This last week has demonstrated that a sailing ship without a destination will… well… just drift with the wind.
During this last budget week the Tories, under pressure from their backbenchers, reduced the 50% rate of tax for higher earners. Under the principle of Collective Cabinet Responsibility, Lib Dem ministers defended the change, implying that this concession has been granted in return for broader anti-avoidance tax measures for the better off, and the next step in the reduction in the number of lower earners paying income tax. BIS Minister Vince Cable weighed in dutifully with facts and figures showing that the reduced 45% rate will not result in a significant fall in tax revenue.
Getting there had been tortuous and involved more than a little ‘megaphone diplomacy’. However the subtext of the whole process, clear for all to see, was the Tories were negotiating on behalf of the better off and the Lib Dems negotiating on behalf of the rest of us. It was very hard to avoid this impression. Thus, the Tories are likely to suffer in popularity amongst the average less-well-off voter, as a result of this powerful subtext.
Newspapers and TV news this week also picked up the story of proposed off-budget private financing for new or upgraded roads, with tolls offsetting the cost. This was reported negatively across the media spectrum. The more savvy journalists pointed out that this proposal was little more than the Gordon Brown-style super-expensive Private Finance Initiative, which Chancellor Osborne has been so critical of.
The proposal was no doubt the result of lobbying. However, the Tories have forgotten why PFI has been such a licence to print money. The concept itself seems perfectly reasonable and indeed uncontroversial across Europe – operators borrow against future stable toll revenues and improve/maintain/build roads with the cash.
But this is Britain. In past decades Transport civil servants have strongly resisted toll roads, unlike much of Europe. Part of the reason is the ‘close relations’ between those Transport civil servants and the motorway building and maintenance contractors. Just like PFI, in the UK the new toll arrangements will no doubt end up as a cosy arrangement with ‘the usual suspects’ forming consortia and agreeing mega-contracts on a national basis with fixed, ‘eye-watering’ profits built in. Savvy journalists know very well this is where it will end up – just like PFI.
In the case of the 50p tax rate and off-budget roadbuilding finances, the Tories, directionless, are buffeted about by the wind. The symptoms are obvious – policy comes from short term backbench lobbying, ideas promoted opportunistically by industrial interests chasing inflated-price contracts, and whims from informal advisers who may have ‘made a donation’.
What is missing is a clear definition from the Tories as to exactly what specific problems they intend to solve, so that individual policy ideas fit into a framework. No wonder Tory backbenchers claim that too much policy is Lib Dem policy – the minority party does have a clear approach is many areas of policy and that is where we have been winning.
* Paul Reynolds is an independent foreign policy & international economics adviser, who has had senior political roles in Afghanistan, Iraq, and Pakistan, among other countries across the globe.