It may well turn out to be the case that David Cameron, as it was said of former Tory chancellor Iain Macleod, is altogether too clever by half. That, at least, is the generous interpretation of his handling of the Tories’ tax reform commission, which published its recommendations last month.
For, on the face of it, Cameron has committed a mammoth political blunder, by revealing to the electorate the hollow reality behind his repositioning of the Conservative party. The commission’s findings offered little more than warmed over Thatcheronomics. This should have surprised no one, given the choice of Lord Forsyth, one of the ‘no turning back’ Thatcherite young Turks of the 1990s, to head it.
While some proposals – such as increasing personal allowances – can be portrayed as designed to help the lower paid, the combined effects of the Tories’ tax cut ‘menu’ – cutting the basic rate of income tax; abolishing Labour’s 10p band; scrapping inheritance tax and the stamp duty on shares; and reducing the higher rate of tax and capital gains tax – will disproportionately benefit the rich. The proposals echo, suggested one tax expert, the reforms introduced by Nigel Lawson in the 1980s.
And, indeed, even the overall figure of tax cuts Forsyth proposes – £21bn in all – has the air of attempting to turn the clock back about it, given that the revenue-raising measures introduced by Labour since 1997 amount to almost exactly the same figure.
So why, as he apparently attempts to jettison the Tories’ Thatcherite baggage by embracing everything – from the NHS to the anti-apartheid movement – for which the former prime minister showed such contempt, has David Cameron allowed the economic policies with which she was so closely associated to receive such a public airing once again?
The explanation is simple enough: the Tory leader clearly believes he can have his cake and eat it. Allowing the Tory right free rein to argue for massive tax cuts seems to be a win-win proposition. It gives Cameron and shadow chancellor George Osborne another opportunity to pose as moderates as they repeat their mantra of economic stability first in the face of calls for tax cuts. It also implants in the public mind the notion that the Tories are the party of low taxation, the supposed electoral trump card which the tax rises of the early 1990s squandered.
If this was Cameron’s intention, it is likely to turn out to be a serious miscalculation. The Tory leader has failed to recognise that a party which has suffered seriously from the perception that it is serially split needs, above all else, to speak with one, clear voice. Its key message – that it can be trusted to run the economy and invest in public services – cannot afford to be complicated by noises off from those proposing the very policies which unsettled voters in the first place.
It’s worth remembering that to erase the doubts the electorate had about Labour’s economic competence in the mid-1990s, Gordon Brown imposed an iron discipline on those wanting to make uncosted spending commitments (the party’s equivalent Achilles’ heel). Labour’s policy reviews were not, moreover, placed in the hands of those who betrayed little sympathy for the overall direction to which Brown and Tony Blair had committed the party.
And this leads us to the most serious question that the Forsyth commission presents, which is the degree to which Cameron is truly committed to the kind of serious rethinking of the Tories’ policy agenda which Labour undertook in the 1990s. It is not simply the unreconstructed agenda which Forsyth proposed (the prelude, no doubt, to similar offerings on social justice and competitiveness from the likes of Iain Duncan Smith and John Redwood). It is more the fact that, by appearing utterly unembarrassed to be associated with it, the Tory leader betrayed his true sympathies.
Indeed, Osborne’s response to the commission’s proposals – that any tax changes in the Tory manifesto will be both ‘revenue-neutral’ and simply a ‘rebalancing’ of the system – was hardly the rebuke to Forsyth some interpreted it to be. The shadow chancellor pointed out, for instance, that the commission’s tax cuts could be offset by tax increases elsewhere, with pollution and carbon likely targets. But such ‘green taxes’, because they impact hard on the least well-off, increase the case for making direct taxation more progressive, not less, as Forsyth proposes.
Last month, the mask of David Cameron’s ‘liberal Conservatism’ slipped a little. For progressive voters, what it revealed is likely to prove profoundly unappetising.