George Osborne needs to get a grip

George Osborne has confirmed today's Daily Telegraph front page splash and said that Labour's 45p tax hike will be "difficult to avoid".

It is far from clear that the 45p tax rate will produce much revenue.  It seemed like a politically-motivated tax rise when Alistair Darling announced it and it is disappointing to hear a Conservative willing to talk of tax rises when Britain's economy is already dangerously over-burdened with a complex and heavy burden of Labour taxation.

It may well be that an incoming Conservative government inherits such an awful borrowing requirement that tax rises cannot be avoided but it is very disappointing to hear the Shadow Chancellor close to surrender on the 45p tax band at the same time as being so cautious on public spending.  We are told by the Tory leadership that it's too early to say what a Conservative government will do on public spending but it's not - apparently - too early to say we'll accept increases in taxation.  That inconsistency betrays the party leadership's instinct to keep both public spending and taxes at Labour's relatively high levels - an instinct evident in the Tories' 2007 decision to match Labour on public spending increases.

Let's be clear: The big problem in Britain's public finances isn't that we are lightly taxed but that Labour has presided over the biggest ever peacetime increase in public spending. The expenditure has not been spent well. A Conservative government shouldn't be thinking of tax rises until it has exhausted the possibility for economies from Labour's bloated state.  Tax rises must be the last resort, not, as it appears, the first resort.

George Osborne wasted his early period as Shadow Chancellor by disarming economically.  Rather than devoting energy to finding ways of cutting waste and delivering much better value for taxpayers' money he largely accepted the Blair-Brown settlement on the size of the state.  That was always an undesirable position but it become impossible when recession struck.

This website has consistently given George Osborne the benefit of the doubt but today is worrying.  Mr Osborne needs to get a grip of the debt crisis but he must realise that it is fundamentally a crisis of excessive and wasteful public spending.

Tim Montgomerie

Comments

[DCMX]

It's New Labour or Blue Labour.

Osborne and Cameron have never run anything.

They see the 45p issue entirely in terms of politics and don't want to be on the back foot electorally.

Depressing.

[Phyllis Crash]

Now we've given in on 45p Labour will find it easier to go to 50p and so on.

[Adam in London]

Come off it Tim - do you honestly think any government could cut £150-£200bn out of the budget in 2011?

Either you believe that Labour are trashing the public finances to a degree we have never seen before, or you don't and think it's just a cheap political line that no-one really believes. Personally, I think it's abundantly clear that the public finances are in such a catastrophic state that we will have to raise taxes and take a flamethrower to public spending to have any chance of balancing the books.

[Jack Stone]

The editor still doesn`t get it. Go into an election promising cuts in public spending you will lose. People will think that those cuts will be made in health and education and the advances that we have seen in both services in recent years will be lost and we will be back again to long waiting list in the NHS and school class sizes rising again.
What I don`t understand is this mentality that people would rather be right than win the election and get back into power. Without power you can do nothing. I sometimes get the impression with a lot of conservative supporters that they don`t know the differance between a debating society and a political party!!

[oldrightie]

Conservative knockers need to get a grip. The depth of the mire we are in is still unknown. Let's at least get a decent working majority before kicking off all the time.

[TRG Tory]

Didn't the IFS say the 45p rate wouldn't bring in much revenue?

[David Galea]

Gordon Brown is probably laughing and smiling at this cockup, but he should remember that it isn't checkmate until the general election results come in.

[John Moss]

Real reform costs money up-front and takes time to deliver, but it delivers in the end, so we must be bold!

School reform - if done properly - will halt the increase in spending as the market finds more efficient ways of teaching and Local Education Authorities are no longer needed. Initially it will cost money to set this up and it will take five years, probably, for any benefit to flow through, but those benefits will come.

Making people work for their benefits won't save money, or will save only pittingly small amounts, but it will get more done with the same cash.

However, we have one big opportunity coming up. We will probably be running almost all local authorities as well as the Government post 2010. That is a tremendous chance to make truly radical changes which will embed certain things - like competition and sound finance - for a very very long time.

We must be ready as it will not be long before we start losing councils as the negative effects of incumbancy kick in. We must be ready with changes to housing and social services as well as education so we can get them implimented by friendly local authorities early on. Tories will be better at organising these things as well so more efficient systems will be created in the first instance.

It is going to be tough, but I really believe the people are ready for it. They know it's got to be fixed and they will accept to a far greater degree the pain that they know is necessary to get the job done. We must not flunk this!

[Colin Thurston]

I agree. George Osborne is a massive disappointment. Its time for David to get tough and shift him to another job.

[Westminster Wolf]

Osborne Cameron hate the right of the Conservative Party but they fear the Guardian and B.B.C. Caving on this issue is another stage in the appeasement process.

[William Blake's Ghost]

I agree with you too. You seem fired up on this one Tim.....

[Malcolm Stevas]

The big problem in Britain's public finances isn't that we are lightly taxed but that Labour has presided over the biggest ever peacetime increase in public spending. The expenditure has not been spent well. A Conservative government shouldn't be thinking of tax rises until it has exhausted the possibility for economies from Labour's bloated state. Tax rises must be the last resort, not, as it appears, the first resort.
Glad to see that the Proprietor knows the score, though he could avoid this "last resort" business since a half-well-run State should operate on the basis of minimal taxation and be acutely aware of the risk of lynching by upright citizens at any mention of tax increases.... And the potential for public expenditure reductions is vast - just give me a list and a biro...
Osborne is a loser. DCMX has it right.

[Peter Buss]

Sorry Tim but just can't agree with you on this. Its all about winning an election. We really must be absolutely watertight on this question of fairness which will be a major asault on us by Labour. We shall be asking the people to accept major reductions in Govt spending and only a fool(and you are not that) believes that such reduction can be achieved by reducing the number of non -frontline staff.In addition we shall be asking people to accept increases in petrol, VAT , wine, beer etc etc etc. There will be tax rises going along with public spending cuts. People will accept that but only if they feel the pain is being equally shared. It would be political suicide to reduce the tax rate for high earners why expecting the rest of us to see our living standads cut. Frankly it will not cut much ice with most of us if there IS a marginal increase ( for thats what it is) on someones earnings over £150k a year.Thee will be far far more people having to settle for loads more pain than that and who can afford it even less.

