Interviewed for the Today programme at 8.10am Shadow Chancellor George Osborne gave a broad welcome to the report on economic competitiveness that will be formally launched later today by its co-chairmen, John Redwood MP and Next’s Simon Wolfson. Mr Redwood sets out the ambitions of his report in an article for today’s ConservativeHome. Mr Osborne has ruled out any immediate acceptance of the Redwood-Wolfson recommendations on abolishing inheritance tax on the main family home and on other tax cut suggestions which would see corporation tax cut to 25p and stamp duty on shares abolished.
Mr Osborne said that he liked the overall look of the report but that he would now need time to consider its detailed recommendations. He said that his two basic approaches to economic policy remained the same:
(1) Tax was only part of economic policy. The quality of transport infrastructure, the levels of skills and Britain’s planning rules were other important determinants of Britain’s competitiveness and the Redwood report had useful ideas on these topics.
(2) No risks would be taken with Britain’s economic stability and all tax cuts would have to be funded from the proceeds of growth. The Shadow Chancellor told Today that he was not a pure ‘supply-sider’. He said that tax cuts had, in the past, paid for for themselves by generating extra revenue but he was not willing to ‘punt’ that they would.
Mr Osborne said that he nonetheless believed that low tax economies such as Ireland were generally higher growth economies and he would hope to be a tax-cutting Chancellor. He said that lower business taxes were particularly important and hoped to be able to pledge lower rates of corporation tax that would be paid for by possible simplifications of the tax system that were being drawn up by Price Waterhouse Coopers.
On IHT the Shadow Chancellor acknowledged that it was a very unpopular tax but he would not commit to its elimination now. He said that raising the threshold or reducing the rate of inheritance tax would also be options that a future Conservative government might enact.
Mr Osborne said that this report was not a move away from the kinder Conservatism of recent months. It had to be seen in the context of Iain Duncan Smith’s earlier report on social justice, he said, and the forthcoming Gummer-Goldsmith report on quality of life issues.
Not for the first time there has been confusion over Tory tax plans. Some newspapers such as the Daily Mail (above) and yesterday’s Evening Standard have appeared to think that the Tories would embrace the call to scrap inheritance tax for the main family home. Other newspapers, like The Times, appear to have heard George Osborne’s caution.