‘No time to lose for Tory tax cuts,’ says Tory MP DANNY KRUGER
With roughly a year until the likely date of the next General Election, there is no time to lose in exposing the danger that Sir Keir Starmer’s Labour represents to this country.
That means highlighting how Labour will let people down – from abandoning the fight against illegal migration to surrendering to union barons’ unaffordable pay demands and betraying Brexit.
But there is also no time to lose to show why voters should stick with the Conservatives and demonstrate how we are the only party with the true interests of the nation at heart.
That surest way to achieve that is to cut taxes and let people spend more of their own money.
Rishi Sunak is to be applauded for restoring much-needed stability to the Government.
There is no time to lose to show why voters should stick with the Conservatives. That surest way to achieve that is to cut taxes and let people spend more of their own money
Now, to energise our party and revive our appeal to voters we must come forward with the promise of tax cuts.
And by promise, I do not mean a distant pledge for some time in the future.
I mean this Autumn, and preferably at the Conservative Party Conference in October.
Of course, for true Conservatives, the case for tax cuts needs little re-stating.
As much as possible, people should decide for themselves how to spend their hard-earned income rather than seeing it disappear into government coffers.
Reducing unnecessary levies on families will provide greater incentive to work and so boost productivity – a deep-seated problem in the British economy.
But the case for tax cuts is also timely.
Only last week, we learnt that the public borrowing requirement for the first four months of this year was no less than £11 billion less than predicted by the ever-unreliable Office for Budget Responsibility (OBR).
This wasn’t because spending was down.
Spending rose, as it always does these days.
This windfall was because tax receipts were higher than predicted.
Danny Kruger MP, pictured on March 27, 2023, says there is no time to lose for Tory tax cuts
There is no time to lose in exposing the danger that Sir Keir Starmer’s Labour represents to this country
Indeed, Income Tax receipts alone were up 13 per cent owing to growth in the economy – something that, predictably, the OBR hadn’t foreseen.
In other words, Chancellor Jeremy Hunt now has unexpected room for manoeuvre when it comes to offering much-needed tax relief.
Of course, as you might expect, the Chancellor is keeping tight-lipped ahead of the Autumn Budget.
Moreover, he will be told by so-called experts that with national debt so high, this is no time to relax his fiscal rules, especially when raised interest rates make the cost of that servicing that debt higher than ever.
But as Mr Hunt ponders what to put in that famous Budget Red Box, he should bear three things in mind.
First, the system for forecasting his fiscal options is broken.
He needs to listen to other voices than the permanently pessimistic OBR.
Second, the great battle against inflation won’t be won by high interest rates and high taxation to curb private spending. It will be won by improving productivity and boosting growth.
And third, the case for tax cuts is both moral and practical.
Our society as well as our economy is held back by big government.
We urgently need to liberate the animal spirits of enterprise and allow people to do the right thing by their families and communities.
Let’s look at the OBR.
This quango, set up by George Osborne in mimicry of Gordon Brown’s grant of independence for the Bank of England, was designed to ‘take the politics out’ of fiscal policy, just as Bank independence supposedly did for monetary policy.
As you might expect, the Chancellor is keeping tight-lipped ahead of the Autumn Budget
But the problem with taking the politics out is that groupthink comes in.
Both the Bank and the OBR have been captured by a mind-set of post-industrial decline.
Along with the rest of the London establishment, they share a vision of the United Kingdom as little more than a finance hub for international capital, plus some trendy industries – law and advertising, media and the creative arts – to spice up our brand and give the children of the elite high-status jobs.
Meanwhile, they think, we can simply import the things we need – instead of producing them ourselves – and then get cheap foreign workers to do the menial jobs that remain. The consequences of this mindset for ordinary people outside London are plain to see in the state of our society.
Moreover, the OBR experts consistently get their forecasts wrong – as they did on the tax take so far this year.
Within the Treasury itself, there’s a danger that lower borrowing will strengthen the wrong argument.
Namely, that because debt is less than predicted, we should borrow more and spend more.
Yet our debt is already unsustainably high, at over 100 per cent of national income (up from less than 30 per cent at the turn of the century), with interest payments running at nearly £90 billion a year.
Instead of listening to the voices of pessimism, the Chancellor should instead pay heed to businesses, and indeed to families.
Families are facing the full force of unaffordable borrowing rates and restricting their spending as a result.
To head off a recession, and yes, there is still that danger, we urgently need to boost economic activity through targeted tax cuts.
But what about the Prime Minister’s pledge to get control of inflation?
The Chancellor is right to point out that if the value of the pound in your pocket is falling then the benefits of any tax cuts, as with pay rises, are wiped out.
At nearly seven per cent, it is lower than last year but still punishingly painful for families and businesses.
And I fear our current approach to taming it will not work.
Inflation – caused by too much money chasing too few goods – can be countered either by reducing the amount of money or by growing the amount of goods.
In my view, and that of many Conservative colleagues, we are doing too much of Option A and not enough of Option B.
The disaster of Liz Truss’s premiership – a disaster partly though not all of her own making – looms large in the memory
The Bank of England, which is to blame for the over-supply of money in the economy, is now hiking interest rates to their highest levels since 2008.
That leaves some families facing a doubling of their mortgage payments, not to mention record energy bills and the highest taxes since World War II.
Yet with these savage constraints on spending, inflation remains stubbornly high.
The Government is right to reject union barons’ demands for unaffordable and inflationary pay demands.
However, high interest rates and low wages aren’t the answer to our problems.
Most of all, to fight inflation without squeezing incomes unbearably we need to boost output.
We need to get more goods and services into the market at prices people can afford.
Which brings me back to tax cuts because at the heart of the UK’s economic malaise isn’t inflation but productivity – the value created by our workforce.
Productivity in much of the country outside London and the South-East is lower than in parts of Eastern Europe.
Often this is because, rather than training our own people or investing in labour-saving technology, we import lots of cheap foreign labour.
And that again is partly because of a tax and regulatory regime that hinders entrepreneurship, discourages sensible risk-taking and caps growth.
Take our wrong-headed VAT tax regime which positively discourages small businesses from growing because once they pass a threshold of about £85,000, they become liable for the hated levy.
Yet three years on from leaving the EU which dictated our VAT policy to us, we have still not released firms from this unnecessary shackle.
There are a host of other limited tax cuts that could support families and boost productivity, such as modifying green levies and carbon taxes, which represent a direct cost to working people yet fail to tackle climate change in any substantial way.
Of course, the PM and the Chancellor are rightly cautious about any suggestion of promising unfunded tax cuts.
The disaster of Liz Truss’s premiership – a disaster partly though not all of her own making – looms large in the memory.
But I and like-minded Conservative colleagues are not calling for unfunded reductions.
We are calling for a carefully calibrated programme of properly costed tax cuts to produce the dynamic economy that the country deserves.
There is no time to lose.
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