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Monday 7 July 2008

The Tories should not let their caution on tax conceal the radicalism of their other policies

James Forsyth reviews the week in politics

It should be noted that there are also economic arguments against any commitment to upfront tax cuts; although the case for the current position is normally made primarily on political grounds in private. It is only creative accounting which enables the government to claim that national debt does not already exceed 40 per cent of national income. Indeed, by the Maastricht criteria it is already over 43 per cent and heading north at an alarming rate. In these circumstances, increasing government borrowing even as a short-term measure would be reckless.

There is also the distinctly dicey economic situation to be considered which could see both growth and tax revenues fall drastically in the next few years. Meanwhile, the Tories are committed to above-inflation increases in both education and health spending — a necessary political insurance scheme against Brown depicting the Tories as a threat to schools and hospitals — and a failure to increase defence spending would both mark the Tories out as unserious about Britain’s role in the world and make them complicit in a breach of the military covenant. There is also the commitment to increase development aid to 0.7 per cent of GDP which the Tories have pledged to meet. Like Alistair Darling last week, Osborne will have little to work with.

To those who want tax cuts all this is deeply unsatisfactory. They say that it is, in more than one way, balls for Cameron to decry in his Budget response the ‘highest tax burden in our history’ but then not to propose to do anything about it until 2014 at the earliest. To them, it is equivalent to handing Brownism a second term regardless of the election result. They look at Cameron and say ‘so weak’.

The same poll that showed the Tories 16 points ahead offered apparent support for the cutters’ argument. Two thirds of the public favour the government taxing and spending less while 60 per cent think that taxes could be cut without harming public services. The cutters take this as evidence that a guaranteed tax cut would rally the faithful, give those who don’t vote a reason to turn out and reach the parts of the country that other Cameroon policies do not.

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