Big cuts in public spending are going to be necessary to restore order to Britain’s public finances (and to avoid large tax increases). It is politically essential that Cameron-Osborne show that they aren’t just prepared to cut things that hurt others but that they are prepared to cut things that will be seen to be uncomfortable for Conservatives too – either personally or politically. Three such candidates for cuts are floated below:
(1) Abandon the inheritance tax pledge
Within today’s leading article critical of Tory economic policy, the FT urges David Cameron and George Osborne to abandon their 2007 commitment to abolish inheritance tax for all but millionaires:
"Their proposal to cut inheritance tax should, in particular, be abandoned. This policy was a tactical masterstroke when announced in 2007. It is also inexpensive. But slashing the duties owed by millionaires on unearned income will make it politically harder to sell the severe and unpleasant structural tightening for which – if they are a successful administration – they would be remembered."
Responding to a recent question from Jonathan Isaby the Tory leader said that he would NOT abandon the pledge. The calculation at the top of the party is that the now cheaper pledge would be too difficult to unwind – certainly in respect of the political aggravation that it would cause. But is cutting inheritance tax the right thing to do in such changed economic circumstances?
(2) Don’t renew Trident
Michael Portillo has already made this case:
"The money that Brown intends to spend on renewal could be diverted instead to aircraft carriers, cruise missiles and unmanned aircraft, all of which have awesome destructive power and almost certainly will get used. It is to be hoped that the Conservatives are thinking the issue through. For that matter a different US administration might also believe that Britain would be a more useful ally if it spent less on Trident but could unleash more explosive and fly more missions in the next regional war than it did against Iraq."
By not renewing Trident the Conservatives could both strengthen conventional firepower and still have some change left over for reducing government debt.
(3) Scrap National Citizen Service
This is a flagship David Cameron idea but is it now affordable? By scrapping/ delaying something so closely identified with his personal mission, the Tory leader would be signalling the seriousness of the budgetary situation.
I do not know conclusively what I think about each of these three suggestions for saving money but I do think that this is the sort of tough thinking that is now necessary.