Attention! The Tories’ deficit disorder.

Cross-posted from the International Business Times:

It’s not often you’ll find me agreeing with Labour’s uber-spin-doctor, and Tony Blair’s apologist-in-chief, Alastair Campbell. But precisely because he helped write the New Labour election-winning manual, he is highly attuned to the failings in the Conservatives’ attempts to plagiarise it, and in particular David Cameron’s and George Osborne’s habit of mistaking tactics for strategy.

The latest example he highlights on his always-entertaining blog is the Tories’ attempts to force Labour onto the defensive by promising to reverse the increase in employers’ National Insurance contributions:

The Tories assume that if they get a good media hit out of something, they have won the day. And they think if they win enough days in the media war, they will win with the public. … the Tories were wrong on the recession and wrong on the recovery. Tactics will only take you so far if your strategic response to the single most important event of the last Parliament, and the single most important issue for the next one, is wrong.

He’s absolutey right. Yes, it’s still possible that the Tories’ decision to turn their campaign fire on the NI rises will prove to be the tactic which wins them the election. After all, they have been able to pray in aid the support of a number of business leaders, endorsements which have played well in the media – although the public seems to be less impressed.

But “new tax on business unpopular with businesses” is scarcely news. And all voters realise: nothing comes for free. The reversal of the NI rise will cost the Tories £13 billion to implement. They claim the money can be found from vague ‘efficiency savings’ in order to try and dodge accusations that they’ll have to put up other taxes, or slash public spending faster than the still-fragile economic recovery can sustain.

Yet the Tories’ themselves admit that the savings they want to make for 2010-11 through outsourcing back office functions won’t actually come through fully until January 2012. In other words, for all the talk of cutting the deficit – remember the air-brushed “We can’t go on like this” posters? – the Tories’ reversal of Labour’s NI tax rises will actually increase the deficit.

This smacks of panic. The polls narrow, and the Tories’ knee-jerk reaction is to announce a tax-cut and hope no-one will ask how it’s going to be paid for: suddenly cutting the deficit is no longer the number one priority which David Cameron pledged it would be just a few months ago.

But the Lib Dems are asking how the Tories intend to pay for their tax-cuts for businesses – and have been quick to highlight one way in which Messrs Cameron and Osborne may choose after the election to make up the difference: by increasing the standard rate of VAT by 3%. This would cost the average family an additional £389 a year, with who knows what potential damage to the economy.

Contrast this with Nick Clegg and Vince Cable’s fully-funded plan to raise the income tax threshold to £10,000 – cutting the average individual’s tax bill by £700, and lifting four million of the poorest in society out of tax altogether – paid for by tax increases for the wealthiest in society. Not only will this boost the economy, given the greater propensity of low-earners to spend, it will also help build a fairer Britan, reversing the income inequalities which have actually increased during Labour’s 13 years in power.

Elections are always about choices – and at this election it could not be clearer.

You can vote for the Tories, whose unfunded tax-cuts will increase the deficit and likely hit ordinary voters hard through VAT increases.

You can vote for Labour, which has presided over widening inequality in which low-income workers face marginal tax-rates of up to 92%.

Or you can vote for the Lib Dems, who have already identified spending cuts – scrapping Trident replacement and ID cards, for example – to reduce the deficit, and who would cut income taxes for people on low and middle incomes.

It’s your choice. Who do you think has the right strategy?

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5 Comments

  • Anthony Aloysius St 10th Apr '10 - 4:15pm

    “But the Lib Dems are asking how the Tories intend to pay for their tax-cuts for businesses – and have been quick to highlight one way in which Messrs Cameron and Osborne may choose after the election to make up the difference”

    No. They haven’t been “quick to highlight one way [the Tories] _may_ choose”. They have simply claimed as a fact that the Tories _will_ raise VAT by 3%.

  • Anthony Aloysius St 10th Apr '10 - 8:57pm

    Stephen

    You know very well that the Tories have said they will fund the reversal of the NI rise through cutting public spending, not through tax rises. The Lib Dems have simply invented a Tory policy that does not exist, and have tried to mislead the electorate by stating it as though it were a fact.

    And of course, what you are saying implies that if your opponents don’t think Lib Dem policies add up, then they are “quite entitled” to invent Lib Dem tax rises and/or spending cuts, and present them to the electorate as though they are party policy. Is that really the direction in which you want to take British politics?

    What would be so hard about actually arguing these points in a clear and honest way, rather than resorting to this kind of deception?

  • “You know very well that the Tories have said they will fund the reversal of the NI rise through cutting public spending,”

    No we don’t – we have a rag bag of policies that don’t stack up – for example: a recruitment freeze, a reduction in the use of agency staff and a reduction in the use of consultants. The saving for which is “maybe £1 or £2 billion”

    But these are fantasy savings. Agency staff and consultants are sometimes less expensive than public sector workers sometime more expensive. Often you don’t know untill after the event.

    Lets be serious Government is spending £170 billion more than it gets in income. Total public spending in 2009 was £631 billion (not including the off book stuff like PFI).

    In that context £6 Billion for NI is is margin of error stuff and an absurd policy for a party that says it will cut the deficit.

  • “your opponents don’t think Lib Dem policies add up, then they are “quite entitled” to invent Lib Dem tax rises and/or spending cuts, and present them to the electorate as though they are party policy.”

    That would be the new regional income tax, the local income tax that will cost the average family 10p on income tax and the £3000 tax on your parking space etc etc the The Conservatives have been using round my way for years. While two wrngs don’t make a right, it’s hard to say that negative campaigning and laods of money isn’t a winning formula.

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