In today’s Independent Steve Richards writes this:
"I am addicted to the ConservativeHome website where there is a similar campaign for tax and spending cuts. But I have yet to read tax proposals that differ greatly from those put forward at the last election when the party won fewer seats than Michael Foot managed for Labour in 1983."
We love Mr Richards’ column, too, but have to disagree with his idea that we lost the last election because of our tax cuts policy. We’ve discussed this issue before but here are ten rebuttals of the argument that tax cuts didn’t work last time and shouldn’t be part of our pitch at the next election:
- Oliver Letwin’s uncertain trumpet: At the Tory Conference before the last General election Oliver Letwin, then our Shadow Chancellor, was telling people that tax cut promises wouldn’t be believed. "Letwin: believe me, no tax cuts" was The Guardian’s headline at the time.
- Oliver Letwin’s last minute announcement: Hoping that voters might forget his Tory Conference hesitancy Oliver Letwin and his then number two, George Osborne, did make tax cut promises in the weeks before the 2005 General Election but as campaigns guru Lynton Crosby warned: You cannot fatten a pig on market day.
- Oliver Letwin’s timid promise: The tax cuts that were promised only amounted to £4bn. Such a small promise was meant to be believable but it was hardly the sort of thing that could excite voters. [This ‘make small promises so we are believable’ notion is a much bigger tactical problem that we’ll be examining properly idc].
- Labour’s spend, spend, spend experiment has reached the end of the road: In 1997 voters were willing to buy the Brown-Blair argument that extra spending on the public services was necessary. Polling by the TaxPayers’ Alliance proves that that willingness has been massively eroded. 53% think that more than £20 of every £100 that government spends is wasted. 65% believe that the extra money spent by government on public services since 1997 has generally been spent badly. Where an anti-waste argument was once difficult to sell, it’s now in tune with voters. 66% agreed that the nation "could lower taxes without having to cut spending on vital services… if Britain reformed public services and cut waste".
- Voters can’t afford any more taxation: Voters may have been willing to pay extra taxes when economic growth was strong and their take home pay was still higher after Gordon Brown had taken a larger share of their income. But that’s not true anymore. Charlie Elphicke for the Centre for Policy Studies has documented today’s serious squeeze on disposable incomes. Even Labour MPs are admitting that voters are at the limits on tax.
- The economy needs lower taxation: Many of our economic competitors are cutting tax rates – particularly on business. Over-taxed Britain is sliding down the league table of global competitiveness. At recent elections – with UK plc doing reasonably well – voters may not have been open to the case for economy-boosting tax relief. That’s not the situation today.
- George Osborne’s inheritance tax cut proved that cutting hated taxes can be very popular: George Osborne was made The Spectator’s politician of the year for what Fraser Nelson, the magazine’s Political Editor, believed was "the single most effective policy ever announced by the Conservatives in Opposition". The inheritance tax cut showed that a tax cut was most likely to be successful when it was presented ethically. Voters thought that there was something wrong about inheritance tax. They think the same about many other taxes – notably council tax. At the next election we need to make the moral case for lower taxation (as Alex Deane has argued).
- Tax cuts are not a silver bullet but they should be part of the mix: We wouldn’t argue that lower taxation is a magic bullet. This website has consistently argued for a more balanced conservatism (‘the politics of and’). The last Tory campaign was too much about immigration and we criticised it at the time. We asked for a greener, gentler conservatism to sit alongside more familiar themes. We have warmly welcomed David Cameron’s ‘progressive conservatism’ and all the work of Iain Duncan Smith. But should lower taxation be part of this new Tory mix? Absolutely yes.
- David Cameron is a better salesman than Michael Howard: Another difference between the next election and the last is that we have a more attractive leader and Labour has a worse leader. Some of the über-modernisers underestimate the extent to which David Cameron can sell more traditional policies – on tax, crime and immigration – to middle class voters.
- We are in a different place than America: The latest argument of the Tory opponents of lower taxation is that American conservatives are retreating from using tax as a key electoral weapon. See Daniel Finkelstein here. Danny is right in the US context. To a significant extent tax (and crime and welfare) has been retired as an electoral issue but that’s only because of many years of conservative activism on those issues. Britain is in a very different place. We’ve had more than a decade of Labour’s high taxation. Britain and America are not in the same electoral cycles.