The thin strip of clear blue water between the Government and Opposition's positions on public spending is steadily widening. On this morning's Today programme, George Osborne's statement that "the age of excess" in public sector pay is over is another step
towards the kind of hawkishness that will be necessary
to clean up the Brown-Darling mess.
The latest ConHome survey of Tory members shows that a whopping 94% believe that "significant cuts in public spending are going to be necessary to restore order to the public finances." 86% agree with the ConHome line that "tax rises should only be considered after the possibilities for reductions in state spending have been exhausted."
The membership is split on the suggestion that "significant tax rises will be necessary to restore order to the public finances." 40% agree and 41% disagree.
Members are very suspicious about the 45p tax band. 82% agree that "the Government's increase in the top rate of tax to 45p will raise little or no money." Only 36% agree that "Conservatives must support the 45p tax rate in order to avoid Labour's 'you-are-the-party-of-the-rich' attack."
There is no enthusiasm for delaying on inheritance tax. More than three-quarters (77%) say that "the Conservatives' inheritance tax policy should remain a priority." 16% disagree.
Supply-siders will also be pleased with the fact that 74% believe that "some taxes should be cut in order to boost the economy."
Tim Montgomerie
Its stupid for the Conservatives to get hung up on the IHT promise, for as was shown by Andrew Neil on HardTalk its impossible to defend, for why do the Conservatives think someone working hard for their million should have 450k taken in taxes, while someone doing nothing other than being the beneficiary of an accident of birth gets a million tax free?
But in regards to the wider point of the financial hole we are in, it is going to take more than a little bit of fiddling around to get us out of the mess, for that is going to take a complete revue of all Government spending and ripping out vast swathes of costs the state currently imposes on the economy. It is said Gordon Brown has doubled the amount of tax law, taking Tolley's yellow tax hand book from 4,000 pages to 9,000 pages , which indicates the task that needs confronting, but I don't see any evidence the Conservatives are serious about doing the work to rip out these costs, for they are in favour of keeping Brown's Heath Robinson's tax credit system, the EU costs us £55 billion, but there isn't any evidence the Conservatives wish to roll back the malign influence the EU has in every aspect of our lives, and they are in favour of ring fencing the £10 billion Aid budget, which means we are giving India £800 million while they spend billions on a space program to the moon.
Posted by: Iain | April 06, 2009 at 14:05
I really fear our members are too complacent.There will have to be big reductions in spending for sure but there will almost certainly have to be tax rises too particularly if the IFS is right.
Under those circumstances abolishing the 45p tax band or keeping our IHT promise do look untenable.
Posted by: Malcolm Dunn | April 06, 2009 at 14:06
However you wrap it up right now we need to pay another 2P in the pound just to tread water.
Government debt is rising at an unheard of rate whilst the demand for benefits increases.
A modern-day miracle of the fishes and loaves is required.
Posted by: Victor, NW Kent | April 06, 2009 at 14:14
Iain - Don't forget the person passing on that inheritance will already have paid tax on it, why should he have it taxed again if he has been unselfish and given something for the next generation. In any case IHT remains for wealth over £1 million. 45p simply brings us in line with most western economies, although if it rises to 50p or more then clearly your point about providing a disincentive to hard work will be more relevant.
Posted by: HYUFD | April 06, 2009 at 14:28
Also if someone is inheriting close to a million then it is also likely they will be hit by the 45p rate too.
Posted by: HYUFD | April 06, 2009 at 14:30
"Brown's Heath Robinson's tax credit system"
Sadly we are not going to be able to simple abolish tax credits. They are too popular and help to make work pay for a lot of people. To be fair we had a similar scheme of payments but that was also clumsy, outside of the tax system, and expensive to administer. One way of decreasing the cost to the state of tax credits would be to increase the minimum wage. Its not an easy call because tax credits are effectively a subsidy to employers.We have to decide if getting people into work and rewarding them is the duty of the government or of the employers. Should Government be subsidising industries in this way?
"the EU costs us £55 billion, but there isn't any evidence the Conservatives wish to roll back the malign influence the EU has in every aspect of our lives"
Its a depressing fact that despite being openly Euro-sceptic there seems to be no plans for Withdrawing from Europe. So what exactly dose being Euro-sceptic mean to our leaders? My gut instinct is that it means nothing. We will win the election and Europe will be swept under the carpet.
