Yesterday’s ToryDiary reported the outline of George Osborne’s welcome statement on the need for the Tories to control Labour’s spending. The Daily Mail writes of "the prospect of large tax cuts" if the Conservatives are elected and choose to "put an end to Labour’s "tax and spend" economics." Leader-writers at The Telegraph also welcome George Osborne’s statement:
"The Conservatives now seem ready to acknowledge, however tentatively, that Labour has provided voters with an education in the futility of throwing more and more money at unreformed, centrally run services. In his speech to the CBI yesterday, the shadow chancellor, George Osborne, repeated what has become the familiar vow to make economic stability his chief priority in government, but on this occasion he laid as much emphasis on restraining spending as he did on his usual insistence on not promising "upfront" tax cuts. Mr Osborne’s favourite mantra, that the Conservatives will "share the proceeds of growth between public spending and tax cuts", still appears to fly in the face of economic logic – since lower taxes actually produce economic growth. But the fact that he is now embracing the idea that higher spending is not necessarily an unalloyed good is very welcome."
Research carried out last October by the accountants Grant Thornton – and published at the time in The Business – suggests that £21bn of tax cuts would be possible if George Osborne shared the proceeds of growth in a 1:2 ratio between lower taxation and higher spending. Grant Thornton assumed economic growth of 2.25%. Supply-siders would say, of course, that the long-term growth rate would increase if tax relief was focused on the productive side of the economy and therefore boost the proceeds of growth.
Peter Riddell in The Times sees George Osborne’s statement on the control of spending announcements as an acknowledgement by the Tories that they need to display the same resolution that won Gordon Brown so much respect before the 1997 General Election.