An end to the great spend

This post first appeared on the Guardian's Comment is free.


The announcement from the Conservatives that they will not renew their pledge to match the government's spending plans after 2011, and indeed will review the level of spending for 2010-11 should they win the election, is good news for families struggling to make ends meet.


It is only a year since George Osborne made this commitment, a move which the TaxPayers' Alliance (TPA) criticised at the time. So where does this dramatic and welcome shift come from?


With the credit crunch and rising commodity prices, public opinion has turned decisively against higher taxes. Families are now having to tighten their belts, so they increasingly feel that government should do likewise. The TPA has been consistently making the case that there is a significant degree of wasteful government spending, and recent polling shows the strength of public feeling on this issue.


A YouGov poll (pdf) in May this year found that a miniscule 2% of people think they pay too little in taxes and the outrage at the government's doubling of the 10p tax rate sprang from genuine financial hardship.


These developments have not gone unnoticed. The Liberal Democrats were the first party to commit to reduce wasteful spending and provide relief from the burden of taxes hitting ordinary people. It is good news for taxpayers that the Conservatives now seem to be following suit and we can expect this benign competition to continue.


Given the collapse in support for the government, it now looks all but certain that the Conservatives will win the next election, and with greater electoral prospects comes greater responsibility. It is no longer credible to criticise wasteful spending and higher taxes as damaging to Britain's economic competitiveness and then refuse to offer anything significantly different.


The right way to get Britain out of its economic hole is to curb wasteful government projects to provide room for tax relief. For example, the £3bn a year spent on the ineffective regional development agencies, which have failed to reduce regional inequalities, is enough to fund a 4p reduction in the rate of tax paid by small companies, giving a boost to businesses and jobs just when the economy needs it.


For too long social justice has been the preserve of those advocating higher government spending and more taxes. The desperate condition of so many of Britain's crime-ridden housing estates and the financial hardship caused by tax rises, such as the doubling of the 10p rate on the lowest paid, have revealed the flaws of that philosophy. Families are now demanding a different approach, and it is encouraging to see two of the three main parties taking steps in the right direction.


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