Britain is in the middle of the deepest slump in our modern history. What can be done? The best idea we seem to have is one which Danny Alexander drew up on the back of an envelope. When advising Nick Clegg, the now Chief Secretary to the Treasury came up with the idea that no one paid below £10,000 a year should pay income tax. His short-lived predecessor, David Laws, reprised the idea this week, calling for the policy to be financed by cutting higher-rate tax relief on pensions. The Liberal Democrats are rightly exploiting one of the more worrying gaps in British politics: the vacuum where a Tory growth agenda ought to be.
George Osborne performs many roles in the government. He is the chief strategist and the arch-fixer. But he has yet to demonstrate a knack for effective economic policy. Britain’s national debt, now at the £1 trillion mark, will hit £1.4 trillion within three years, and the growth prospects are evaporating.
We at least know what the Lib Dems propose: a £7 billion tax cut, funded by a pensions raid. As they know, Mr Osborne can hardly feign outrage about stealing pensions. His Quantitative Easing experiment has so far reduced the value of British pension funds by a staggering £119 billion, according to industry estimates. This QE pensions raid may end up being as costly as Gordon Brown’s much-reviled assault on retirement schemes.
The Chancellor often points to his slow-motion corporation tax cut, from today’s 26 per cent to 23 per cent. But that has been accompanied by a raising of other business taxes. The Centre for Policy Studies recently laid out a proposal for an immediate cut in corporation tax to 20 per cent — but the idea has aroused little interest from the Treasury. The Centre for Social Justice suggests a cheaper tax break on marriage. But neither No. 10 nor the Treasury has any intention of developing such ideas.
The Lib Dems have the only tax-cutting game in town, and the Conservatives ought to join it. Nick Clegg says the proposed tax cut would save the average worker £60 a month. It would also create tens of thousands of jobs by coaxing people off the dole. Moreover, the lower income tax cut could go a long way towards paying for itself in lower welfare bills and higher VAT receipts.
But let us accept that the idea of a self-financing tax cut will not be accepted, and that the £7 billion cost of the Lib Dem proposal must come from somewhere. Conservatives should suggest that, rather than yet another raid on pension funds, greater savings are found in government spending. This week it emerged that the government machine has spent £9 billion less than anticipated, without closing any schools or hospitals. If it can save this much, almost by accident, how much more could be done?
There was a time when raising the tax threshold was a Tory idea, the highlight of Michael Forsyth’s 2006 tax review. Only the most partisan Tory would argue that it is now a bad idea simply because it is being proposed by a Lib Dem. Tory MPs should urge Osborne to back Alexander’s proposal, on condition that it is funded by more ambitious savings in state spending. This ought to be a textbook coalition compromise, and the centrepiece of next month’s Budget.
Our woman in Homs
Truth in war cannot be ascertained from a distance. In Syria, for instance, it is all but impossible to tell whether the President has embarked on a massacre of innocents in the city of Homs, or is battling an Islamist insurgency. It was typical of Marie Colvin that she went into what has become the most dangerous city on earth to try to find out which.
In her final report she confirmed that there were no military targets in the city, and that the Syrian government was ‘shelling cold, starving civilians’. On Wednesday morning she herself became a casualty of the violence when she was killed by a rocket, along with a French photographer, Remi Ochlik.
Ms Colvin was a veteran reporter, and had covered many wars. She lost an eye to a grenade in Sri Lanka. At the time of her death she was the only correspondent in Homs. She knew she was risking her life. A few years ago she gave a speech about her trade, which perhaps is her best epitaph:
‘Our mission is to report these horrors of war with accuracy and without prejudice. We always have to ask ourselves whether the level of risk is worth the story. What is bravery, and what is bravado? Journalists covering combat shoulder great responsibilities and face difficult choices. Sometimes they pay the ultimate price.’
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