The Tories’ revolutionary schools and welfare policies are the way forward

13 October 2007

AFTER a disastrous three months, the worst is finally over for David Cameron and his Conservative Party.

But while the Tories have made some good advances, fundamental problems remain in their world view. The biggest is that they continue to accept that the vast expansion of the size of the state and of the overall tax burden under Mr Brown is here to stay. In 2000, public spending in Britain was just 37.5% of GDP, according to the OECD; by next year it will have reached 45.1%. Not only is this a huge increase which should be seen as Mr Brown’s most important economic legacy, it is also significantly higher than in Germany, where the state will account for only 44.3% of GDP next year.

A decade ago, there was a vast difference between the British, eurozone and Scandinavian tax-and-spend models; today, the difference is for all intents and purposes negligible. Public spending as a share of GDP in the eurozone remained constant at 46.2% of GDP, while in Scandinavia it was cut from 50.4% of GDP to 48.3%.

It is only thanks to the booming City, a remarkable openness to immigration and a house price and credit-fuelled consumer spending boom that Britain was able to put in a decent overall performance in recent years. With income and corporation tax rates being cut all over the world, the UK is becoming increasingly uncompetitive; trimming inheritance tax and stamp duty, as the Tories propose, while laudable policies in themselves, will do nothing to reverse this.

But for all the remaining holes in their policies, the Conservatives unveiled a set of surprisingly sophisticated policies this week. The road ahead remains difficult and the Party still faces defeat if Gordon Brown chooses to call an election next month. But the Tories have ensured that they once again deserve a hearing, at the very least; given how low expectations for the Party were just a week ago, that in itself is a major breakthrough.

Political Notebook, page 18