Unlike Jack Stone I am not a socialist, but a convinced Tory (of the One Nation variety) but he really is right when having a go about doctrinal purity before all else.
This is exactly where the Labour Party got into so much trouble until Blair came along.

I would go even further and make the IHTax cut an aspiration rather than a pledge. I just don't think its politically saleable in our present dire straits. I really don't think its worth losing an election over.

[Ed]

It's politics, ConHome. Just that. Did you notice where Cameron said that the country needed to get pay in quangos under control? No one who supports quangos uses the term quangos (at least not like that). He concentrates on pay because it mirrors (but actually broadens) "Daily Mail man"'s concern with overpay and exploitation of position which has come to the fore during the credit crisis. He's trying to reassure middle Britain that the Tories will not try a quick tax break economic rush out of recession, benefitting only the high international rollers. By his modest statement about quangos, Cam is emphasising continuity rather than revolution.

Basically the concern is that the Conservative critique has been so correct for so long that voters will fear that the Tory reaction to Labour's overspending might be savage and visceral. He wants the middle demographic, and he's trying to time the message so as not to waste the more positive free market Tory argument before the real electoral fray begins. Cameron is really rather good at politics. ConHome's discomfort is vital to his effort, so when Cam comes over all soft on the State, just lie back and think of England!

[Tim Montgomerie]

@ William Blake's Ghost.

Yes, I'm very fired up. Angry at the intellectual surrender.

[Oberon Houston]

Don't get to hot under the collar about this. Its about political maneuvering and signaling to different groups of the electorate.

Nobody seriously expects us to tax as high as Labour, or to preside over a bloated and wasteful public sector. We must remember Osborne's audience isn't us when he makes these statements, its NHS nurses.

Attacking him with such strong language isn't helpful I think.

[Phyllis Crash]

Thank you Tim for standing up on this one.
That you are questioning Osborne after backing him during the Russian boat business is interesting.

[Sally Roberts]

Peter Buss is 100% right. No doubt I will be called a "spaniel", a member of the "Party machine" and all sorts for saying it but it is time to BACK the Party. We have to WIN an Election!

[Social conservative]

A forty five pence tax rate moves us towards the kind of economy that won't be able to compete in the world. Talented labour will drain away. Accountants will hide money.People will be less keen to seek overtime and promotions.

The alternative is spending cuts that only move us back to where we were three years ago -- ie not a bad situation.

It is notable that those on Tim's side of the argument are worried about the country and those on George's side are worried about the party. My advice to the party first people is to look at the country's interests first and the country will support you.

[Jon Gale]

I'd much rather that we abolished foreign aid, arts subsidies, regional assemblies and many other things before we start considering tax rises.

But if every child is now being born with £30,000 of national debt (as Dan Hannan said last week) that has to be paid off somehow.

[Bishop Swine]

"Yes, I'm very fired up. Angry at the intellectual surrender"

But Tim old boy, your starting to sound like you mean it. This is not surrender, it is a pragmatic and measured silance for the most part. " "difficult to avoid"." I would have thought that was clear even to the most ardent free-market capitalist. We will inherit a big black hole and we will have no choice but to balance our books before we hope to move forward. I would have preferred George to have said we will slash all budgets to ensure that we don't have to raise tax's by a single penny, but it would be dishonest to pretend that such actions would be accepted by the public. If we share out the burden we might have some hope of getting the nation back on track. If we fail the backlash will turn us either into an authoritarian state or a basket case nation.
Of course we have been a basket case for a long time mostly as a result of quick fix's.

[Cameron Watt]

Osborne is right on this one. It's smart politics not to be privileging the wealthy when it's people on low and moderate wages that will suffer most from the recession. The greed of top bosses has been a significant factor in creating the mess we're in.

I do hope that we will square with the electorate on the need for substantial cuts in public spending, though.

[snegchui]

I think also Peter Buss is right. Despite Cameron's relatively successful decontamination strategy, the "Nasty Party" jibe still resonates too strongly. It is not fair, never really was, but it is Labour's dogwhistle.
Cameron and Osborne have not brought in this tax, they will inherit it. Saying that it is high on the agenda of things to roll back would just open up the party to charges of looking after the rich and stealing from the poor, as the retrenchments in public spending take effect. Those waste-cutting exercises must take a much higher priority, followed by an easing on businesses. It is indisputable that the current tax regime needs a thorough overhaul, especially the distortions and complexity of the credits system. William Norton is also right, and it may be a very acceptable side-effect, payment into the pension funds is an easy way to mitigate it for the higher-earner. More pension savings, less champers doesn't sound too bad to me.
But if it sours your milk, it sours your milk.

[Sally Roberts]

"It is notable that those on Tim's side of the argument are worried about the country and those on George's side are worried about the party."

Oh believe me, we ARE very much on the side of the Country and that is why we are also on the side of the Party! Do you really think that any alternative other than the Conservatives will SAVE the country?

[Dan Beckham]

"Tax rises must be the last resort, not, as it appears, the first resort."

Exactly.

I agree with every word in this blog

[Schlieffen Plan]

First there was Grammargate, then there was Yachtgate...Standby for Taxgate!!!!

[Matthew Reynolds]

As the 45p tax band will only raise £2 billion why not just end RDA's and use the £2 billion saved to fund not proceeding with this insane tax hike ? RDA's do not provide value for money and this tax increase will just harm our already over-taxed economy.

One other idea could be to align the thresholds for 45p tax , basic personal allowance claw back and pensioner tax allowance claw back at say £300,000 p/a. That would be fair as it would reserve high taxes for the rich alone while not affecting most taxpayers personal finances in an adverse way.

