This is what Tim Hames writes in this morning’s Times:

"It is implied that because Alistair Darling has partially matched the Conservative proposals on inheritance tax that Labour has performed some sort of political frontal lobotomy on itself from which it will never recover. This is a fantastic interpretation of the evidence.

The Comprehensive Spending Review set out public spending of almost £580 billion in the current financial year increasing to £678 billion by 2010-11. The Opposition has not only accepted all of these totals but also every penny of each single departmental allocation. The disagreement over taxes involves £3.5 billion that the Tories would have steered towards cutting inheritance tax and easing stamp duty on first-time buyers.

This might sound like a tidy sum of money but it represents 0.68 per cent of all that will be brought in through tax and national insurance this year. The difference is yet smaller now that Mr Darling has set out his stall on death duties. Call that a “battle of ideas”? It is an insignificant squabble at the margins of a tax-and-spending debate that has been framed on the terms of the Labour Party."

Tim Hames is right.  As ConservativeHome has already noted, we won a £1bn tax cut but had already surrendered a £37bn real increase in spending.  One of the most important internal debates in the run-up to the next General Election will be whether George Osborne should repeat the pledge to match Labour’s spending for the subsequent three years.  At the moment, he has said that we will match the commitment until 2010/11.  We need to ensure that the pledge does not become 2011/12 and then 2012/13.  Tory grassroots members oppose the pledge by 64% to 24%.  There is also much unhappiness amongst Tory MPs about the spending me-tooism.

I think they do so for three good reasons:

  • Economic: The British economy wil not be competitive if our tax burden continues to grow as it falls in competitor countries.  There is a danger that all of the proceeds of growth are going to end up with the Exchequer.
  • Value for money: The waste within the public sector is huge.  Taxpayers know that they are not getting value for money.  Real spending increases may be necessary but we should be creating more room for a Conservative Chancellor to cut taxes and/ or borrowing.  We should certainly not be tying his or her hands for three years.
  • Political: The inheritance tax cut showed that there is a real appetite for politicians to cut taxes that offend the voters’ sense of what is right.  Ten years ago the benefit of the doubt was with politicians who said that the public sector was underfunded.  Today the voters are at least as likely to say that, with their disposable incomes under pressure, they deserve a refund.

Idea #1 in this series: It’s time to make it harder to remove the sitting Conservative leader

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