak up for the British people who want and end to the dishonesty of this lousy so called government which thinks throwing our money at the walls of banks and borrowing ever increasing amounts of money which can only be replaced by future generations will solve the dire problem of a deficient British economy without a manufacturing base and without the steam of home equity rises to drive it.

2009 is the year of reckoning.

[Opinicus]

First it was Malcolm Dunn and me
Then it was the British Public
Next the Shadow Cabinet...?

I am their Leader I must follow them
- Alexandre Ledru-Rollin chasing the Parisian mob down a Boulevarde in 1848
- Plus ca change, plus c'est le meme chose.

[David Belchamber]

"He led his regiment from behind/He found it less exciting".

As many of us have been saying for years (i) while crucial public services must be ringfenced under a conservative government, bureacracy, red tape and government waste must be slashed (ii) the management of public servivces must be reformed to make them properly efficient and (iii) the burden of personal tax and corporation tax should then be reduced when the country can afford it.

[Mike]

rugfish, you are completely right.

This is no ordinary ebb and flow of the business cycle. It's altogether something far more serious.

The public need to be told.

If this crisis continues to develop with our political classes tinkering at the edges and frightened to tell the truth then it bodes very ill indeed.

[George Hinton]

A very radical approach needs to be taken by Cameron and his party.
Savers need to be rewarded.
Those in stable married relationships should be rewarded.
Reckless spending by local and central government needs to be reined in.
Business should not be regarded as some social funding milch cow.
The NHS needs root and branch reform, to ensure funding is spent on front line services not administrators...similarly the Armed Forces.
The culture of state funding support for all has to be reviewed. Responsibility has to be the mantra, not rights. Irresponsible behaviour cannot be rewarded...vide having 7 kids with 5 fathers and being reliant on state benefits for a decade or more.
Flat taxes and higher tax thresholds will help the lower paid and remove the anomaly of the poorer paying a higher percentage of take home pay in taxes.
Labour has created a culture of dependence and a layer of society that is uniquely reliant on them staying in power. These people will never vote Conservative, it is similar to the analogy of Turkeys, Votes and X'mas.
So Cameron and Co must be highly radical.

[Pete L]

Cuts in government spending are inevitable, but the following will (hopefully) allow a more balanced assessment of the challenge: -
"An end to ID cards": Forget the term 'cards' it is far too narrow a descriptor but the need to reliably establish an individual's identity becomes more important with each passing day. Try getting money from your cashpoint without your 'ID Card' or cash card as it is known. The future is electronic and will bring ever more demands for proof of ID, and not just the supporting police / defeating terrorism argument.
"Scrapping of projects such as the New Deal and Regional Development Agencies": OK, make your case and offer an alternative ... or not ... whatever your policy may be.
"Real cuts in most budgets to force public sector management to reduce waste". Be specific. The old worn-out phrase "cutting waste" is meaningless unless some costed examples are given. All too often this turns out to be sacking Labour consultants and hiring Tory consultants with no saving at all. Unless you favour cutting services and are prepared to state where, the only alternative is to compel Local Government to work in partnership with private industry in partnerships where the bill is paid for out of proven savings.
"Negotiation of a rebate from the EU": Nostalgia about Maggie & her 'handbagging' of the EU I fear. The only real 'stick' any government can weild is to withold contributions, and in the current climate that approach could back-fire with a vengence.
"An end to supercomputer projects as in the NHS": IT projects in the NHS have included failures although the successes are invariably ignored (doesn't sell newspapers). However, the NHS needs good IT, and better high-level programme & project management is the answer not a Luddite view of IT.
"A recruitment freeze across the public sector": Fine, resulting in a public sector unable to supply the very services it was created to provide. Sweeping statements like these may grab the headlines, but are never thought through into any coherent policy.
"A reduction in the transfer of money from England to other parts of the UK":
If you wish to disssolve the union say so!

[Richard Calhoun]

The Cameron team are at last recognising that there has been a paradigm shift in the perception of the electorate as to what needs to be 'done' to balance the economy.

First we must come up with radical and realistic proposals to cut public expenditure over a 5 year period.

Secondly this must be aligned with cuts in taxation for the average wage earner.

Flat taxation must be seriously considered as a realistic option

[rugfish]

I think you miss the point Pete L.
These things you indicate you'd wish to keep are not affordable.

There isn't the money to provide for much or any of it and they can only be gotten by borrowing and higher taxes.

