Without bold tax cuts the Tories are doomed – ‘safety first’ won’t do it
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Contemplating the year ahead, in his 1939 Christmas broadcast George VI quoted poet Minnie Louise Haskins: “And I said to the man who stood at the gate of the year / Give me a light that I may tread safely into the unknown”. As the King made his broadcast, people were wondering how long the war would last and what 1940 would bring.
By contrast, there are many things we already know about 2024. There will almost certainly be a UK general election. There will be elections in the United States and for the European Parliament.
We may know that a general election is coming, but only a fool would predict its outcome. We all remember the 2017 general election, when everyone thought Theresa May would win a landslide. I remember the Conservatives being 20 points ahead in the polls when the surprise election was called on April 18. By June 8, little more than six weeks later, we were only two points ahead. This shows how unpredictable and volatile modern elections can be.
Contrary to common belief, many of the things that happen this year can be shaped by the Government. It isn’t a foregone conclusion that Labour will waltz effortlessly into power. Ten months is time enough to forge a convincing narrative, challenge Labour’s vacuity and win re-election. The Conservatives have it in their power to close the gap on Labour, but that time is short.
It may seem paradoxical but, as I see things, the Government is in a reasonable place. I was directly involved in government at the highest level, and subsequently removed from office as a consequence of market reaction, in the autumn of 2022. After those experiences, I commend the Prime Minister and the Chancellor for having steadied the ship, so to speak.
Rishi Sunak deserves credit that inflation has more than halved since he became Prime Minister. This, after all, was what he pledged to do, even if the Bank of England was in control of interest rates, the main lever with which to tackle inflation.
Looking at the Opposition, Labour remains as unconvincing and as unimaginative as ever. Few people have any idea what Sir Keir Starmer has said about his potential programme of government.
Even fewer seem to know the man himself. Rather stiff and reserved, he leaves people with very little impression of his beliefs or overall vision for the country. After Labour failures in the past four elections, Sir Keir’s caution is understandable. Yet he remains a blank sheet of paper.
Beyond the personality of its leader, the glimpses that we have had of Labour’s policy platform are annoyingly vague. There is the enduring stale atmosphere of class war rhetoric: VAT on school fees and, inevitably, higher taxation.
It also seems likely to me that Labour will be looking at plans for a “mansion tax”, or other capital taxes, to raise revenue for ever increasing public spending, while punishing “the rich”. In reality, we all know it is the middle classes who will be affected. The genuinely rich will find ways of preserving their wealth.
As far as spending restraint is concerned, the Labour Party’s union paymasters will not allow a Labour government to slow the increase in public expenditure, even in the unlikely event of Rachel Reeves wishing to do so. “Tax the rich” will be their answer to every problem. All this is depressingly clear.
Despite Labour’s crushing lack of creativity, the Tories will need to mobilise millions of naturally conservative voters to win the election. Voters need causes around which they can rally. For Conservatives, national security and strong borders have always been important issues. This is what makes controlling immigration so vital to any prospect of a Conservative victory.
The Conservatives have always been a party which promotes wealth creation. We simply cannot afford the public services we all expect without increasing economic growth. A growing economy produces greater tax revenues for public spending. Extracting more taxes simply weakens incentives and damages growth.
Winston Churchill famously bemoaned being presented with “a pudding without a theme”. This government needs a theme. That theme should be economic growth.
We all know that there is a wide gulf between the socialist inspiration of the Labour party and what we stand for as Conservatives. We are naturally sceptical of an overbearing state. We are proud of our country’s traditions and its past. As Conservatives, we are eager to encourage the creativities of our entrepreneurs and inventors.
An overly cautious approach, so close to a general election, runs the risk of allowing the clear distinction between the Conservates and Labour to become blurred. The Covid-19 pandemic forced the Government to increase public spending dramatically. When I was first elected as an MP in 2010, we spent £700bn. Today that figure is well over a trillion (£1,000 bn) pounds. This in itself explains the relentless increase in the tax burden, to the absurd point where people actually associate a Conservative government with increased taxation.
Even after these increased taxes, there remain great prospects for the UK and its economy. Much to the disappointment of the EU elites and their supporters in Britain, the UK is outstripping France and Germany in terms of economic growth.
A little more than a week ago, the Centre for Economics and Business Research (CEBR) predicted GDP growth in Britain will be between 1.6 per cent and 1.8 per cent until 2038. This would make Britain the best performing major economy in Europe.
As far as start-ups are concerned, the UK is way ahead of its European competitors. A “unicorn” has been defined as a private company that is worth a $1 billion or more.
The CEBR report noted that Europe had 514 unicorns in 2023. These businesses were spread across 65 cities and 25 countries. Of these innovative companies, Berlin has 35, while 44 are located in Paris. London has 105, more than Paris and Berlin combined.
We should build on this success. This Spring’s Budget will almost certainly be the last chance to establish what used to be called “clear blue water” between the Conservative party and the Opposition. More of the same won’t do.
Tax thresholds have remained the same for years. This has increased the tax burden on aspirational people. More “jam tomorrow” and promises of future benefits from a hypothetical fifth Conservative term of government simply won’t cut it. Labour will only commit to more tax and spend; merely offering a pale imitation of their policies can only lead to certain defeat.
In many ways, we have been here before. In 1929 the Conservative Prime Minister, Stanley Baldwin, campaigned on a platform of steady competence. “Safety First” was the party slogan during that campaign. Baldwin was at the centre of the campaign, where he was described by the party machine as “the man you can trust”. The electorate delivered its own devastating verdict. The party lost 152 seats.
As a young activist in the 1990s, I remember very elderly party members talking about that general election. In those pre-television days, they didn’t have all the visual gimmicks that accompany elections today. As they huddled round the radio, party activists heard a clear-cut, sonorous voice repeating the depressing phrase “Labour gain”.
We can’t go into the 2024 election promising more of the same. There has to be a brighter vision for the future. We all know what Labour is about. More taxes, more spending, more stagnation. We can, and should, do much better.
Kwasi Kwarteng is a Conservative MP and former Chancellor of the Exchequer
