Finkelstein Versus Montgomerie

Daniel Finkelstein - Comment Editor at The Times - and I have emailed each other this morning about my editorial of late last night on DD's tax announcement.  Danny and I worked together at CCO when William Hague was leader (he in a much more senior position!).  This was our exchange (which he suggested I post):

DF: “Hi,
I've noticed you're v enthusiastic about DD's tax plan. I just thought I'd point out v quickly that his plan is the same, figure for figure as the one on which we fought the last election! The only difference is that he is planning to give the £8bn we preserved for borrowing out in tax cuts too. This may or may not be sensible depending on the position at the time. Cameron's view that we should "share" growth between tax cuts and spending is also, roughly  speaking, the same as davis's plan without the figure. So the argument is not on ambitiousness of plans but on whether it is  electorally sensible and economically prudent to start giving out headline tax figures four years from an election. I send you this only because your blog is magic but I think on this rare ocassion you have got carried away. Feel free to use this email as you wish.”

Tim Montgomerie: “I beg to differ Mr Comment Editor.  The economic competitiveness case for tax relief hasn't been made in a sustained way for a generation within Britain.  Few things could be more important for the future of our party and the economy.”

DF: “Fine but you are not disagreeing, you are agreeing (at least with what I've written to you so far)!

My point is that his tax plan is the same as the Tory plan at the last election. This is not a matter of argument but one of maths so you obviously wouldn't disagree with that. I then say that what we are therefore arguing about is not the size of tax cuts but its prominence in our campaigning and the use and timing of headline figures. This appears to be your point - that what is exciting is that davis is making the same policy bold and early. It's about its place in the mix, not its size.

You have however added a point in your email with which I DO disagree.  "The economic competitiveness case for tax relief hasn't been made in a sustained way for a generation". Tim, this simply isn't true. I wish it was but it simply isn't. We made this case (which is obviously correct) again and again and again and again during the whole of the 1997 Parliament. I wrote the speeches. I wrote the policy documents. I promise you we did. And, actually we made it often in the 1992 Parliament too. Do you recall the "Enterprise Centre of Europe" speech?”

TM: “On your first para - yes you may be right in Davis' case about the continuity of the tax cut size but what can we believe about DC?  It's all very vague.  My reassurance is that George [Osborne] is alongside DC on this.

On your second para - speeches are one thing - a sustained effort at public communication is very different.  We need the enlistment of third parties, better use of language, an internet campaign, touring of universities etc etc.  I would emphasise the word "sustained" in defence of my suggestion that we haven't really made this case.”

DF: “Well, this is a longer argument but....

1. I don't think it is remotely sensible (in fact it's slightly mad) to start defining the size of a tax cut now. Cameron is right to be articulating the principle without going further. You call this "vague". I tghink it is merely sane.

2. Tax cuts and radical public sector reform are not, as traditionally argued by Tories, essential companions but actually, in the first parliament, contradictory. Reform will cost money in the first five years.

3. It may be that the right priority for an incoming tory government will be a big tax cut to lift growth. It may not be. It may be better to offer a reform programme with a more nuanced offer on taxes. And we must must must make sure the Tory agenda addresses the issues on people's minds. The right thing is to develop the arguments without putting a figure on it.

4. So the more I think about it the worst Davis's gambit seems to me to be.

5. I am sure that really you agree!

6. If Davis thought he would win he would never have done this which boxes everything in for the next four years.

Tim, I am going out for a couple of hours now. If you want to use our exchange on your blog plse go ahead."

***

I am open to the idea that Danny is right on his final point (3): "It may be that the right priority for an incoming tory government will be a big tax cut to lift growth. It may not be. It may be better to offer a reform programme with a more nuanced offer on taxes. And we must must must make sure the Tory agenda addresses the issues on people's minds. The right thing is to develop the arguments without putting a figure on it."  I am still inclined to think, however, that the intent to cut taxes is more credible with real numbers than without.

Comments

[michael]

What else could Davis do? Cameron's talent is to paint the big picture. He's a politician who knows how to do the vision thing.

The only way to attack, for those on this site who oppose Cameron, has been to shout where's the substance?

Without the charisma or charm, Davis has to define himself in response to DC. The only option being to give detail and lots of it.

Where Cameron has sought to paint big pictures, Davis is busy painting himself into a corner.

