Sharing the pain of getting Britain out of the red

Good piece by Policy Exchange's Neil O'Brien in The Sunday Times.  He advocates "blue collar conservatism".  I've had similar thoughts myself in the past.

One paragraph stood out from Neil's piece:

"The first priority [of a Conservative government] must be to reduce unemployment. Cutting employers’ National Insurance is probably the most effective way to get it down. In the new era, cutting the tax on jobs should be a priority over any other reduction in tax – including inheritance tax."

It would be politically difficult to delay the inheritance tax promise but it certainly isn't the tax cut most likely to stimulate our sick economy.  I'm told delaying the IHT change would save about £1.5bn.  Not enough to justify the distrust that would be associated with abandoning/ delaying a commitment that saved our political bacon in the autumn of 2007.

At some point, however, it would be helpful if the Conservatives made it clear that the sacrifices that are going to be required of others (particularly public sector workers) will be shared by us.  This sharing should be personal and political:

• Personal: Politicians abandoning, for example, a portion of their special pension position.  Mark Field MP has advocated this.
• Political: Cameron might admit that things he wanted to do are no longer affordable.  The IHT cut is too tricky but he might look at things like his National Community Service idea and certain environmental goals.

The Tories are certainly going to have to get much, much, much, much, much tougher on public spending.  There is no way that Britain's horrendous fiscal position is going to be remedied by the modest difference between our spending plans and Labour's.  Is there a secret plan to raise taxes dramatically?  The post-election Domesday Book may give the Conservatives an excuse to be tougher but it would be more honest to level with voters now.

Tim Montgomerie

Comments

[Adam Hume]

We can start by getting of the "Short" money - the taxpayers' subsidy that finances Tory researchers.

[Adam Hume]

Typo - get the rid of the Short money.

[Adam Hume]

We could also get rid of the taxpayer subsidy to political junkies who work in think tanks. They are not charities, just lobbyists and policy whores funded by vested interests.

[asquith]

The IHT cut should be done away with if at all possible. The working class were never affected by it: they either don't own property at all or have cheaper houses with no realistic prospect of ever rising above the threshold, especially now the bubble has been burst.

I appreciate the political difficulties. But it was never right that the wealthy should get a tax cut for unearned money, while those who are struggling to better their lot in life through their own hard work continue to be penalised by the state.

Reduce/abolish VAT, greater focus on energy efficiency to save fuel bills, stamp out bonus culture, raise the threshold & all that goodness.

Those who live in the south-east probably take a different view, I appreciate that, but the focus should be on the working man as you've said. Bear in mind that this is not 2007, so the welfare "reforms" & IHT cuts are now unrealistic. (I was against them both from the beginning, but there you go).

I see merit in Cameron's community service scheme but it should not be compulsory & a lot of it could involve the state backing away. Accept that some people aren't likely to find paid jobs & let them do voluntary work without their benefits being affected & without being dragooned into looking for jobs that don't exist or waste of time courses.

I know long-term unemployed people who are on council-sponsored courses, & the companies running them are woeful & admit that they won't work, but the government is just obsessed with creating a system which is statist & puts companies on the Labour ****s' payroll. Far better to have these people volunteering at a Citizens' Advice Bureau or a YMCA than being shuffled from pillar to post for no reason.

It would save on administration & on the deeply immoral subsidies that Workhouse Purnell wants.

In reality, the best way to help those in low-paid jobs & the unemployed tends to be a reduction o taxes on them & state involvement in their lives.

Let's make sure that when work becomes available that (a) they are USEFUL jobs rather than nonsense like the City, the public sector or waste of time distribution centres & (b) People are qualified to do it.

The Germans & Japanese fought their way out of a worse situation than what we're in because they had the right attitude. Brown isn't helping & I doubt whether Cameron would be much better.

PS- Am not a Tory, just in case anyone thought I was.

[DCMX]

I disagree with you Tim and agree with Neil O'Brien. Delaying the IHT cut would send exactly the right message. We could say we still plan to do it but not for three years. Divert the money to a job creation programme or tax cut for small businesses.

[Malcolm Dunn]

Totally agree with everything you've written Tim. Being honest with people is a good way to govern.