[Will Yoxall]

I think George Osborn is very sensibly preparing the ground in case taxes have to go up across the board after the next GE, even if we are cutting expenditure at the same time. Gordon Brown really seems to be following a scorched earth policy reducing the debt he leaves behind him is David Cameron's fist priority according to the man himself - that may involve tax rises at both the higher and basic rates - I don't like it, I wouldn't have thought that David Cameron or George Osborne like it much either but they might not have a choice.

Once the ship has been steadied tax cuts would be the first thing on the agenda I'm sure (at least if taxes have had to go up).

No Tory wants to see taxes go up, but given the scale of the debt we must keep our options open.

[Social conservative]

Will Yoxall writes No Tory wants to see taxes go up, but given the scale of the debt we must keep our options open.

But Osborne appears to have already decided his option is to raise taxes. Why didn't he do what Matthew Reynolds sensibly suggests and abolish RDAs and say that will avoid the tax rise? Let's get rid of the fat in the state before loading new burdens on our wealth and job creators.

[Michael]

by saying, 'it will be hard to avoid' diffuse the issue for a GE campaign but leave us enough room to ditch it after. If so clever politics to me.

[Alan S]

"What are the Conservatives offering today? The suggestion that they would impose the 45p top rate of tax that Labour favours is not a good start and should be reversed. It is hard to understand how penalising wealth-creators is going to bring about economic recovery. Furthermore, a promise to freeze the BBC licence fee was, frankly, a footling announcement in current circumstances.
Mr Cameron needs to be honest about the cuts that will be needed in the size of the state and what this will mean for public services – not by declaring war, but by setting out what teachers, nurses, police officers and the like stand to gain from having the dead hand of Whitehall removed from everything they do. Describing this world, in which public services are delivered in a different way by the state – or not by the state – is the task of political leadership. Mr Cameron calls it the "post-bureaucratic age" – hardly a rallying cry to quicken the pulse, even though it is about giving people more control over their lives, by transferring power from government to individuals and communities. This idea is about offering to lead people to a better future in which they can flourish; goodness knows, the country is crying out for leadership."

FROM THE TELEGRAPH
http://www.telegraph.co.uk/comment/telegraph-view/5024601/Conservatives-must-promise-cuts---and-freedom.html

[WHS]

"@ William Blake's Ghost.

Yes, I'm very fired up. Angry at the intellectual surrender."

When are you going to realise that you're aren't the sole keeper of the true Tory flame? Maybe you personally disagree with this but there's nothing antithetical to British conservative thought in this, even if it does offend the imported Poujadist streak that has taken hold since 1975.

[Tim Montgomerie]

Boris Johnson has just said on Any Questions that 45p tax rate is not "economically sensible". The Mayor of London is right.

[Tim Montgomerie]

@WHS. I never said I was.

[DCMX]

Good for Boris! He is right, George is wrong.

[Victor, NW Kent]

It is essential that, after 12 years of Labour broken promises and dashed aspirations, the voters are not again deceived into a false sense of security. Mind you, I doubt that anyone feels very secure right now.

We have had a decade of placebos and quack remedies. It is now time for worthwhile prescriptions to be issued and the patient, our sick economy, is told how sick it is and why this medicine is the only cure.

In short - it is time for honesty, not humbug - time for a rallying cry not a soothing lullaby.

I will agree that Osborne does not yet realise how vital it is that people are made aware of the facts. He must show that he understands or give way.

I am not in the slightest interested in us winning the General Election on a cloud of puffery. In the vernacular - Get Real.

[Steve Tierney]

Disappointed is not anywhere near a strong enough word for how I feel.

I was *just* beginning to think Osborne had the right stuff to lead us to safety and then this.

Very. Very. Very ... disappointed (will have to do, for now).

[David]

Tim consistently claims that he wants to cut taxes for the poorest as part of his "social justice" agenda.
I'm afraid, Tim, to do that taxes will need to rise elsewhere to compensate. Unless you concern for the poorest is merely a beard for a traditional tax cuts at all costs agenda, you'd be honest and understand that.

[Tim Montgomerie]

We probably cannot afford tax cuts (for poor or whoever) at present David but we must also pursue all alternative avenues before raising taxes. I'm not persuaded that that pursuit has been done.

[John Moss]

Boris is having a Laffer!

[Russell King]

I couldn't disagree with the editor more on this one. Whoever wins the next election will have to both raise taxes and (massively) cut public spending. David Cameron has made it quite clear that the pain must be shared across society. Support for the 45p tax band is symbolic. It says to the British public that the Conservative party is willing to make difficult decisions that go against the grain, that the Conservative party has changed and that it is the Party of the whole Country not just the well off. The Grassroots might not like it but the decision is politically spot on.

[greg]

In the teeth of a recession tax rises ARE the first resort. Cutting public spending, and particularly, public sector jobs when the private sector is in no position to pick up the slack is economic suicide. In the short term, widespread public sector job cuts would actually lose more money than it would save - due to the redundancy costs, the unemployment costs of increase in benefit payments, and the additional pension costs due to the entitlement of anyone over the age of 50 to claim their pension early.

And simply asserting that the public sector is "inefficient" does not make it any easier to achieve spending reductions in anything other than a long term, planned way.

[Social conservative]

Russell King proves the point I made at 7.39pm. It's all politics for some people. All about positioning signals and polls. Just for one minute forget the political message it sends out about us and worry about the future of the economy.

[strapworld]

Does Osborne make these statements before or after seeking advice from his colleagues?

Cameron must give the job of shadow chancellor to Ken Clarke immediately. Osborne is such a liability.

People know that the public services both local and national will have to be pruned. Cameron and his team must look for a top down pruning and certainly not a cull of the little people.

Chief Executives must be told to take a 25% paycut,for a start. No wage above £60K for a Chief Executive.

As for tax rises. Cameron has alluded to this so why turn on his own supporters?

