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« | Main | The Sun Says: Carry on, Dr Fox »


Samuel Coates

It'd be very helpful to our image to break out of the "tax cuts = spending cuts = pure evil" frame!
The way Ed sets out the contest I do wonder if Clarkes electoral advantage would be worth it.

James Hellyer

Ken Clarke is right. It pains me to say that, but it is true.

We cannot cut taxes without controlling spending first. At the last election we promised "tax cuts" and offered efficiency savings as a means of funding them. The problem was that if these cuts couldbe realised, it would take years to realise them. As a result, we were proposeing to cut taxes and fund expenditure by borrowing (one cause of tbe Lawson boom and bust).

James Hellyer

"Mr Clarke believes that spending restraint must precede any tax cuts. Mr Davis believes that tax cuts are essential to incentivise the kind of growing economy which supports increased public spending."

If you cut taxes *now* the economy may grow in the *future*. This does not fund expenditure now. Reduced tax income would lead to a shortfall, that would have to be financed by borrowing.

Clarke's position is a necessary precursor to the one articulated by Davis.


I fear your man Dr Fox may not agree with you on this one James.

Today's Independent says: "Dr Fox said tax cuts were "one of the elements of a prosperity agenda". He said the party needed to "make the case for lower taxes in the first half of a parliament, before we come to specific measures in the second.""

Spending restraint is important - no candidate disagrees on that. The danger is that if we wait until spending is under control and don't unleash the incentives effects of lower taxation until near the end of a parliament that's three/ four years of extra growth foregone.

We need to make the case that cuts in certains forms of taxation will not endanger revenues (perhaps - quite the reverse) but are essential for the protection of British jobs and competitiveness.

It isn't an argument we have made - as a party - for a long time but Davis, Fox and Osborne all seem to appreciate that we must begin to.

Selsdon Man

A future Conservative government will need to deal with the pensions crisis (that will lead to a higher welfare burden) and increasing health and care bills for the elderly. It will also be locked into huge PPP bills and will need to deal with Network Rail's huge debts.

Cutting certain taxes will raise revenues and that is where we should focus our attention. The James Review only scratched the surface. It will take a tough government to deal with Brown's army bureaucrats - and that includes local government too.

James Hellyer

A government has spending commitments in the present. Tax cuts have the effect of reducing current tax income, even if in the longer term they will increase revenues through economic growth and fewer cases of evasion.

Unless proposed cuts are matched with controlled or reduced expenditure, then they will have to be financed through borrowing. That's a gamble on future revenues being as predicted.

We need to make the case for lower taxation, but any claim that taxes can be cut without either borrowing in the short term, or spending cuts, will fail to convince the electorate.


I thought Clarkes honesty was extremely refreshing and I hope his speech re Gordon Brown recieves wide publicity.
What was equally gratifying was the Treasurys pathetic response.Has Brown lost his confidence?

Selsdon Man

We need to look at corporate as well as personal taxation. Countries in Eastern Europe, e.g. Estonia, have low corporate taxes as well flat taxes. Tax competition will increase dramatically over the next few years - to the dismay of the EUrocrats.

Companies will relocate. The Baltics have a large mobile and furniture industry - Swedish firms that found home too expensive.

We will have no option but to tackle our over-bloated and expensive government and reduce taxes across the board. If we do so, we could attract firms in western Europe with high taxes, notably France.

The next Conservative government will need to cut non-essential expenditure to fund the extra costs that I set out above and the tax cuts to make us competitive. That will require Ministers with hands-on experience. There will be no time to learn on the job.

Selsdon Man

Both Labour and the Lib Dems have been rattled by Ken Clarke's huge impact, especially in this week's polls. Gordon Brown seems to be a worried man, especially as Ken's attack was so personal and on the mark.

Simon C

"We need to make the case for lower taxation, but any claim that taxes can be cut without either borrowing in the short term, or spending cuts, will fail to convince the electorate."

Isn't this where David Willett's idea of reducing the damand for the state - of which healing the Broken Society would be a part - comes in?

Michael McGowan

I find it disappointing that none of the candidates seem able to address taxation in the broader context of what it will take to turn Britain into a high-skill high-growth economy. It is emphatically not that kind of economy now, notwithstanding spiralling public expenditure bills and a spiralling public payroll. It is also obvious that Gordon Brown and the hugely overrated Ed Balls haven't got a clue about how to make it so. Either our politicians do something about this now....or we will have very uncomfortable structural changes forced on us, quite rightly, by emerging economic giants such as India and China, not to mention the Baltic States.


Yes, Simon.

Conservatives should show that reducing the size of the state (and the public expenditure burden on the economy) cannot be about a precipitate reduction in the supply of government services but must be sequenced in response to a long-term programme of social reform. That social reform will include family strengthening (two parent families need an average £100,000 less from the taxpayer over a sixteen year childhood than lone parent families) and zero tolerance of crime and drugs. Crime places a huge burden on the Exchequer and drug abusers are not effective citizens.

Social and public service reform are the medium to long-term keys to a smaller state.

Simplication of all taxation and reductions in business taxation (thank you Selsdon Man) are the interim means to maintaining revenues and boosting the economy.

Simon C

"I find it disappointing that none of the candidates seem able to address taxation in the broader context of what it will take to turn Britain into a high-skill high-growth economy."

Is that going to mean a flat tax Michael? Or at least a flatter and much simpler system. George Osborne is looking carefully at this. He's not a candidate, but he is pointing the way forward.

Fox hasn't said much on the economy yet - although he has pointed out the competitive threat from India & China on an number of occasions. I haven't read what DD or KC said yesterday in their offerings on the economy - any clues as to their stance?

Selsdon Man

In moving towards a flat tax, it is politically necessary to minimise the number`of people who will be worse off. It will take time to unravel Gordon Brown's complicated system. We will need a programme of simplification that could take a few years to achieve. George Osborne's approach is right.

Simon C

Further to my last, I have now read the Editor's excellent summaries at the top of the Blog.

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