[buxtehude]

It may well by that DF is right that the case was made - but it wasn't heard. The case on EU and immigration WAS heard. So it may be that DF's speech-writing was sustained and excellent, but the party didn't sell the message, and hasn't, properly, for years. We have let 'tax cuts' become a question of greed. We have let the 'tax cuts v public services' argument win. Even now you don't hear many Conservatives arguing that tax cuts create growth - the debate it always about whether it is an effective or ineffective campaigning strategy (ie bribe).

On another post, I asked about Oliver Letwin. OL is much-admired across the party, is is strongly behind the Cameron camp and will be a trusted eminence (rightly) under a Cameron regime. OL clearly now recoils from the idea of tax cuts (though I dare say he would still argue intelligently about the theoretical case for them, one day). I want to know: where is the insticntive response from DC: enthusiasm or anxiety about a low-tax commitment? DF cannot expect us to have blind faith in Cameron as someone to be trusted on this and other vital issues. I don't want to vote for the guy and find out later that my vote was taken as an endorsement for:

1) Ditching a lower-tax commitment in favour of a modest 'aspiration'

2) Focus-group-led policy development to 'win at all costs' (which backfires for the country, if not for the personal ambition of politicians)

3) Anti-democratic 'A' list candidate selection, passing all control to the soho politburo

Cameron really does need to be explicit if he wants to avoid disappointing an awful lot of Tories in the future (who could then be out to 'get him back', with a whole new chapter of splits).

[Wat Tyler]

Obviously I hesitate to trade numbers with Fink, but DD's headline figure is £38bn for 2014-15. The manifesto figure was £12bn for 2007-08. So how do the two stack up? After all the £12bn came from the James Report efficency savings, whereas the £38 bn comes from the Growth Rule. Any equation must be coincidental.

True, public spending is ballpark £500bn, so 1% (ie the Growth Rule) implies a saving of c £5bn pa cumulative. Thus with 2007-08 2 years into a Parliament, the Rule would have yielded 2x£5bn= c£12bn. But is that relevant?

And as for the "boxing in" point, that's the whole point. This is a Rule- just like Gordo's Golden Rules. It's designed to limit the discretion of egregious politicos because, well, frankly they can't be trusted with our money.

[Lower Taxes, Higher Votes]

Pro-Cameron messages so far on this issue have been either:
(a) there's no difference between the two candidates - Cameron wants to cut taxes too, he just hasn't quite used the same language;
(b) Davis is mad to make a specific pledge on tax [ADD HERE any other policy issue you care to mention] this early on.

Which is true? Answer on no more than one side of the paper, please.

If we are going to make the moral case for lower taxation, then we need to start early and make it clearly. There is no time for MH/WH style policy shifts in response to the latest unfavourable headlines.

we are electing a leader not endorsing the 2009 manifesto.

a) is about direction
b) is about detail

[Jonathan Sheppard]

So are we heading in the DIRECTION of less taxes than we would face under Gordon Brown, or more?

[Jack Stone]

The present election is not about detail. Its about a vision and an ability to get the party back into power.

[Haymarket]

Dear Mr Editor,
what's happened to Good Week, Bad Week?

[buxtehude]

"we are electing a leader not endorsing the 2009 manifesto.

a) is about direction
b) is about detail"

Unsigned posts should be ignored, but this has to be countered. What exactly is 'direction'? How can the difference between a commitment to lower tax (DD) and 'never again go into an election promising lower tax' (Letwin and other DC supporters) be mere 'detail'? What, in that case is NOT detail? Is it 'detail' whether we try to imitate Blair or not? Or is that direction?

How do you dare to assume we are such pathetic crawling envelope-stuffers who must bow down before the 'direction' of DC vaguely heaven-wards?

[buxtehude]

And, Jack Stone, what is "a vision and an ability to get the party back into power" if we are not to discover the true nature of the future leader? Do you consider a political party to exist merely to make sure that people with the label "Conservative" get more seats than people with the label "Labour"? Or does "Conservative" have to mean something besides ambition for power? What exactly do you think politics is for? Betting on the winner?

direction = getting to number 10
detail = what he does when he gets there
Is that your view of democracy? Are you really so desperate for your 'team' to win?

Jonathan, that's up to Gordon Brown.

But both Davids want to see lower taxation.

[Oberon Houston]

Well there’s a couple of observations that can be made. Firstly, whilst tax is always an area of interest for the Conservatives, given the backdrop of a Labour Government; we must learn the lessons of previous election defeats. The public at large are suspicious of our taxation policy, and it will not take much to frighten them enough to avoid putting an ‘X’ next to a Conservative candidate. Labour know this intimately, and the £35bn tax bombshell advert was just the nudge many needed to avoid a Conservative vote.