OSBORNE MUST BE REMOVED.

[Umbrella man]

Boris for Chancellor!

[Peter Buss]

Just one more thought on this. There seems to be a view that under Maggie there was this sort of doctinal purity and this she was able to sell to the electorate.

I yield to no one in my admiration for that truly great PM but part of her greatnes was her remarkable political antennae. She had her fundamental principles but this did not mean that she was blind to political reality (until she lost that over the Poll Tax). For that reason she was always against privatising the Post Office - the public will not accept it - market economics cast aside as nothing !! Similarly she would never have touched privatising the Railways - more bother than its worth and so on. In other words she was prepared to trim when it made political sense.

Surely that is all Cameron and Osbourne are doing with the 45p tax issue. There surely is no point in making its reduction a priority if it leaves a gaping hole for Labour to charge through. Even with the rise its not as though the better off will be paying penal rates of tax. Its not as though they will be worse off than our major European Competitors.

Now if the tax had not been raised and Cameron was saying that as a priority he would raise it to 45p then that would be a different matter. But all he's saying is that we can't make its reduction a priority.I really can't see the problem - but I can see that if he was to take Tim's advice then he would be odds on to lose the next election.What would that achieve - doctrinal purity - great - well done -but just the small matter of living unde a wretched Labour Govt for another 5 yrs!

[greg]

Is that the same Ken Clarke whose solution to the early 90s recession was to, er, raise taxes?

[greg]

I love the irony of someone strongly opposing the suggestion of a 45p tax rate on those earning over £150k, and then proposing that nobody (who should earn more than a Chief Executive?) should earn more than 60k, thereby making the whole debate academic... ;)

[Adam in London]

The Ken Clarke who paid off the debt and left a golden economic legacy in 1997 you mean?

[HF]

The real problem appears to me that George is not focused 100% on financial matters.

Can the Editor assure me that I am wrong?

If so then the problem is one of judgement and not of focus.

[Alan Douglas]

Economically GO may well be right, but politically and tactically he is wrong to back this now.

AFTER the election, he could say "My God, what has Brown left us, sorry guys, we have to keep the 45p rate".

The Tories should be banging on about the cost of quangos compared to 1997, and their determination to reduce this figure. That would resonate :

"In 1997 quangos cost £ 130bn, now it is double that, while with inflation it would be £ 160bn. We aim to bring the total cost back to nearer this figure". (Invented figures). No one could argue with that.

GO is to much of a gentleman, too honest, too wet, too un-political, etc etc, a bit like Letwin. Both probably vital backroom boys, but not safe on the airwaves.

Alan Douglas

[Doug]

I agree with Peter Buss, Sally Roberts et al.

You've got to be mad to believe that efficiency savings will cover the HUGE debt that is currently accruing. It might have been possible to win that argument with the smaller debt levels a few years ago but not now. We've got to stop mythologising low tax Toryism of the past. Early on Thatcher had to raises taxes to balance the books before restructuring government's affairs and then implementing a low tax agenda. The 45p rate will be a fait accompli before the election and I just think the Tories are laying the groundwork for the required spending cuts and tax increases needed to start retiring debt. The question for me is when to increase tax as doing it too early will hamper growth - I reckon late 2011, early 2012 but it does depend on how strong the growth is, how big the debt is and whether the rate of debt growth is slowing enough.

We are the only ones prepared to make the tough decisions to get the books in order. What I do not want is the classic ideological Republican program of only cutting taxes and leaving huge debts on top of huge debts to the next government. The fact is the ship of state has to survive and Labour's addiction to debt has railroaded us into a harsh spell of cold turkey public finances. I disagree with social conservatives comment about Tim thinking of the nation first and the rest of us thinking of the party. If anything it's the exact opposite - using supposedly immutable party ideology about tax to avoid the tough decisions and get the nation back on an even keel during these largely unprecedented times. Does Tim not recognise the black hole we're being sucked into?

[Vincent Wall]

Osborne has triggered an unnecessary row.

Why didn't he just say he won't make ANY decisions on tax and spending at this stage of the economic cycle.

[Laura]

Tim,

Are you saying you don't mind higher taxes as long as it's only for basic rate taxpayers?

My view is that if higher taxes are neccessary then everyone should bare the burden, including higher earners. It is called fairness.

[Tim Montgomerie]

Of course I'm not saying that Laura. There is nothing in what I wrote that implied that either. I wrote that there should be no talk of any kind of tax rises until we'd addressed the root of the problem ie a failure to control spending.

[Goldie]

Some people -like yours truly- have consistently mocked the idiocy that was 'sharing the proceeds of growth'.
That, and an excess of timidity which is now paralyzing the Tories, is the only tangible work product of Osborne.

He is absolutely not seen by anyone in the country as a plausible Chancellor amidst the worst Financial Crisis since the 1930s. Cameron is continuing a very serious error by keeping him in his position. It may lead to a hung parliament.

It is essential that Cameron move Osborne over --Party Chairman would be a fine position for me, or Home Office and move Grayling to Party Chairman-- make Clarke shadow Chancellor or Hague, and make Osborne Foreign Secretary.

But this move must be made, and it must be made soon. Time is running out!

[Jarod]

Every time the Tories give me the opportunity to return to the fold, Dave or Boy George blow it. I really want to support the Tories but every time I think that I might, the leadership says "Ah! Tricked you, thought that we were real Tories? Fooled you again". I have now finally given up on them. There is no difference between Labour and the Tories. How depressing is that?

[Tony Sharp]

There are some pretty short memories among people on this thread. Do some of you not recall the public stating time and again that they do not trust politicians and view them as snake oil salesmen?

With that in mind how on earth is it reasonable to make arguments such as "It's all about winning an election" instead of doing what is right?

Those who are arguing that "People will think that those cuts will be made in health and education" are doing Labour's job for them by perpetuating a falsehood. We all know there are significant opportunities for reducing spending without hitting frontline services.

