Must-read article by Lord (Michael) Forsyth in The Daily Telegraph.  Here are the money quotes with our commentary:

  • "The priority must be to contain public expenditure and cut taxes, particularly for the poorest."  Yes, tax cuts must be on the agenda but, in the spirit of compassionate conservatism, they must be targeted on low income workers and those on fixed incomes. That means council tax relief and/ or a higher basic threshold for the payment of income tax.
  • ""Sharing the proceeds of growth" may have been a slick slogan during the boom years, but it is hopelessly ill-suited to the conditions we now face. The mantra for the public sector must be "sharing the pain"." Simon Chapman got their first but, yes, it’s only fair that the public sector faces some of the same restraints threatening to overwhelm private businesses and families.
  • "George Osborne should be applauded for this week signalling a change in approach by acknowledging that government spending plans are unaffordable." Yes Mr O made the call, but our understanding is that the lion’s share of credit must go to David Cameron. Our sources – for last Sunday’s ConHome exclusivesay that it was the Tory leader who made the running on this policy shift.  Since observing the potency of the low tax message in May’s local election results Mr Cameron has been something of a convert to the more hawkish view on tax.
  • "What is needed is an urgent reallocation of resources from unproductive Labour public spending on expensive and wasteful quangos to the productive parts of the economy. With businesses relocating abroad to escape tax and regulation, would the £2.7 billion the taxpayer spends on Regional Development Agencies not be better deployed cutting corporation tax?" The TPA made the RDA proposal some weeks ago. We’d also recommend a ‘flexible freeze’ in public sector recruitment – the proceeds of which should be shared between economy-boosting tax relief and emergency support for the armed forces.

But here’s the big quote from Lord Forsyth’s piece:

"Brown may be preparing to raise taxes on the middle classes yet again. In a little-noticed move just before the summer recess, the Treasury sneaked through an amendment to the National Insurance Bill removing the restriction on raising the upper earnings limit for employee NI contributions – a ruse that would enable the Chancellor to increase tax and national insurance on those earning more than £40,000 from 41 per cent to 51 per cent by order."

It certainly wasn’t noticed at all by us.  We need some journalists to ask Mr Darling to rule out use of this new tax-raising power (we are going to forward the quote to three of them).  If he doesn’t we need a campaign from our frontbench warning people of the Chancellor’s secret plan.

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