It's the difference between riding on a horse drawn cart because it is within your budget, or riding first class on an inter city 125 paid for by a government Visa.

Personally, I'd prefer the horse and cart approach until we've got the money rather than to delude myself I'm living in luxury whilst leaving my kids to live with the horse and cart.

[David Galea]

It looks like spending cuts will be announced bit by bit. Cut one particular area of wasteful spending to pay for one particularly useful tax cut.

Good idea, I reckon. Show how you can improve people's lives by cutting the dodgy spending and reducing the dodgy taxes. Leave the valuable tax and spending alone.

For example they could cut a brainwashing government tv ad campaign to give money back to pensioners who are forced to live in a cold house.

[Cleethorpes Rock]

How is it right that 140,000 households receive more in benefits than the average British worker EARNS in a year?

No-one can allow that to continue and at the same time tell people they can't keep their own money.

[James Maskell]

Abolishing ID Cards wont change anything. The database should be destroyed as well. Its the databases that are the problem and should be abolished.

[David Sergeant]

There is nothing new about this list. It starts hopefully and gets less and less viable as the list goes down. E.g., just to take the third one down; if you cut public budgets without specifying the cuts the managers cut a service people like and stand back while assorted media pile in with bleeding heart stories of the people who could be affected without wondering how small their numbers are. Don't expect the local managers to provide the media with any mitigating information, they will just say how distressed they are at having to do the cut and it's the government's fault.

Oh yes, and don't expect Tory MPs to follow up with any check on the cuts, they will either keep their head down or support the managers against the government.

Come on we have been here for 18 years, you know how it works.

[Jack Stone]

Hague did all this sort of thing when he was leader. Brought out plans where the cuts would be made to pay for tax cuts and look what happened a landslide victory for Labour.
People will still think that Tory cuts will mean cuts in the NHS and other front line services and mark my words they will not vote for that.
The more the party talks about tax cuts and spending reductions the happier Gordon Brown will be because he will then go to the country fighting on the same platform of tory cuts that have seen the party lose the last two election campaigns.
People just don`t seem to have the sense of learning from the past. What most in the party are proposing is simply standing at the next election with a suicide note not a manifesto.

[Winston C]

Jack you are wrong.We are now in a very different time.The last 17 years has proved beyond doubt that there is no corelation between high public spending and excellence in public services.Ask any family whose loved one has gone into hospital only to emerge with MRSA or C difficile.

My sense is that people instinctively are now ready to accept the need for lower spending.They are looking for better value lower taxes.There is a sense that we can not continue to spend like a drunken salior.I am astonished that Jack has not picked this up on the doorsteps.

[Cleethorpes Rock]

Winston's right. We ned to be honest with the British people and tell them to grow up and get real.

The country CANNOT AFFORD to go on spending as we are at the moment. We will be BANKRUPT.

Brown is acting like a doorstep lender, telling us all about how we can have whatever we want whenever we want it, and nothing about how much it'll all cost when the shark comes knocking on the door.

[sjm]

Do you know how many quangos there are within the NHS? each one costing £millions to run, and falling over each other in their pointless aims?

They could all go, and would not be missed.

The same would be true for other Government departments.

Untangle the Inland Revenue from Customs, and radically simplify the tax system, and further money could be saved, both by Government and business.

Scrap the winter fuel bonus and £10 xmas bonus for pensioners, and increase personal allowances for the over-65's - think how much that would save in administration.

[Yet Another Anon]

There needs to be cuts in the Control Total for Spending and cuts in taxes, and overall re-balancing of the Public Accounts.

Within that some things need to be increased and some need to be cut sharply, the political parties need to abandon this obsession with raising Health and Education spend and possibly freeze or even make cuts in gross terms.

Defence, National Security and Policing need more money.

As well as overall tax cuts there needs to be restructuring, there need to be cuts in the total number of different taxes and different benefits and in terms of cutting social spending whoever is in government needs to be ruthless.

The watchword needs to be austerity

[Mark Wallace]

In answer to some of Pete L's points:

ID cards: The difference between a Government ID card and my cash card is - 1) I have chosen to have my cash card, and if the supplier lets me down or messes me about I can change to another; 2) my cash card works, unlike the ID database and biometrics; 3) my cash card does not cost £19 billion.