This is not simply about ideological purity and hitting back at the sneering attitude of those who find a concept such as having principles ludicrous. This is about recognising that an economy that is overburdened by taxation will not be heading to recovery any time soon.

Do we want to present a programme to the electorate that says "These are the tough decisions we have to make to get out of this mess"? Or do we say "Labour spent us into a terrible position and our solution is more of the same"?

Tim is absolutely right about this. We absolutely must tackle the crisis of excessive and wasteful public spending head on. That will not happen if we raise taxes even higher to maintain Labour's damaging and profligate waste of our tax pounds.

[Bill Melotti]

Sorry I cannot agree with this. As Conservatives we all wish to see the state grow smaller not larger, we expect to see good and efficient public services, and ultimately a lower burden on the taxpayer. it will come in time.

When Maggie came in VAT rose to 15% and yes she dropped the higher rate to 60%, but maintained it at that level for many years.

Yes, 60% under Margaret Thatcher. And yet that time is rightly remembered for the tax cuts, the people we brought out of taxation completely and how for many years she made it politically impossible for any party to raise income tax.

Unfortunately a lot has been wound back. Economically we're back at square one again, or probably worse....

[Cleethorpes Rock]

Ideology aside, how effective will this 45% tax be?

How will it help me, as a non-top rate taxpayer?

I suspect the tax will have minimal impact, but is just a way of sending a political message along the lines of "Don't worry, someone else is paying for all this"

Very disappointing from George Osborne.

[Carrie]

Boris also wants an amnesty for 750,000 illegals during a recession.......still think he's a genius? I'd rather have Osborne in the Treasury than Boris anyday! Boris is ok as Mayor of London, where he has no REAL power!!!

[Freddy]

Have any of you read the glowing editorial in the "Sun" this morning on Cameron's plans?

The plans are aimed at winning over people who are open to Conservative ideas but might not vote Tory because they are "not like us."

As far as Maggie is concerned, she had very good political antennae. She would have realised that not going along with this would enable Labour to "monster" the Tories. "Oh! they only care for the rich!" they would say, and, however hard you argued, you wouldn't be able to dispel this false impression!

[ChrisD]

Tim, give us a break!

Events dear boy, events!

Our economy is effectively at breaking point awaiting the bankruptcy court if strong action is not taken. We are presently screwed because of the vast debt burden that Brown has accumulated before we can even see an end to this recession. Even Diane Abbot admitted the next GE might be a good one to lose because its going to be such a poisoned chalice. I suspect that Osborne is a lot more clued up on just exactly how big a hole we are in right now, and that is why he is looking paler, older and more stern by the minute!
Just a couple of days ago, I read that the Conservative leadership are preparing their shadow cabinet team and the backbenchers to brace themselves to be the most unpopular government in living memory if we win the next GE.

And that means pain for everyone, the poor, the middle classes, and most importantly the rich! Yes, yes, I understand the old saying about them legging it out of the country or to offshore trusts if they are over taxed here.

But the point is, the middle classes took the biggest hammering by far in stealth taxation under Gordon Brown, he then sold out our poorest workers in his last budget as Chancellor. As for the rich, well they got richer and in some cases a knighthood under this incompetent lot.

Tax cuts! Forget it, we are going to have to slash public spending and raise taxes in the short term to get us out of this economic hole. And no, I don't have time to be bothered with the 80's Tory boy book of economics, and neither did that most famous of housewives Mrs Thatcher.

[pp]

I am gutted.

It is so, so lazy "lets do what they were going to do eh?".

I rooted for Osborne through the yacht affair - a minor mistake but he showed integrity, openness and honesty in clearing it up.

But on financial issues he isn't delivering.

We need financial revolution not more of the same with a few tweaks.

What does GO do with his time?

[ChrisD]

"The real problem appears to me that George is not focused 100% on financial matters.

Can the Editor assure me that I am wrong?

If so then the problem is one of judgement and not of focus."

HF, as usually, you are wrong. Osborne is focussed 100% on the financial problem we face. Sticking to this is an economic and political must right now. And no, its not a tax hike, and certainly not in the sense of all those poorer earners who got caught in the nets of the stationary tax brackets that Brown left unchanged with little or no comment for years.

[Steve Tierney]

>>Cameron must give the job of shadow chancellor to Ken Clarke immediately. Osborne is such a liability.<<

Get out of it. Osborne may have missed the ball with this one, but Ken Clarke would be a disaster as shadow chancellor. He doesn't have the answers. He's a good politician, I like him on the front bench, but NOT as chancellor. Redwood is the man we need.

[Perdix]

The Editor needs to get a grip. Stop knocking George. He's keeping his options open. Who knows how much more Brown will wreck the economy before he's thrown out?

[Raj]

Tim, sometimes I wonder that perhaps you and Osbourne's doubters need to "get a grip". Conservative governments have raised tax in the past when necessary. 5% on the richest won't solve all ills but it won't cause them either.

There is nothing left to do other than raise taxes. Cutting spending is a long and difficult process. You can't just close the Ministry for Administrative Affairs.

++++

The Ken Clarke who paid off the debt and left a golden economic legacy in 1997 you mean?

Paid off some debt - the UK wasn't 0% debt in 1997. Also note that a reduction in debt came with the recovery, not during recession.

[ChrisD]

Perdix, I am a great fan of George Osborne, a much underestimated politician, often more so by some in Conservative party. The government have since woken up to his ability since Mandelson was brought into government. I keep saying this, the guy is consistently 2/3 steps ahead of the game politically and economically. He and Cameron are now positioning us for the tough times ahead.

As for public spending, I predict that by the next GE the electorate will be no doubts that its going to be slashed under an incoming Conservative government through necessity rather than desire. And ditto for tax raises. And that is an important consistency that Cameron and his team will be well aware has to be conveyed to the electorate in the shorter term.

In fact, that is also why the Cruddas interview where he admits that his party have to accept that Cameron might be the real deal was so striking.

