Bournemouth
The current Tory position on tax cuts is rather like the doctrine of the Trinity. It makes no sense unless you know the questions that lie behind it. It is not really a position about tax cuts, but a position about how to go into an election campaign. In 2001, Oliver Letwin was chased high and low by the press who wanted him to confirm his suggestion that there would be huge spending cuts over the course of a parliament. In 2005, Mr Letwin, by then shadow chancellor, stuck to spending cuts of £8 billion, but Howard Flight exploded this in a private, leaked speech which suggested much bigger cuts concealed. This time, the Tories do not want to have any rate or amount of tax or spend that can be hung round their necks. They want to avoid having to make any specific promise at all. Their position that spending will rise, but that ‘the proceeds of growth’ will allow them to cut taxes as well, at least has the merit that it will probably turn out to be true (no government in modern times has actually cut tax, as opposed to cutting its share of GDP). George Osborne is correct that when the Tories returned to power in 1979 they avoided promising tax cuts with figures attached or, indeed, an immediate fall in the overall tax burden. What they said was that taxes were too high, and that the burden of tax should shift from direct to indirect. Their first act, while cutting income tax, was almost to double the rate of VAT. During the 1979 campaign Jock Bruce-Gardyne, economic columnist of this paper and a parliamentary candidate, wrote a piece in the Daily Telegraph entitled ‘Where the axe will have to fall’. The indelicacy of such a piece at such a time persuaded Mrs Thatcher to keep Jock out of office for a couple of years, although she probably agreed with every word he had written.
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