[asquith]

If you delay the IHT cut, delay it until prices rise. The old world is dead. I personally don't mourn it.

That money could be put to better use in a sense that is more useful & more moral when the working man is real hope of better times rather than some nebulous "aspiration" to own a large property, which is no realistic prospect.

Marginal seats & outside chances do not contain high concentrations of inheritors of unearned wealth.

[asquith]

PS- Sorry if I am a bit abrasive. It may well be sound policy to ignore me. I have quite strong personal views on the matter :)

[Jack Stone]

If the party is going to be much tougher on public spending than they should say where the cuts are going to come from.
Will we see broken promises as soon as Cameron has his feet in Downing Street and will see cuts in health and education? Unless he tells us where the cuts are going to be then it is highly likely that is what is being planned.

[Tony Makara]

"cutting the tax on jobs should be a priority over any other reduction in tax"

Absolutely the correct policy. Unemployment must now become the priority issue for an incoming Conservative government. In fact, new business should even be allowed to operate in a tax-free environment for a given time to allow it the leeway to build a job-creating infrastructure.

To produce new jobs we need to make it profitable to create jobs, government must support those with the aptitude and will to do this.

[Yet Another Anon]

Scrap Employer National Insurance, cutback the amount of money from the National Insurance Fund going on the NHS and cutback overall NHS spending, at the very least have phased cuts to reduce it to the proportion of GDP it was in the 1950s and start reducing people's expectations about what they can get free.

Sell off a lot of the new Hospitals to the private sector.

[Westminster Wolf]

I second DCMX. Cut NI not IHT!

[David]

reduce it to the proportion of GDP it was in the 1950s

Healthcare costs the same as it does in the 1950s does it?

[Cleethorpes Rock]

Cutting NI and Corporation tax would be a boost to businesses.

The penny has finally dropped that NI is nothing but a compulsory payment to a glorified Ponzi scheme, due to collapse probably just as I'm due something out of it.

Cameron and Osborne have a chance to turn their "sharing the proceeds of growth" slogan into "sharing the pain of getting Britain out of the Red"

This means sacrifice from everyone. I'm now working longer hours in a new job with less perks than my last. The thought that government workers are immune from the recession, particularly MPs makes my blood boil, and lots of other workers will feel the same.

Just as Cameron and Osborne are calling to an end of the excesses of the city, so too must public figures take their share of pain for the team.

This means restraint, starting with MPs, Lords and Council Chief Executives. The BBC is another organisation ripe for some pruning.

We're in this together, so everyone needs to pull their weight.

[Graeme Archer]

The biggest issue to me are public sector pensions. But I admit I have no idea how to turn a necessity into something politically viable. I'm surprised there isn't more private sector outrage about it. Making MPs switch to money purchase would be a great first step.

[Richard]

In the middle of a recession is not the time to be cutting spending; you have to put the deficit up to generate an economic stimulus.

Of course, you need to be ready to cut, and cut hard.

Personally, I would completely scrap the navy and the RAF.

[David Cooper]

Don't forget the need to cut regulation too. Small businesses would surely prefer freedom from the burden of employment legislation rather than any one off reward for taking on a long term unemployed person. In fact, why not announce a one year suspension of all legislation directly or indirectly brought about by the EU (Messrs Hannan and Carswell can work on the fine details) as an essential immediate step towards the UK's recovery, and dare Brussels to oppose this? Wishful thinking, I fear...

Oh yes, and repeal the Climate Change Act and consign all related expensive eco-twaddle to the bin.

[The Bishop Swine.]

We should commit to ended much of Labour's IT upgrade Bill, modern computers are pretty darn reliable, and should last 10-20 years with servicing. Of course this will impact some companies, but their not British for the most part anyway. Other IT companies would soon emerge dedicated to servicing and modest one at a time upgrades.

"Personal: Politicians abandoning, for example, a portion of their special pension position. Mark Field MP has advocated this."

Why stop at part. End the gravy train and we will get better people in the job, those who really care about serving their community.

"Is there a secret plan to raise taxes dramatically?"

Are there any plans at all that address the serious situation we are in.