[billindie]

Despite wanting tax cuts, maybe, just maybe, taxing the rich at this tge makes political sense. show were in touch and all that.

[Henry Bancroft]

Osborne has someone in his office who does web stuff. Since no sane person could write what ChrisD has, I assume it's him.

[Patsy Sergeant]

I have to agree with Peter Buss @ 18.13 and Ed @ 19.14, and Sally and others.
I long for the fat-cats at the head of quangos and all the unnecessary agencies, to be eradicated, but the battle has got to be convincingly won first!!

[Conservative member]

This ridiculous policy is a massively wrong “knee-jerk” reaction. We are in danger of returning to a 1960/70’s style of consensus politics which almost drove this country into the ground. Conservatives should exist to be better at governing – an alternative direction, not just people.

[Helen]

Taxing the rich shows you are in touch? With whom precisely? So, it's stirring up class warfare, eh? Remind me, which party is this we are talking about?

[ChrisD]

" Osborne has someone in his office who does web stuff. Since no sane person could write what ChrisD has, I assume it's him."

LOL...would love the opportunity, but alas, I doubt Osborne needs my input in his office. And I am female by the way, just the kind that the Conservatives will need to appeal too in large numbers in marginal/target seats right across the UK.

And yes, I was out delivering leaflets during the 2005 GE before coming home and putting my hands in my face as I watched our national campaign unfold on the national news. The result was no surprise to me then, but no less disappointing. I finally decided after 20 years as a dyed in the wool Conservative voter, and then member and activist, to give it the six months to see if the inevitable leadership contest would finally make us wake up to smell the coffee as a party. Especially after three GE defeats that left us with less seats than Labour managed under Michael Foot's leadership!

[Teck]

Those who pontificate about how services could be affected by cuts do not seem to realise how ponderous and bloated some of our public services are, not only with top heavy administration and inflated wages but the huge army of staff who do meaningless little jobs that proliferate out of nowhere and only hinders real wealth creation.

There is such a huge amount of wastage in public spending that politicians either do not see or choose to turn a blind eye to them.

What's happened to all that talk about small government?

We must make savings by cutting back unnecessary staff, stopping non-viable projects and instituting direct accountability. A leaner and more efficient machinery is a pre-requisite to improved public services, not fecklessly drenching it with taxpayers' money.

[snegchui]

And yes Teck, that must be the first priority. Tinkering on 45% tax rate for less than 0.5% of the population (inherited) is a soundbite of no value. Rhis is where I hope the CSJ are applying their real focus.

[Simon R]

Osborne needs to go. But who to replace him? Surely the only person in the frame is Clarke, and where would that leave us?

Perhaps Clarke as Shadow Chancellor balanced by Redwood as Shadow Business Secretary. Osborne could be dedicated to running the election campaign full time. There's no shame in that.

[Adam in London]

Some people seem to be in denial about what Labour is doing to this country. We will be borrowing a sum equivalent to 10% of GDP this year, and perhaps as much as 15% of GDP next year. That's going to be about a third of government spending covered by borrowing.

If you think you can walk into Downing Street and slice a third off government spending on day one, you need to think again. If you tried a cut on that scale, and justified it by saying you refused to put up a single tax, I suggest you'd have riots on the streets.

The problem is that people (editor included) seem to imply that all that is needed is to trim a bit here and there and it will all sort itself out, and besides although we make a song and dance about it the government's fiscal policy at the moment isn't that serious or dangerous. Well, I have to tell them it really is. We are sailing frighteningly close to the wind. Britain is borrowing huge amounts of money, at the same time as every other government is attempting to do the same. Our credit rating is in danger of being downgraded. At the moment we may be being kept afloat by the nationalised banks being force-fed government debt. If our credit rating does deteriorate and the rates we face to borrow increase our finances will truly go into freefall. Literally, every little helps to keep us away from that situation. Therefore we need get ourselves back to balanced budget as quickly as possible without doing anything that will spook the markets too much (like provoking nationwide riots). How about a combination of sharp spending cuts combined with a couple of modest tax rises (and a lot of tax simplification).

Then the question becomes what can we cut from spending, but remember it's as well as a tax rise not instead of...

- cancel Trident?
- lose the aircraft carriers?
- cancel ID cards?
- cancel NHS IT?
- end tax credits for the middle classes?
- cut back corporate welfare?
- cut University places?
- cancel Crossrail?
- cancel Heathrow expansion?
- withdraw from Afghanistan?
- stop approving new drugs on the NHS?

[Steve Tierney]

I'm not saying we don't need to be ready to increase taxes if we really, really need to. Dire situations call for dire resolutions.

I'm not saying: "It's tax cuts or nothing." Like everybody else, I'm well aware of the mess Labour may leave us.

But this tax will achieve so little money it is clearly just "taking a stand" and political posturing. This is the wrong stand to take, in my opinion.

It's going to backfire unless they are very quick to qualify what they've said to grass roots satisfaction.

[Alex Swanson]

Do you really think that any alternative other than the Conservatives will SAVE the country?

I'm fed up of hearing people say - effectively - "We should tell people whatever they want to hear regardless of whether we think it's true, promise whatever policies will get us votes even if they're wrong, if only it will get us into power".

Firstly, it's morally wrong. Although I appreciate that the lefties amongst us, including the spaniels, don't understand that and probably never will.

Secondly, it's practically wrong. There is no point in getting into power if you are then obliged to do the wrong thing.

I'll repeat that second one for the hard-of-thinking amongst us.

The whole point of getting into power is to do the right thing for the country. If you get into power, but then do the wrong thing, then that really is worse than Labour staying, because at least if you are being honest even in opposition, then you are fighting the intellectual battle for genuine future change.