Secondly we must not confuse what we would like to see done with what would need to be done to attract floating voters. Its easy to fall into the trap of believing what you want to believe. Daniel is correct in counselling caution against falling into the same trap that has caught us many times, but Tim has a good point in that, as time goes on, the message is getting a better reception.

Cameron seems to be playing a more carefully considered game that Davis, mentioning tax cuts, but against a background of caution. David Davis however fully realises that the next election is not a General Election, but one where the electorate are Conservative Members. The risk he takes is that many members are much more sensitive to public mood than they once were and will not be so easily attracted by ‘conventional’ Conservative policy given its very poor reception with the public in recent elections.

[Henry Cook]

"Obviously I hesitate to trade numbers with Fink, but DD's headline figure is £38bn for 2014-15. The manifesto figure was £12bn for 2007-08. So how do the two stack up? After all the £12bn came from the James Report efficency savings, whereas the £38 bn comes from the Growth Rule. Any equation must be coincidental."

The figure which is the same (I think) is the 40% figure. The £12 billion cut will rise to a figure of £38 billion by 2014-5 because of economic growth. Therefore Fink is right that this is more or less a rehash of the Letwin plan, projected far into the future when we have no idea what the economic situation will be. As much as we may want 'real numbers', it is irresponsible to give them.

[Lower Taxes, Higher Votes]

Oberon - is that a "Cameron agrees with Davis" or "Cameron disagrees with Davis"?

Having trouble assembling the focus group?

[michael]

buxtehude, I want to be part of policy development, the detail. If Davis is setting out rules and figures, then the Party wont have a role to play in developing those detailed policies.

[Oberon Houston]

Correct. Laying down a commitment to tax cuts way out in the future is not a responsible statement to make for one who also claims to want to protect services. If growth is below that required , then spending cuts will have to be introduced to make good on the promise. Its inconceivable that we would win an election on this footing given the current political climate.

[Oberon Houston]

Sorry, posts are coming in quickly now. "Lower Taxes, Higher Votes" (is that a stage name?)

Anyway, in response to your question, both candidates agree that high taxes are bad for the Country. Difference's exist between all politicians in the lies in the balance of one agains the other.

[Lower Taxes, Higher Votes]

Now I understand. The Cameron Gang have developed the world's first post-modern economic policy:
(a) Oliver Letwin tells us that only an idiot would run an election campaign involving the promise of tax cuts, because the last time it was tried (by, er, Oliver Letwin) it didn't work;

(b) George Osborne tells us he wants a flat tax, but of course it's irresponsible to give out detail like that this early in the parliament, so presumably they're going to campaign on the basis of a flat-tax-with-bumps-in-it;

(c) David Cameron will concentrate on the big picture vision and cunningly avoid explaining which side he's on.

Winner!

[Editor]

Haymarket: Rightly or wrongly I stopped GWBW after the parliamentary round.

[Oberon Houston]

"Higher Taxis fares, Shorter queues", specifically, what would you like to do?

[Daniel Vince-Archer]

"David Cameron will concentrate on the big picture vision and cunningly avoid explaining which side he's on."

Now I wonder who the inspiration was for this novel approach? (Clue: his surname is Blair, first names Anthony Charles Lynton.)

As any good artist will tell you, a big picture with no detail or focus is just a blur of pretty colours with no meaning.

[wasp]

The point still remains that Davis is an idiot if he thinks he can make promises for 4 years time now.

I don't believe these figures because we don't know what is going to happen between now & 2010.

If I don't believe them how on earth can we expect to win with them.

[Editor]

We do know (for sure) Wasp that the next few years will see more and more competition from emerging economies in the Far East and Central Europe. If we stay on Gordon Brown's hi-tax path Britain will lose jobs and businesses to those competitor economies. DD seems determined to do something about that. I honestly don't know what DC plans to do...

[James Maskell]

Im expecting a recession in the next 5 years. The economy is slowing down and eventually the economy will halt. Id rather it didnt happen because Britain needs a strong economy, but the fact is that the economy is winding down.

[Editor]

Bush cut the tax burden when the economy was weak in order to restart it. That's the attitude of a politician who sees tax as an economic weapon.

A politician who sees tax narrowly as a budgetary tool would raise taxes - exacerbating the economic situation.

Britain has a level of debt that stands international comparison at the moment. We could afford short-term budget deterioration for a medium-term gain in economic performance.