"The Tories are certainly going to have to get much, much, much, much, much tougher on public spending. There is no way that Britain's horrendous fiscal position is going to be remedied by the modest difference between our spending plans and Labour's."

Isn't that a fact, but its not going to be our Flag ship policy. We do want to win, I take it? Maybe not, we could let Labour sort out the mess, after all Brown's a genius isn't he? I think Jeremy Clarkson nailed It !

[The Bishop's Wife.]

In the middle of a recession is not the time "to be cutting spending; you have to put the deficit up to generate an economic stimulus.

Of course, you need to be ready to cut, and cut hard.

Personally, I would completely scrap the navy and the RAF."

Lunatic in the house.

[Christopher Chantrill]

"cutting the tax on jobs."

Exactly.

[Yet Another Anon]

reduce it to the proportion of GDP it was in the 1950s

Healthcare costs the same as it does in the 1950s does it?
If Personal Healthcare continues to grow in cost as it is doing it will become increasingly unaffordable for the public sector - the fact is that the economy is significantly larger than it was in the 1950s, so the same proportion of the economy would also be significantly larger than it would then.

The state needs to explore extending charging for services, and rationing treatment further, improving productivity and transferring organisations such as the NHS to Private Charities Limited by Guarantee and developing the raising of revenue by commercial means as well as charitable donations and cross subsidising vulnerable groups.

Less choice and longer waits in the public sector will encourage those who can afford to go private reducing the burden on taxpayers.

[Mark Williams]

"It would be politically difficult to delay the inheritance tax promise"

Why? All promises made before the big bank bailout should be off the table now. Only in Westminster village would anybody think those promises mattered now. In the real world, a big unforeseen cost means you have to rebudget.

Cutting NI is a good idea, as is anything to increase productive capital investment (which usually implies substantial employement, not just from the investment but from industry in which the investment is made.

[Tony Makara]

Its really great to see the different ideas bouncing around on this thread. This is the sort of thing that makes Conservative Home such a great, proactive, website.

We want, and now expect, a Conservative government, but we don't rest on our laurels, instead we keep pushing team Cameron to give us more, much more, we keep pushing them to deliver, hopefully they will. Keep up the good work everyone.

[RichardJ]

The Tories must promise not to increase national insurance or income tax. If any taxes have to go up to plug the gap (and I would prefer it if they didn't), make them indirect.

[John Moss]

IHT abolition ought to be self financing over ten years as the "tax" lost would mainly invested so garnering returns in tax from returns on those investments going forward.

It is probably true that this is the only tax this might actually work with as most people invest bequests, wheras minor gains from other tax cuts would more likely be spent. As such, borrowing to fund it is justified.

Also, I do not hold with the view that it was the IHT cut proposal which saved our bacon, IMHO it was the collapse of Northern Rock and two weeks of that sinking in.

[pp]

So what was wrong with 'loadsamoney' ?

People objecting to 'coarse' people having plenty of cash ?

The government need to police the maketplace to prevent fraud and mis-representaton, but apart from that to leave participants to find the most effective/efficient methods of operation (the participants risking their own money as they see fit).

Promoting employment over self-employment is the same wrong-headedness as promoting comprehensive schools against grammer schools.

[Opinicus]

CCHQ must do the maths now before government. So that all the pain is over in year 1 and they should aim at least £100b off. They must do this by cutting areas of government business especially in the regulatory field. We should resile from certain EU regulations for 3 years or "for the duration of the emergency" and then renegotiate what areas we restart with the EU after. Almost all these cuts must be born by the Quangos rather than front line services and I repeat the formula I've used before "not a single policeman, teacher nurse or doctor will lose their job from any cuts". This is the Tory mirror of Blair's "no rise in income tax" and gives us equal room for manoeuvre, whilst ripping the claws from any Labour counter-attack.

Then £25b of that £100 saved can be returned as reductions in NI and corporation tax and I see nothing wrong with continuing the IHT cut (though I wouldn't major on it before the election). It will be as popular in 2010 as it was in 2007 and we will need the popularity every bit as much.

[Opinicus]

In my first paragraph I meant to emphasise more of a distinction between cutting whole government functions as against salami slicing across every department.