[snegchui]

Look, Labour are leaving an Augean stable behind , mit der landmines. This 45% is a landmine. Tories are not introducing it, it will be an inheritance.
Making row about dealing with it first before the bloated areas of the public sector will be playing right into soundbite territory. Focus, on real change. Labour must be wetting themselves at how easily distracted Tory focus is.
The principle of keeping taxation as low as possible does not mean rushing out and cutting all taxes like excitable children, - what it means is examining the tax environment and thinking smart how to make it achieve the aims of small Govt efficiently.
Yarra man, youse lot is sometimes flinging loaves of bread that is not catching fish but feeding the seagulls what is horrible eating. Fling bits and catch a tasty fish, hey. Blurry political people divorced from reality

[ChrisD]

Adam, I agree with you. Only one I would leave off your list is the aircraft carriers.
They should be regarded as a vital component of a trimmed down, modern and well equipped army easily mobilised at a moment's notice on defence, UN or humanitarian missions.
They are worth their weight in gold in that regard, and remember, one of our most elite regiments is the Royal Marines. That is why its vital that we invest in our Army, Navy and the RAF.

[ChrisD]

"But this tax will achieve so little money it is clearly just "taking a stand" and political posturing. This is the wrong stand to take, in my opinion.

It's going to backfire unless they are very quick to qualify what they've said to grass roots satisfaction."

Steve, it won't backfire, it will resonate with all those other people who are going to take a hit in this recession, sharing the pain if you like.

Never underestimate the damage Brown did to himself personally and his party when he removed the 10p tax rate in that last budget as Chancellor, many of us saw the damage immediately. Even Darling realised the magnitude of the mistake and tried to rectify it without success before Brown finally had to be dragged into backing down when the C&N by election loomed.

And if the Conservatives under Cameron and Osborne decided to oppose this 45% tax take on higher earners at this time, and while highlighting the sheer levels of debt and the need to reign in public spending, they would be making a mistake of equal magnitude.

And the daft thing was, Brown had tried to appeal to the middle classes by giving the a 2p cut income tax cut paid for by the lower earners, it went down like a lead balloon. Osborne isn't doing that, instead, he is trying to spread the pain amongst everyone.

[joshuwahwah]

Labour set a trap and little naive Georgy Osborne and David Cameron fell into it.

[Steve Tierney]

Snegchui:
"Blurry political people divorced from reality" indeed. You shouldn't mock people's broken relationships. Reality and I used to be the perfect couple until she found out I was flirting dangerously with MeanWhatYouSay behind her back. That was that, a divorce was the only option. She got half the pragmatism and I kept half the integrity. Que sera sera.

ChrisD:
I've always been a loyal Conservative. I expect I'll stomach this and pray there is hidden genius in it, as you seem convinced there is. But it feels wrong to me. That's all. It. Just. Feels. Wrong.

[Sally Roberts]

Thank you, Doug, Patsy and others who are calm voices of common sense in a maelstrom!

The fact is, GO has said the tax will be "difficult to avoid" - hardly the same as an intention to impose it! On the contrary it implies he is doing his utmost to consider other options.

Come on People! Please let's not resort to revisiting the Battle of the Wets and The Drys - I am beginning to think that I am in a time machine that has reversed 25 years!!

[Oberon Houston]

Tim, I'm surprised that you've decided to whip up a frenzy over this. The readiness for large numbers of regular visitors to this site to attack the party leadership needs absolutely no encouragement.

Someone who absolutely does not intend to introduce a 45% upper tax band could make the comment that its difficult to avoid when in opposition. Why? Well one does not need to be a sophisticated tactician to realise why...

Message 1: Its difficult to avoid especially by Labour, who have made such a cock-up of governing the country that to them is absoluteely necessary.

Message 2: Its difficult for us to avoid, because we are not going to make the easy slash and burn decisions to allow its abolition, we are responsible in power and can be trusted with public services.

Message 3: Being in power is difficult, every day. I understand that. In a recession tax and spend is terribly difficult. Hard decision need to be made, someone always loses. DCs comments about public services coupled with mine about taxation show we are attuned to this in a reassuring way.

Tim, the 45% band is Gordon Browns bear pit for the next election. If we go into it with your messaging we will end up with a hung parliament. Luckily the party leadership are far more in tune with this than you seem to be. How long do we need to be in opposition to realise that we cannot message the electorate in the way that would get your local association slapping you on the back and sloshing cheap red wine all over the carpet. YOU NEED TO GET A GRIP.

[Sally Roberts]

Oberon what are you doing up so early? Another insomniac??? I fear we are both about to receive a dressing down :-(

[Oberon Houston]

Sally, I'm in Tunis - one our ahead of you. Plus the nice problem that I was in bed at 9pm last might (8pm GMT!) with my Patrick O'Brian book ("Clarissa Oakes"). Anyway, BBC are reporting that GO has said he won't reverse a 45% rate? Not sure O said that, but slightly nervous now at my earlier vehemence towards Tim.

Whats going ON! I've said AAAALLL along that the party leadership are a bunch of ugly silly Troglodytes. RAT RANT!! {:-KD___

[Ted]

Get real. Its not just going to be higher top rates of tax but higher VAT, probably higher standard rate.

Ernst & Young forecast for the 2009/201 deficit is £180bn, that is 12% of GDP. That is unsustainable but unemployment is unlikely to fall fast, corporate revenues unlikely to grow quickly, structural deficit that developed over last decade and particularly the loss of financial services as a revenue generator all point to tax rises and spending cuts.

Spending cuts alone will not deal with it, there will be hard enough choices to be made there even with tax rises. Conservatives need to be ready to make the real hard decisions to get finances back on an even keel and that includes raising taxes.

[Oberon Houston]

OSBOURNE ON RADIO 4 TODAY PROGRAM AT 0805. I WILL BE GLUED TO MY LIVE INTERNET RADIO FEED, ANALYSING EVERY WORD

Guess you can set up a new discussion board Tim? Suspect there will be lots to talk about in a 'heated debate'?

[TomTom]

Personally, I think it's abundantly clear that the public finances are in such a catastrophic state that we will have to raise taxes and take a flamethrower to public spending to have any chance of balancing the books.

