IT’S Conservative party conference time, and you know what that means – let’s talk about tax cuts! For 51 weeks of the year, the Tories will talk about how the government must help everybody, do everything they ever wanted, and how it can all absolutely be funded by tax.
HS2 – keep spending. NHS – more spending. Triple lock – we must keep spending. Spend, spend, spend, let’s spend it like Elton John in a flower shop. During lockdown, they literally paid people to do nothing and stay at home. Then they funded people to leave their homes and ‘eat out to help out’. Test and Trace alone cost £37billion over two years. Rishi Sunak signed off on that as Chancellor.
At the last Budget the Tories triumphantly announced a massive expansion of ‘free childcare’ so that mothers could look forward to handing over their babies in swaddling blankets to be looked after by someone else – all funded by the taxpayer. The Institute of Fiscal Studies (IFS) rightly concluded at the time that this was such a big giveaway that it amounted to a ‘new branch of the welfare state’. This will cost £17.3billion over the next five years and is the biggest increase in childcare spending ever. (Not quite the £37billion spent on the bonkers Test and Trace scheme, but still quite a bit.)
Then the Truss premiership imploded. Liz was run out of town for saying she would cut taxes, and the markets did what the markets do – they made their feelings known and, boom, we had Sunak installed as Prime Minister instead. The sensible Sunak. The grown-up in the room. The one that signed all the cheques during lockdown.
So all in all, when you boil it all down, unsurprisingly, the IFS reported that the tax take will hit and then remain at about 37 per cent of GDP, the highest ever in peacetime. After 12 years of Tory-led government. Paul Johnson, the head of the IFS, sees little or no prospect of us breaking this high tax/high spend cycle. Remember, total UK borrowing stands at 99.5 per cent of GDP with the debt-to-GDP ratio at levels last seen in the early 1960s. Interest payments rose to £17.3billion.
Now, for three to four glorious days of the year, Tory MPs are falling over themselves to talk about tax cuts. It’s tax cuts, tax cuts, tax cuts all the way to whatever microphone they can get in front of. We had a little warm-up on Saturday with the Times lead of ‘We can’t let tax rises go on for ever, insists Hunt’. Well, that is reassuring. Mark that in your diary. We have to wait only until shortly before the end of ‘for ever’ and then we can look forward to a tax cut.
It’s the cake-ism I object to. The Conservatives rarely make the case for small government and low taxes, so the general public then want a large state, excellent public services, a generous welfare state, and somehow for it to be funded by taxing someone else, not me, anyone else but me.
Yesterday we had the hilarious spectacle of Michael Gove (lockdown hawk Gove) saying he wanted to ‘see the tax burden reduced before the next election’. Dame Priti Patel said she backed reductions in income tax and also supported scrapping inheritance tax. Truss of course, ever hopeful, says ‘let’s stop taxing and banning things’ and, never to be left out, Sir Jacob Rees-Mogg will also call for tax cuts.
Jeremy Hunt is holding the line though. The Chancellor said that announcing ‘big tax cuts’ now would be ‘inflationary’. However, the Chancellor also said he believed the tax burden does not have to be ‘permanently’ at a high level. So again, high taxes are not permanent, they will not be for ever, but I can’t promise anything.
This is truly excellent expectation management from the Chancellor, as ‘not for ever’ and ‘not permanent’ certainly gives him quite a bit of wriggle room. He’s not making any big commitments there. This is what I tell my kids: you cleaning the kitchen for me is not going to be permanent, I mean we are not talking for ever, but just keep doing it for now.
Indeed, it’s the age-old ‘I’ll call you, don’t call me’.
So enjoy the three days of empty promises and cake-ism from the Tories. I will be doing literally, anything else – maybe even cleaning my kitchen.