This is not the 1970s. Tory pledges to cut taxes are absurd

Sunak and Truss have no grasp of how low personal taxation is now – or how much a battered Britain needs public spending

Whenever I told him things were going from bad to worse, my father used to nod sagely and say: “It was ever thus.” However, I wonder what he would have said now about the state of the country and the “governing” Conservative party.

In a leadership race whose inanity almost beggars belief, the two very rightwing contenders seem obsessed with establishing their Thatcherite credentials without, as far as I can see, having a clue what Thatcherism was really about.

Take this obsession with cutting personal rates of income tax. When Margaret Thatcher came to power in 1979, the top rate of income tax was 83%. In his first budget Sir Geoffrey Howe reduced it to 60%, and the basic rate from 33% to 30%. They decided it would look bad to lower the top rate alone, even though it was absurdly high. But to balance the books they were forced to raise VAT. They had committed themselves not to double VAT – in those days campaign commitments were serious – so they raised it from 8% to 15%.

In his budget of 1988, my old friend Nigel Lawson brought the top rate down to 40% and the basic to 25%. These days the basic rate is 20% and the higher rate remains at Lawson’s level, except for the additional rate on incomes above £150,000, which is 45%. This history puts into context the absurdity of Truss’s and Sunak’s obsession with cutting present tax rates – she now, he later – when the nation’s infrastructure and public services have become an embarrassment. Current rates of taxation are miles, and years, away from the situation that faced the Thatcher government of 1979, and low by international standards.

Oh and by the way: do these fanatics really want to emulate the Thatcher government’s “achievements” of presiding over a doubling of the inflation rate, to approaching 20%, between 1979 and 1980 – accompanied by the biggest recession since the second world war – and a level of unemployment that rose from under 1.5 million in 1979 (when Conservative posters proclaimed “Labour isn’t working”) to more than 3 million by 1986? Do they not realise, as they chase chimerical Brexit “opportunities”, that Kenneth Clarke, a decent Tory, described her contribution to forming the European single market as Thatcher’s greatest achievement?

Talking of decent Tories: I fear there are not many influential ones left, thanks to the cabinet cull of non-Brexiters under a prime minister about whom a former friend of his recently observed: “No other prime minister has done so much damage in such a short time.”

We used to take decent Tories for granted. When they said they were one nation Tories they meant it. Any concessions Truss makes to the poor have to be wrung out of her as she goes on propounding tax cuts for people who don’t need them; and I fear Sunak, after the credit he earned for helping those in hardship during the pandemic, was found out recently: yes, he was caught boasting that he had been, in effect, “levelling down” by reallocating Treasury funds from poorer to richer areas.

Britain is suffering now from the progressive assault on public sector provision started by Thatcher and resumed with the Osborne austerity programme of 2010 onwards, on which has now been superimposed the biggest economic crisis of many people’s lifetimes – and the Brexit disaster on top.

That great one nation Tory Harold Macmillan is often credited with having told the British electorate in 1957 that “You’ve never had it so good”. Well, he never actually said it. What he said was: “Let’s be frank about it: most [my italics] of our people have never had it so good.” He went on: “The Conservative party is not the party of any class or section … and we cannot forget that some sections of our people have not shared in this general prosperity … we cannot, as a national party, see their interests sacrificed.”

With the present cost of living crisis, impelled by the addition of externally induced cost increases on a badly battered supply side, a modern Macmillan would be tempted to say: “Let’s be frank about it: most of our people have never had it so bad.”

In the face of this, neither of the contenders appears to have a solution. Moreover, they are not prepared to admit that the Brexit they promoted (in Sunak’s case) or accepted (in Truss’s case) is a disaster, severely damaging the investment they purport to champion, with ripple effects on output and, yes, taxable capacity. If either had any serious leadership qualities, they should be admitting their mistakes and conceding that we should be back in the single market championed by their putative heroine – er, one Margaret Thatcher.

Contributor

William Keegan

The GuardianTramp

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