No it is not. You do not want to destabilise the economy by creating yet more uncertainty and dislocation. By 2011 this depression may be very deep and I don't think England will be very peaceful if unemployment reaches 4-5 million.

This country has been flatlining since the 1970s with just credit making consumers feel rich. Every since Edward Heath turned on the credit and it was boosted by Big Bang and North Sea Oil the British have lived in Never-Never-Land suffering from The Dutch Disease.

Each turn of the cycle has ratcheted up the credit until Brown stayed in power too long simply boosting credit to higher and higher plateaux. Now it has to come down and frankly I doubt the economy can be stabilised and that unemployment will soar and the existing political parties will disintegrate or be fused into a National Government facing street upheaval.

This is not 1979 there is no North Sea Oil - as Wilson said whoever is in power when North Sea Oil comes onstream will stay for a generation....and did. This time it is Redistribution - and so far the Government has redistributed future incomes from Taxpayers to Banks....think about the £300,000,000,000 Britain will be borrowing to fund this show.

That is 70% Public Spending this year. If you want to cut dramatically £200 billion then abolish all Benefit so people losing their jobs through cuts have to starve or forage for food and shelter or you are simply shifting from one budget to another.

Maybe democracy cannot sort these problems> I know of no example where such a mess has been solved in a democracy. Certainly huge public spending will be needed on police and military

[Sally Roberts]

The fact is that in his speech yesterday George said

"The answer is that in a recession government debt increases because tax receipts fall off and welfare payments increase - those are the fiscal stabilisers which provide a fiscal stimulus, which is a long held debate held in this country and many others since the 1930s."

With the increase in Government debt, we have less to spend and we have already committed ourselves to removing the tax on savings which will help pensioners and others reliant upon their nest-egg.

The shortfall needs to be made up somehow and if taxes have to be raised as a last resort then surely it is fairer that the higher earners should shoulder the burden which would, it is intended and hoped, would be a temporary one.

[Sally Roberts]

" If you want to cut dramatically £200 billion then abolish all Benefit so people losing their jobs through cuts have to starve or forage for food and shelter"

Fine, if you want to see the Conservatives in opposition until 2020 or later.....

[Mark Hudson]

OK, the Party lost my support some time ago. However, I am very conflicted by the desire to vote for a Party with which I actually agree and wanting to kick out this appalling Government. But after this announcement?

I mean, come on. The Conservatives have lost all sort of economic sense. This left-inspired crowd pleaser will raise a paltry sum in comparative fiscal terms. It will be avoided by many who can avoid the tax advice. It will also royally irritate a lot of people like myself who pay quite enough tax as it is, thanks all the same.

Anyone who has encountered local or central government will know that it is spectacularly inefficient, wasteful and bloated. If Dave and Gideon want some savings, start with final salary pension schemes in the public sector. Then the 'propping up corrupt black dictators fund' - sorry, overseas aid budget. Then start reigning in the proliferation of quangos, payrises and bonus schemes that have exploded in the public sector since 1997.

This timind, confused and pointless response does nothing to establish any kind of economic credibility for the Party. Pathetic.

[Oberon Houston]

Well, having listened to GO on Today, I still think the narrative makes good sense. Remember this is a party leadership who is trying to win an election, not a rant from the back of the Scunthorpe Conservative Association 'Princess Elizabeth Committee Room".

1. The problem is Labours making
2. It wont go away when we are elected
3. Everyone will need to pitch in to fix it
4. In the end we will have better, reformed, public services and lower taxes with us

The strap-lines: We will not punish the poor whilst helping the rich, so its okay to trust us with running the Country.

The alternative Tim is to headline on "We won't introduce a 45% tax rate, but Labour have". Are we seriously saying thats good tactics? What % of the population give a s**t about that in a GE? Again, this isn't an argument of principle as the Editor seems to be making it, its nothing to do with the 45% rate, which Brown is desperate to make it. GO is absolutely right to kick this policy decision into the long grass.

[ToryBlog.com - The Editor says that I must warn you that I have been a naughty boy and not a loyal Tory-abix]

Give Osborne a break.

He'll fall on his face soon enough, so please don't prevent him setting himself up to do this at the earliest possible opportunity.

The man's a clown but he is also going to be the Chancellor for a little while and there is no amount of complaining that will change that.

Chill out. Us non-partisan observers will get the double bonus of seeing the back of Labour and seeing the Roons royally fark up too. :-)

[David Belchamber]

"Go into an election promising cuts in public spending you will lose".

So, Jack, as Gordon Brown has actually been cutting public services (NHS beds, post offices, prison budgets etc), he will definitely lose?

The trouble is that it is this self-same Brown who created our credit boom and bust and has saddled this country with the biggest level of debt ever experienced. I can see why Brown is so keen not to win next time.

As Tim points out, this expenditure has not been well spent but I also agree with him that: 'George Osborne wasted his early period as Shadow Chancellor by disarming economically'.

I think that, like England cricket, the shadow treasury team needs a fundamental shake-up; bring in the professionals.

[StevenAdams]

Slash foreign aid and 'reign in' QUANGOs. 'Reigning in' QUANGOs won't even do a fraction of the job required to make the books balance... slashing them wouldn't even do it.

DC and GO need to stabilise and then reduce the size of the state and the tax take, not get into office and just cut everything in sight, without regard to the knock-on impact. That type of quick and thoughtless action – to appease the media – is what has characterised the Blair and Brown governments.

Yes we need to reduce the state and yes we need to reduce the tax-take, but the way to do that during the worst recession in a century when jobs are being lost at a rate of nearly 100,000 per month, and when entire industries are close to collapse (particularly cars, construction and finance) is not to get into government and slash'n'burn in a dogmatic, frothing fashion.

Yes, small government. No, mindlessly and dogmatically. If that means retaining 45% top rate for a short – medium period of time, so be it. That pain will be as unpopular at the top as the impact of the recession will be at the bottom of the economic tree.