James Forsyth

Trouble on the horizon | 18 August 2010

Trouble on the horizon | 18 August 2010
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100 days in, a danger emerging for the coalition: the idea that it is balancing the budget on the backs of the middle class. The Daily Mail front page today warns in apocalyptic font of a ‘Bonfire of the middle class benefits’ while the Times says ‘Families to lose out in bonfire of the benefits.’


The problem for the coalition is that because it is committed to protecting the poorest and the most vulnerable, the cuts will have to be concentrated further up the income scale. This means that a lot of will what go in the cuts are the middle class bits of the welfare state. To compound the problem — and as as Paul Goodman notes - many of the coalition’s tax rises will worry the middle class. The necessity of keeping the Lib Dems happy, means that the Tories haven’t pointed out how much raising the income tax threshold to £10,000 actually helps the middle class by reducing the amount of tax that people who earn many times have to pay.


Adding to the danger of this narrative for the Tories is the idea that Cameron and Osborne are too rich to understand the challenges facing the middle class. The Mail is, as Stephen Glover’s piece the other day showed, sympathetic to this line.


Much ink has been spilled on how the coalition will deal with the 50p tax rate. But equally important for the Tories is how they deal with the 40p problem, the fact that fiscal drag means twice as many people are paying it now as did in 1997. Addressing that problem before 2015 strikes me as more politically important for the Tories than dealing with 50p tax.