"The membership is split on the suggestion that "significant tax rises will be necessary to restore order to the public finances." 40% agree and 41% disagree"
And the other 19% were not asked? I believe we will have no choice but to significantly raise tax's. Unless of course George can find us a lot of cuts. Welfare reform isn't going to be the big provider of funds that we might have hoped for. Even if we do manage to remove the lead swingers and benefit cheats from the system, rising unemployment is going to claw back any savings made here and then some. We cannot cut back on our military spending, and here is another area where we really need to spend more not less. The NHS is another difficult area to find savings. That leaves one obvious area were we can cut to our hearts content and that is the administration of government itself. The Public services have been enjoying a massive unsustainable boom under Brown. Billions can be saved by ending the gravy train? well may be not, in fact it will only be a couple of billion tops. Sadly cuts are not going to be all of the answer what we really need to get ourselves out of Browns recession is to get our economy running properly again. So even though I predict tax rises, I also hope that G.O. will have the strength of character to find tax cuts were they can help stimulate the economy.
Posted by: Marian | April 06, 2009 at 14:36
As long as MPs are using taxpayers' money to buy porno films, new kitchens and second homes, we shouldn't be paying a single penny more in tax.
Is this what Jacqui Smith's husband understands to be a "stimulus package"?
Posted by: Cleethorpes Rock | April 06, 2009 at 14:37
Ban all Socialist Policies before it is too late.
Posted by: A voter | April 06, 2009 at 14:39
More than three-quarters (77%) say that "the Conservatives' inheritance tax policy should remain a priority."
Ridiculous, it has to be one of the lowest priorities out there. It doesn't help those who need help the most. If taxes are to be cut it should be by raising the tax free threshold.
++++
HYUFD
why should he have it taxed again if he has been unselfish and given something for the next generation
Why should the 40% rate be set where it is? Why should there be a postcode health lottery?
Why should we refuse to recognise Taiwan as an independent nation?
The world isn't fair. I don't think modest inheritances should be taxed too highly, but it is not an emergency priority.
Also if someone is inheriting close to a million then it is also likely they will be hit by the 45p rate too.
Not because of the inheritance. Why would it matter if an already wealthy person gets a million pound inheritance that's taxed? I'd like to be wealthy and have £1 million left to me! I couldn't care less if most of it was taxed at 40%. Only greedy-guts would shed tears over the tax paid.
Posted by: Raj | April 06, 2009 at 14:39
"They are too popular and help to make work pay for a lot of people."
Because Cameron's Conservatives haven't bothered to argue for anything different. Tax Credits are all about subsidising low wage employers paying below cost of living wages, requiring the state to bring them up to a living wage with Tax Credits. What needs to happen is that we should get control of our borders, call a halt to all low wage immigration, so pushing up the wages of these people, ignore the bleatings of the CBI, at the same time get many of these people out of the tax system, and ditch the Tax Credit system.
Posted by: Iain | April 06, 2009 at 14:53
Raj:
"Why would it matter if an already wealthy person gets a million pound inheritance that's taxed?"
Why should any government, let alone a Tory one, feel free to make arbitrary decisions about what constitutes wealth and how wealthy anyone should be?
Cutting spending is the easiest thing in the world, when it's as grotesquely out of control as it has been for years in this country. Give me a list and a biro and I'll save us billions by teatime.
Posted by: Malcolm Stevas | April 06, 2009 at 14:54
Raj,
I did not say I opposed the 45p rate, provided it stays at that level. In any case someone inheriting up to £1 million will not live a life of luxury if they do no other work as that inheritance will be cut through income tax, council tax etc over the years which was the point I was making. Those inheriting more than £1 million will continue to pay a 40% top rate.
Posted by: HYUFD | April 06, 2009 at 15:19
I agree very much with Iain at 14.05:
"...they are in favour of keeping Brown's Heath Robinson's tax credit system, the EU costs us £55 billion, but there isn't any evidence the Conservatives wish to roll back the malign influence the EU has in every aspect of our lives, and they are in favour of ring fencing the £10 billion Aid budget, which means we are giving India £800 million while they spend billions on a space program to the moon".