Regional Development Agencies: The TaxPayers' Alliance has published a detailed analysis of RDA's performance showing that they have been totally ineffectual. The regions would be better off if there budget had been spent on a 4% cut in small business corporation tax.

NHS database: The question here is not "The NHS should have computers" vs "The NHS should use quills", it's should the NHS be trying to develop its own database? Given the track record of public sector IT projects, the total mess of the NHS Programme for IT and the fact the NHS Trusts are already starting to opt out and buy off the shelf, the answer seems clear.

Freezing public sector recruitment: This is not just an idea it's increasingly a necessity. There has been a nine-fold increase in middle managers in local government in the last decade, compared to three fold in the private sector. Do you really believe services would grind to a halt without them?

[SuperBlue]

Troll-Stone,

In everything you have said over the last two months - and before - I have noit discerned the slightest difference of view between you and Brown.

Why is that, I wonder?

[Scott Carlton]

Balancing the books is key to turning the country around financially, and in my opinion one of the ways that can be done is reducing the number of unemployed, by filling the nearing 600,000 vacant jobs, and in stilling abit of pride in peoples attitudes to work, one of the ways in my opinion that this is only going to occur when the benefit system is brought under control and that benefits is given to those that need it. This is only a small issue in a bigger picture but I think it is a more practical solution than tax cuts, and cuts to public spending that could lead to our most skilled workers leaving the country (as the article indicates) and a cut in funding to the NHS, which the Conservative party is still not fully trusted by the electorate, and this will only be achieved if the Conservative Party changes its direction. I would also raise the question that whilst we need the ideas to be generated, is the current Shadow Treasury Cabinet team right to tackle a general election that is going to be centred around the economy.

[Scott Carlton]

slight correction to the above, when i say is the Shadow Treasury Cabinet Team right to tackle a general election that is going to be centred around the economy...what i meant was is the team itself right, i.e. are the right people in the right roles in the shadow treasury team.

[Scott Carlton]

slight correction to the above...when i raise the question over the shadow treasury team, what i mean is, is the right people in the right roles in the team, or should changes be made now before its too late.

[The Bishop's Wife]

"Balancing the books is key to turning the country around financially, and in my opinion one of the ways that can be done is reducing the number of unemployed, by filling the nearing 600,000 vacant jobs"

I would like to agree with you and on the surface you have a strong case. However how many of these Jobs actually pay a decent wage is debatable. No doubt a number of these Jobs are due to skill shortage’s the rest may well end up costing the taxpayer a bundle in tax credits. It doesn’t help our party if we side with exploitation. Of course the minimum wage goes a small way towards addressing this problem but it doesn’t go nearly far enough. Rather than returning to our old ways which frankly means screwing Peter to pay for Paul’s Jaguar car, we must insist on work paying. Labour have done a very little to help this problem of low wages, but have fallen back on the public purse effectively subsidizing bad employers. I would hope that we could phase out tax credits but the fact is we will have to raise the minimum wage to do this. Maybe this doesn’t sound like the conservative party but I remind you that we are the party of One nation and we should be concerned if any of our hard working families are being left behind. The fact is there are only a small number of Feckless wastrels the vast majority of the unemployed only want a decent wage packet.

[Scott Carlton]

Hi The Bishops Wife,

You raise some interesting points in your post, but the two thing that stood out for me the most was firstly your opinion over tax credits and the reference to One Nation.

Firstly with regards to tax credits I agree with you that tax credits should be phased out, and I believe they should be 'paid for' by an equal national minimum wage. The current national minimum wage screams age discrimination and does not go far enough to helf our families. A 18 shelf stacker in Morrisons is as effective as say a 34 year old worker, and families from a lower socio-economic background are just as important to us as are those that are from a more fortunate background.

I agree that there may be a skills shortage in key areas, for instance I'm a chef and I know there is a massive shortage of chefs etc, and to rectify this skills shortage problem we need to allow our schools to teach in modern schools with the latest technology and equipment. Paying for this may be an issue, when trying to balance the books if returned to government. There has been talks of cuts to public spending, which I agree with to a point, but public spending needs to invested sustainably, and inline with inflation. Cutting wasteful government spending and investing in Education, Education, Education may be the answer. £2billion has been lost in tax credits fraud and errors.

Also your reference to One Nation intrigued me as I define myself as a One Nation tory and I firmly believe in Tory Democracy. Currently I struggle at times to support the current direction of the Conservative Party, particularly in its approach to the economy. Just my thoughts.