Tories should cut taxes, not raise them

One lesson drawn from Labour’s better-than-expected showing in the general election is that the country has tired of so-called austerity. Since the Conservatives failed to make the case for living within our means during the campaign, they cannot even argue convincingly that the fact that they got more votes shows there is still a public appetite for prudence.

The findings of a social attitudes survey published this week also appear to indicate that more people than in the recent past would rather pay more in tax than see a further squeeze on public services. This was reported in Left-wing quarters as showing “huge support for higher taxes and spending”; yet it was actually less than half of those questioned. We are, then, at a fiscal crossroads. Despite running up a national debt of £1.7 trillion which costs more than the entire defence budget to service, the political winds are blowing in favour of even more spending. Yesterday, Sir Oliver Letwin, the former minister, suggested that since the deficit has come down as a proportion of GDP a modest rise in tax bills to fund investment in public services might be in order. Sir Oliver said he believed it was right to continue to borrow less; so if we want to spend more on services we need to tax more.

There is an alternative, which is to tax less and generate the economic growth that will increase the Treasury’s revenues and make more money available for public spending. This is supposed to be the Tory approach. Taxing more to spend more is the Socialist one. There is another way that our politicians never consider, which is to reform our public services so they can raise money in different ways other than through direct taxation.

The danger for the Conservatives is that they have given up making the arguments. The Government is now reviewing the public sector pay freeze in what looks like a capitulation to Labour demands contained in the party’s attempted amendment to the Queen’s Speech.

But far better to let people keep more of the money they earn by lowering, not raising, their taxes while fundamentally reforming the way our public services operate to reduce the colossal waste that we see everywhere. That should be the Conservative message. Sir Oliver and other Tories who think like him are simply playing Labour’s game; and there is only one winner. Jeremy Corbyn.