The Money Belongs To Us

Fiscal Götterdämmerung - but the fat lady hasn't quite sung yet

As we've noted more than once, back on the doorsteps in 2005 the proposition that tax was too high just didn't land. You couldn't give it away. In those dark days, the tax and spend consensus seemed all-powerful, especially once David Cameron had taken charge of the Tories. The supporters of lower tax and smaller government gritted their teeth for a long hard slog, with nothing to offer but blood sweat and tears.

And then, wow! Just three short years later, we've suddenly burst into the sunlight. That all-powerful consensus seems to have crumbled at the first serious assault. The tax and spend game's up, and politicos of all colours are running for cover.

Last week we had the high tax Lib Dems promising tax cuts - tax cuts! - and on Saturday Chancellor Darling told us:

"There are a lot of people in this country who feel they work hard, they make their contribution and they’re feeling squeezed. People will accept that they have got to pay for the schools for their children and for the hospitals in case they get ill, but they want to make sure the Government is fair about taxation. Every Chancellor has to be very conscious that there is a balance to be struck between how much you can spend and how much people will say, ‘OK if you’ ve got another pound to spend remember me as well’.”

Ah, well... hmm... OK, maybe the battle's not quite over. Maybe the fat lady hasn't quite sung yet. "Fair about taxation" doesn't exactly sound like the clarion for lower taxes.

And just note the way Darling talks about whose money he's spending. Do taxpayers really say to him "if you’ ve got another pound to spend remember me as well"? If they do, they need some serious re-education. These aren't Darling's pounds to spend, they're OURS. Every single penny he spends, he's taken from us, the people who've earned it. He's the one who should be asking us for money, not the other way round. Is that so hard to understand?

And where's Mr Cameron on this? Last week he talked depressingly of the possible need to increase taxes when he gets in.

He may be right. There is a suspicion that lame duck Labour will go for fiscal Götterdämmerung between now and 2010, in a last desperate bid to cling on. The carnage will be stomach churning, and not for the first time a Tory government will have to clear up.

But the short-term need to clear up the immediate mess should not detract us from asking for more detail on Mr Osborne's longer-term fiscal rules. It's good news that they'll be independently monitored, but "sharing the proceeds of growth" remains far too vague - especially in a world where growth may be much harder to come by.

PS That Lib Dem pledge to cut taxes? It's contingent on finding £20bn of "efficiency savings" - ie it's to be funded painlessly so far as most taxpayers are concerned. Sadly, experience in the real Yes Minister world, tells us such "efficiency savings" never ever materialise. As regular readers will know, the massively hyped Gershon exercise turned into an expensive joke, which actually increased spending in some areas. The only sure way of making savings is to close down activities altogether (eg the useless Regional Development Agencies, or the equally useless British Council... there, we've just saved £3bn pa).