It will be much easier to sell cuts in services people couldn't care less about, like the White Fish Authority, than to cause worry and disquiet in every branch of the public service including the (politically) key ones of education and health. Thus we should declare certain current Quango functions of government redundant and unaffordable and give them up completely rather than threaten everything and everyone. This fits into a small government agenda and done properly will give us the chance of a really good row with the EU, which will have us all pulling together against the "hated French".

[JS]

Most of the comment above could just as easily been written by left wing socialists - pathetic. The Conservatives should go further with the iniquitious Inheritance tax and abolish it completely, (it is taxing money twice), reduce capital gains tax and cancel the tax increase on the upper part of income to stimulate personal initiative with the longer term aim of reducing income tax considerably in general - to help pensioners the tax free allowance for over 65s could be raised very high. From previous comments a lot of people seem to want to pander to sections who will never support us to the detriment of those who will. They are frightened of their own shadow in pussy-footing about lower taxation, lower spending and less government. In any case no one did more for so-called 'blue collar conservatism' than
Lady Thatcher (the sale of council houses, Union reform etc.,etc.,) and at the time a majority of Trade Unionists voted Tory. All this with low taxation. Drastically cutting public spending and interference in matters which are best left to the individual whose personal responsibility for most things should be encouraged at all times. Leading from the front always pays in politics in the end - not the opportunism and populism currently being shown by a lot of our party leaders.

[David Belchamber]

I agree with Opinicus who said:

"Almost all these cuts must be born by the Quangos rather than front line services and I repeat the formula I've used before "not a single policeman, teacher nurse or doctor will lose their job from any cuts".

I understand that the quangos cost us some £43Bn, added to which Digby Jones reckons that the civil service could be halved.

Obviously not all of the cost of quangos could be saved, nor the civil service be halved in practice but nonetheless these are obvious areas where huge savings can be made and Cameron should begin to say so.

[Forlornehope]

Denis Healey is on record as stating that the Civil Service could work satisfactorily with half the number of people. Halve the numbers, pay them more and get better more motivated people into it.

[Opinicus]

@david belchamber

£43b wouldn't buy their stationary.

http://www.telegraph.co.uk/news/uknews/1560697/Boom-in-quangos-costs-Britain-andpound170bn-a-year.html

[Marian]

"Denis Healey is on record as stating that the Civil Service could work satisfactorily with half the number of people. Halve the numbers, pay them more and get better more motivated people into it."

Denis Healey is on record as stating that the Civil Service could work satisfactorily with half the number of people. Halve the numbers, pay them more and get better more motivated people into it.

Wouldn't it be nice if the world worked like that? Increased productivity should equal higher wages. The trouble is that for at least the last 20 years, increased productivity has been rewarded with stagnate wages for far to many people. There has been in many industries and increase in productivity of up to 80% whilst the real value of wages for the lower 90% has risen only between 1% and 5%. The situation for the lowest paid is even worse with wages falling in real terms by 20%. Stagnation of wages is very bad things indeed as although everyone is producing far more they cannot infact hope to consume more. The end result of this trend is the recession we have today, a recession were interest rates are at an all time low. Of course the upper 10% have seen their pay-packets skyrocket in real terms. To get our economy up and running again we need to pay ourselves better. We need to shift the money to those who will spend it. This may sound a crazy thing for a conservative to say but I assure you its based on very sound economic principles. Trickle down doesn’t work we need a torrent.

[Patrick Harris]

Sorry, I have led a prudent and frugal, some would say, a sad life.
No credit card debt.
A mortgage that i could comfortably service.
No castles in Spain nor elsewhere.
A modest 7-10 day holiday each year (camping when the children were young).
Modest savings for rainy days.
Clothes that fit and bear labels that are not fake.
A small family car plus a work van before I retired.
A much reduced annuity, something I paid into over 25 years, now completely ficked over by the greedy B'stards and "sorry" sayers but not meaners.
etc. etc. etc.
WHY THE FLYING FLICK SHOULD I SHARE IN THE PAIN OF RECOVERY.
Just give me back my modest savings interest and my modest annuity and get the fcuk out of my life.