ConservativeHome's ToryDiary

A tipping point on tax

I aspire to make this the last ToryDiary post on tax for a few days but I make no promises!  There is a leader in one of today's newspapers that makes some very interesting points on tax.  Here are a few quotations from it:

"'In this world, nothing can be said to be certain,' Benjamin Franklin famously noted, 'except death and taxes.' He might have added that few things upset voters more than taxes on death."

"The Tory strategy is more sophisticated than just bribing the middle class."

"Labour is vulnerable to the charge that billions of pounds have not been prudently spent. Meanwhile, the tax system has become needlessly complicated. Tax credits are poorly understood and mismanaged. Millions have been paid out by mistake."

"The Prime Minister knows that families on average incomes are starting to feel overtaxed. That is why he tried a sleight of hand in his last budget as Chancellor, cutting the basic rate by 2p only to recoup the losses elsewhere."

"Meanwhile, higher interest rates have driven up mortgage payments, draining money from households' disposable income. Those are the circumstances that make voters look at their pay slips and quibble over the deductions made by the state."

"The unwritten contract between the citizen and the state is up for negotiation again. That doesn't necessarily mean taxes should be lower, but it does mean the system should be fairer and more transparent. Failure to deliver that is something from which Mr Brown cannot hide."

Where did that leader appear?  The Sunday Telegraph?  The Sunday Times?  The Mail on Sunday?  No, no, no, as a great lady once said.  It appears in The Observer.  It's quite something when the left-leaners at The Observer understand that the tax burden is really beginning to hurt people.  I was on the panel for Radio 4's Any Questions on Friday night and former Blair adviser Matthew Taylor came within a whisker of admitting to me that we were at a tipping point on the debate on tax.

George Osborne writes for this morning's Mail on Sunday and promises to champion "the 'strivers' in life".  Good.  There is no big shift in policy from the Shadow Chancellor but in the article he appears to be adopting a slightly stronger tax-cutting attitude:

"As Conservatives, we want to reduce taxes over time, but I've made it clear that any immediate reforms would have to be paid for with corresponding tax increases elsewhere, so that public finances remain safe  We won't propose any changes which jeopardise the stability of the economy, or take money from important public services.  But I understand how inheritance tax is fast becoming an unfair tax on aspiration, so I want to make sure that the next Conservative Government is ready to help the millions of families striving hard to provide a better life for their children and who have had such a raw deal from this Labour Government."

Are you better off than you were four years ago?

The Centre for Policy Studies has today released a short 'Perspective paper' by Charlie Elphicke: Are you better off than you were four years ago?  PDF here.

The paper notes that the "real growth in average incomes has stagnated over the last four years (averaging just 0.5% a year), particularly when compared with income growth in the first period of Labour government (when income growth averaged 4.7% a year in real terms)."

The CPS concludes:

"Are you better off now than you were four years ago?" was the "killer question" asked by Ronald Reagan in the 1980 presidential debate. Asked today, the answer of the average UK household would be a resounding: "NO!"

I'm wondering if this theme could be a potent campaign ad for 18DoughtyStreet.com?  Stagnating disposable incomes + rising utility bills + rising cost of buying a home... It certainly fits in with the Year of the Striver theme.

Related links: Charles Elphicke on YourPlatform.

Pocket the difference with the Tories

The first campaign - against 'the Tosser' of debt - on the Tories' Sort-It website was praised by ConservativeHome but widely criticised elsewhere.  The second campaign offers advice on how to live life for 10% less.  The 'Live life for less' campaign encourages readers to 'name and shame' a cowboy tradesman (I hope the party has its lawyers on stand by) and lists a whole range of websites that offer advice on such things as cutting energy bills, locating the cheapest petrol, avoiding being ripped off by tradesman and getting the best prices on food.  The 'getting the best prices on food' link with its focus on the biggest supermarkets doesn't quite fit into the wider Tory message on encouraging shopping at local stores and farmers' markets but is part of the very welcome new year Tory campaign to understand the pressures on 'strivers'.

In an article for The Sunday Times, David Cameron lists the four forces that mean that prices are now raising faster than incomes:

• Stealth taxation: Gordon Brown's taxes are up by 81% while pay is up by just 47%.
• Utility bills: "Gas bills alone have risen by 71% since 2003 and electricity bills have nearly doubled. These rises in necessities hit the most vulnerable hardest.. The number of households who cannot pay for their heating has increased by 1m in the past three winters."
• Housing costs: "Since 1997 mortgage payments have risen by 78%, reflecting the trebling in house prices. The number of first-time buyers is falling faster here than in any other leading country."
• General inflation: "Be it in the cost of basic home maintenance such as plumbing, to last week’s rail fare increases, which mean that an open return ticket between London and Manchester now costs £219, it is unsurprising that people are feeling financially squeezed."

David Cameron concludes:

"In its complacency over the economy, the government has neglected the working people of Britain, who try to provide for themselves and their families but find it is increasingly difficult to do so. They want a party that will fight for them and keep the cost of living down. They want a party that will work with them to get their quality of life up, Today it is the Conservative party which is making sure that their voices are heard."

The Year of The Striver?

This morning's Daily Telegraph reports an excellent initiative by Michael Gove, Tory housing spokesman, that might increase the opportunities for young people to get on the housing ladder.  Mr Gove, noting that first-time buyers cannot afford to buy an average property in 93% of British towns, is suggesting encouraging a form of home ownership where young buyers would own the 'bricks and mortar' but the land would be owned by a community trust that could protect the housing stock for local people.

David Cameron has championed the young housebuyer since the beginning of his leadership but there are signs that he is also thinking more broadly of 'striver voters'.  Strivers are described in ConservativeHome's dictionary:

"When public policy goes wrong hard-working families suffer most. They are hit hardest by stealth taxes, the marriage penalty, interest rate rises and long hospital waiting lists. Gordon Brown’s means-testing maze is making a mockery of their efforts to save for their retirement."

Australia's Prime Minister John Howard has made what he calls 'battlers' a core part of his electoral coalition.  Strong policies on housing access, skills (as reported in today's FT), community safety, relief from taxation and faster access to public services will all be essential components of a Tory strategy to reach out to those aspirational voters that were so important to Mrs Thatcher's electoral success.  Mr Cameron made substantial progress in 2006 in terms of winning support from higher income and professional voters.  The challenge for 2007 is to win support among lower income voters and David Cameron's new year message suggested that he understands that.  He talked about the party becoming the champion "of working people" and he has put David Davis in charge of a commission on social mobility.

In an article for The Sunday Times, Mr Davis identified four key routes to wealth and wider success:

• Education and training;
• Working for a large firm;
• Starting your own business;
• The property ladder.

It must be hoped that the Tory leadership studies today's article by Sir Eric Anderson in The Daily Telegraph.  Sir Eric makes it clear that selective education benefits poorer pupils most.  Is it too late for the Tories to embrace this important conclusion?  Failure to do so will leave a big hole in any renewed Tory interest in the aspirational voter.