DD will today announce plans to cut tax by the equivalent of £1,200 a year for the average family. A DD-led Conservative Government would do this by reducing public spending to 40 per cent of national output – the figure recommended by Ken Clarke at the recent party conference.
You’ll be able to read about DD’s plans in detail elsewhere. I want, in writing about them, to contribute again to the debate taking place on this website about tax, spending, and the leadership election – because it is demonstrating a clear difference between the two candidates. I believe that this difference offers members compelling reasons to vote for DD.
Let me start by arguing again that tax and spending won’t be the only issues at stake in the general election of 2009. Healing what Liam Fox has called “the broken society” will be no less important: it’s the great challenge of our times.
But tax and spending will nonetheless be a vital part of that election. And how much government takes from the people in tax, and how it spends the money it raises, makes a big difference to whether the broken society is healed or harmed. All conservative contributors to this site will surely agree that high taxes and bad spending are bad for the country, and that that lower taxes and wise spending are good for it.
We will all agree, too, that the programme of lower spending and tax cuts that we proposed at the last election didn’t work. But after this agreement, the disagreements begin. Some contributors say that our programme didn’t work because voters don’t want lower spending or tax cuts. Others say that that it didn’t work because it wasn’t championed with conviction, and didn’t go far enough.
David Cameron seems to lean towards the first school of thought. Needless to say, a Cameron Government, being Conservative, would tax less than a Blair or Brown Government. David wants fairly “to share the fruits of economic growth between lower taxes and strengthened public services”. This implies some tax cuts under a Cameron government – or no tax rises at least.
DD definitely leans towards the second school of thought. During the 1997-2001 Parliament, the leadership started by moving to the left, and ended by moving to the right. The last Parliament, with its change of leadership, saw similar zig-zagging. DD wants, as I’m sure David Cameron does, to make a consistent pitch to the voters during the run-up to 2009.
The difference between them lies in the nature of that pitch. David Cameron seems to be what the Editor would call a same-size pie man. He wants to take “the fruits of growth”, and distribute them more evenly between tax cuts and spending increases. Slowing the growth in spending, so that taxes can be cut, and economic growth sped up, doesn’t seem to be part of his policy programme at present.
DD is what the Editor would call a bigger pie man. He wants to cut taxes to grow the economy. Yes, this means a slower rise in spending. No, that doesn’t mean cuts – because a slower rise isn’t a cut. And remember, if Gordon Brown doesn’t do what DD is recommending (or something very like it) he will have to put taxes up again before 2009.
Let’s now turn from economics to politics. The differences between the two Davids on tax-and-spend remind me, in a more courtly way, of the differences between the “wets” and the “dries” during the Thatcher era. The “wets” believed that Margaret Thatcher’s programme of slower spending and income tax cuts would lose the party the electoral “middle ground”. The “dries” believed that high spending and taxation was damaging the economy and society, and that both should be reduced.
The echoes of these long-dead disputes can be heard in the present contest: David Cameron tilts towards the wetter end of the spectrum, David Davis the drier. But though the disputes themselves are dead, the issues which they raised are not. What’s the party’s view of the size of the state? Do we think that it doesn’t matter, or do we believe that Labour’s present levels of tax and spend damage society and the economy? Do we want to accept Gordon Brown’s agenda or challenge it? Whatever your view, these questions will be just as pressing in 2009 as in 1979.
For what it’s worth, my view in the 1980s was towards the wetter end of the spectrum. I was wrong. Margaret Thatcher reined in spending, reduced direct taxes – and made Britain a better place. She had the resilience and determination “not to turn”. The world in 2009 will be a very different place from the world of 1979. But the party will need a leader with the same determination to reduce taxes and rein in spending if Britain is to be made better once again. And making Britain better, not just winning elections, should always be the party’s lodestar.