There are mega savings to be made from that little lot. We must take this one-off opportunity to simplify the tax and benefit system and to build a fairer society, starting at the bottom and working upwards.
I really do think that all pledges made before now have to be put on hold until we can assess how truly awful is the mess that Gardon Brown has created.
Posted by: David Belchamber | April 06, 2009 at 15:31
why do the Conservatives think someone working hard for their million should have 450k taken in taxes, while someone doing nothing other than being the beneficiary of an accident of birth gets a million tax free?
The question is only really valid if you are a leftie who thinks that all wealth belongs to the government and they decide how much they let us keep.
Income tax should be scrapped too.
If that loses too much money then they can just print some more.
Posted by: Norm Brainer | April 06, 2009 at 15:47
Like Labour and the LibDems the Conservative leader has ruled out ever leaving the EU. As long as we stay in that profligate and corrupt body talk of reducing taxes and having a better standard of life in this country is pointless.
The only way to prosperity is to get out and the sooner the better.
Posted by: Edward Huxley | April 06, 2009 at 15:47
"I really do think that all pledges made before now have to be put on hold until we can assess how truly awful is the mess that Gardon Brown has created."
Posted by: David Belchamber | April 06, 2009 at 15:31
This has got to be absolutely right. Consideration of the 45% has to wait untill the books are looked at. IHT can not be a "priority" for heaven's sake, but something that might happen in the 4/5th year perhaps. I don't understand how 70% of supposedly sensible people want this to be a priority, this is day dream stuff. Apart from anything else, consider the GE with Osborne with a list of cuts which Labour then converts to x nurses sacked and y destitute families worse off - and then - say the Tories want to look after millionaires. Come back to the planet Earth guys.
Posted by: David Sergeant | April 06, 2009 at 16:33
Of course any incoming govt would have to find savings and in some cases that will mean plain old cuts but the Conservatives must also go beyond that thinking and look to see how services can be delivered better for less by re-ordering how we do things. That is harder but more necessary and more rewarding. It is actually easy to go through a budget looking at cuts but in the end you may save money but be no further forward. We must seek to make our country one of the most competitive in the world, as well as the most innovative, so that we can generate the money to pay for good services and we must seek to get excellent public services for our money.
Posted by: Matt Wright | April 06, 2009 at 16:34
In time's of recession, there is very little worse that a party can do to become unpopular than raise taxes. Labout have screwed up, yes! And they've borrowed us so deep that of course money needs to be recouperated. However, cutting spending is a much more realistic and pleasing aim - they could start by cutting the useless quangos and geting expenses under control (although I don't know if Eric Pickles will support that!).
Posted by: Thatcherite88 | April 06, 2009 at 16:40
david sergeant - Except the IHT policy is popular with the public and Tory-leaning voters according to the polls. In any case, it is not directed at millionaires, as IHT will still apply to inheritance over £1 million.
Posted by: HYUFD | April 06, 2009 at 17:10
Good to hear that this survey was so conclusive.
With regard to taxes what has happened to George Osborne's flirtation with a 'Flat' tax????
Posted by: Richard Calhoun | April 06, 2009 at 17:38
If George can cut spending there will be no need for a 45p rate. However if it is already in force after the election then there will have to be cuts across the board or else that "party of the rich" comes back to haunt you.
Posted by: Masi | April 06, 2009 at 22:24
The slender Tory lead over a discredited government is a dreadful scandal.
The problem is that we appear to have no political philosophy to distinguish us from the corrupt PC mob we have had governing us for the past 12 years.
Instead we have endless discussion of the minutiae of this or that tax change or pay deal.
FIRST THINGS FIRST
Ronald Regean said:
"Government is not the answer - government is the problem"
Say that outright and you are then in a position to make any policy decision by explaining its place in the overall philosophy.
With one jump Dave would be free!
Posted by: Mike Crowley | April 07, 2009 at 12:18
If you have a spare minute please vote in this on-line poll, and spread the word!
http://www.thisislondon.co.uk/standard/poll/poll-36517-details/ques-36871-id/Lite+poll%3A+nasty+party/poll.do
Posted by: Tim | April 07, 2009 at 13:41