I’m struggling to work out what on Earth the Nick Clegg line on tax cuts actually is. Since the launch of the Make it Happen, I’ve assumed that this is down to poor communication on his part. As I summed it up on Lib Dem Voice last week:
My big concern is that we currently appear to be talking about two different piles of £20bn. The £20bn that we will shift from low and middle income earners and onto the wealthy and polluting, and another £20bn that we are looking to cut from existing government spending. Most of the latter will be allocated to Lib Dem spending priorities with just a slither going towards tax cuts.
I’m not against cutting tax overall, but it was only this morning when I finally figured out what our post-Make it Happen policy is (it isn’t as if the party has deigned to produce a briefing on it or anything helpful like that). If I’m confused what £20bn our politicians are referring to when they start bandying the figure around, I’m sure I’m not the only one.
Now, I might have been wrong about some of the details there (whose fault is that?), but that was what I understood the situation to be. And broadly speaking that is what I understood Ed Davey to be saying here:
…its first priority will be diverting identified savings away from “Labour priorities” to “Liberal Democrat priorities”, Mr Davey explained. Only after that process is complete will the tax burden proposed by the party be quantifiable in overall terms.
“The savings package will involve reallocating money within the same spending area,” he added.
“I wouldn’t see it as a short-term move, nor as a philosophical shift… it’s a response to long-term trends in government expenditure.”
So far, no problems for me. I am all for net tax cuts in principle, but we have other priorities, several of which are frankly more important. We are in uncertain economic times, making predicting the economic situation in six months difficult, let alone three years. By all means, if we can identify tens of billions of pounds of spending cuts, let’s consider allocating a portion to tax cuts. But let’s not get ahead of ourselves here.
Except that is exactly what Clegg has done this morning. Blatantly contradicting Davey, he told the Telegraph that:
“We are now in a process of identifying what I believe will be the most radical package of tax- cutting measures for people on middle incomes.
“We will bear down on the ballooning government budgets. Vince Cable and I have been working over the summer identifying about £20 billion that should be reallocated and the vast bulk of it given back through tax cuts.
“We have taken some difficult decisions already to provide tax relief and we are doing some ongoing work… to help the vast majority of taxpayers. There are a number of options we are looking at. We have our pledge to cut the basic rate of income tax by 4p but as we do the sums, as we identify where we are going to get the money from we can become very much more creative between now and the next general election.”
Frankly, if there is that much money sloshing about, I’m surprised that no-one else has managed to identify it. If Cable and Clegg have identified all these savings, why don’t they talk about them more? And if we’re going to use the vast bulk of these savings to plough into tax cuts, what is going to happen to our spending plans? Hywel Morgan mentions a promised high speed rail link and the “Apollo Project for renewable energy. I would add tuition fees and Clegg’s own pupil premium. And bear in mind this is at a time when the government is haemorrhaging cash in the form of the PSBR deficit.
It may be that Nick Clegg and Vince Cable know something that I (and Ed Davey it seems) do not. In which case, it is high time they shared. Third parties, fighting a daily credibility war, cannot afford to expect people to take things on trust. We’ve always prided ourselves on the fact that our manifestos are fully costed. All of that seems to be going out of the window in favour of some weird triangulation to make ourselves sound like we are to the right of Cameron. I don’t think Clegg has anything like enough personal credibility to carry that off at the moment, and I certainly think it is too big a leap for a party which was campaigning on tax rises at the last election to go.
What we have is monumental confusion. We’ve had it for a couple of months now. I’ve never seen a major political party do such a poor job at explaining its economic policy before and the blame lies squarely on the leader.
If he doesn’t nail down his position over the next week, we are going to have a pretty stormy conference.
Indeed. Aiming to be to the right of Cameron is also an odd strategy to reach 150 seats in two parliaments. Surely this would require big gains from labour next time round?
As to adding to tuition fees in our spending plans, thats up for review in the spring and the rumours I have heard are that may not remain the case.
Couldn’t agree more. Also worth pointing out that we’ll have to put PFI back on the balance sheet, which is hundreds of billions worth of extra debt to service.
I would not worry too much. There is not a sentient being in the Solar system that takes Lib Dem promises of tax cuts seriously anyway. When you have just suffered ten years of ‘no tax rises’ which turned out to mean an inflation adjusted 55% increase in spending people get like that.
Much of the increase was reaped from stamp duty and fiscal drag and so required few direct rises ( although the plunder of pensions and National Insurance was felt ). During this period the Lib Dems criticised continually but sadly it was from the left. Thatcher stuck with Callaghan’s spending plans and Blair was lumbered with Major’s taxation . In reality tax promises are easy to get out of over time and direction and trust are more important than figures
People do not buy from cold callers and especially if they have history of ripping people off . So say what you like about tax , say you will abolish it why not say you will garnish it with lettuce and make it into a sandwich . A flying f— , not a soul will give. Solution – Many years of political honesty , saying g something unpopular just once and the same thing all over the country occasionally eeerm not being the Liberal Party . No charge
I would not worry too much. There is not a sentient being in the Solar system that takes Lib Dem promises of tax cuts seriously anyway. When you have just suffered ten years of ‘no tax rises’ which turned out to mean an inflation adjusted 55% increase in spending people get like that.
Much of the increase was reaped from stamp duty and fiscal drag and so required few direct rises ( although the plunder of pensions and National Insurance was felt ). During this period the Lib Dems criticised continually but sadly it was from the left. Thatcher stuck with Callaghan’s spending plans and Blair was lumbered with Major’s taxation . In reality tax promises are easy to get out of over time and direction and trust are more important than figures
People do not buy from cold callers and especially if they have history of ripping people off . So say what you like about tax , say you will abolish it why not say you will garnish it with lettuce and make it into a sandwich . A flying f— , not a soul will give. Solution – Many years of political honesty , saying g something unpopular just once and the same thing all over the country occasionally eeerm not being the Liberal Party . No charge
>> Also worth pointing out that we’ll have to put PFI back on the balance sheet, which is hundreds of billions worth of extra debt to service.
Nope – having it on balance sheet doesn’t mean it costs you more; in fact the opposite. PFI is an expensive route because you end up paying higher (equity) returns rather than lower ordinary costs of servicing debt – and the con is that despite the equity-like returns, Govt retains de facto the risk on the project.
As for the accounting (“on” v “off” balance sheet), that per se makes no difference at all to the total level of interest / implied interest cost.
Aiming to be to the right of Cameron is also an odd strategy having declared we are targetting Labour seats.
Who said anything about being to the right of Cameron??!
Tax cuts (properly prioritised / funded, which is partly James’ point, I think) are a Liberal objective. And tend to play better on estates than leafy streets in my experience – no coincidence, given that so many of Brown’s stealth taxes have fallen disproportionately on low & middle income earners.