Tuesday 24 March 2009

Taxing times for Tory thinkers

One weakness of David Cameron's ProgCon modernising agenda is that he often lacks any advocates on the centre-right who are upstream of the leader himself. That seems to me to be one reason why, once debates become about anything substantive rather than image, the leadership comes under pressure from the right, and often retreats (grammar schools; tax and spend; Europe), or at least splits the difference (accept the new top rate; keep the inheritance tax pledge despite a Ken wobble).

Were I David Cameron, I would certainly be worried if my only 'outrider' was embedded at Demos, advocating a 'Red Toryism'. But perhaps that analysis unfairly overlooks the role of thinking Tory Daniel Finkelstein, now at The Times, who is among those (dozen? half dozen? three?) people in the party who are happy to call themselves "uber-modernisers" and who have long held it to be self-evident that a party that loses three elections might ask whether it should do something other than say it again louder.

So the argument between Daniel Finkelstein and Tim Montgomerie about Conservative tax policy is interesting and important.

Montgomerie kicked off this exchange by calling on George Osborne to 'get a grip'. The big argument is that, if they take over in a recession, the Tories could and should significantly shrink the size of the state.

Finkelstein wrote him a letter. He in principle shares that goal. But, in the real world, he notes that "Keeping spending growth below the level that Labour now plans will be very hard indeed. Very hard. I agree that Government currently does things it should not do and money can be saved. But each act will be a huge political battle with vested interests who represent real voters". (This is, of course, why neither Thatcher nor Reagan reduced government spending: it was not that they did not want to). The politics of bottling the argument about Labour's new top rate are "compelling", says Finkelstein.

Montgomerie has retorted further, and Finkelstein has replied again. (Even what an Observer ex-colleague is calling Katwala-Cohengate is going to struggle to keep up with this).

The important issue is not that there is a public disagreement: that is in the nature of politics; any party which wants to govern needs to construct a broad coalition to do so. It is what choice the party wants to make and why: I think that remains open, in part because this remains a debate where the leadership has not really fully engaged its own membership.

It is also only fair to note that there are several areas of substantive agreement between these Tory voices (they both have a "visceral reaction" to a 45p rate on the top 1% of earners, which 72% of their fellow citizens support), alongside their very significant disagreement about the party's political strategy. Finkelstein is advocating what is implicitly the leadership's strategy; in my view, part of the party's problem is that the leadership has been decreasingly willing to articulate that strategy publicly, as well as privately, perhaps since the end of 2006.

Alastair Campbell will not - like myself - be universally seen as an entirely popular or trusted observer of this debate. But I think he was right to say last night that an underlying reason for the Clarke gaffe is that Ken might be unsure as to what the party's instincts are now supposed to be. (The reasons for not opposing the 45p rate seem to me to apply precisely to the inheritance tax pledge, except that the latter was used to tickle the party's tummy to squeals of delight).

I would challenge two points about Montgomerie's reply:

* He seems irked that George Osborne chose last week to say they would support it. But I agree with Finkelstein that we all knew they would support it within days of it being announced: I posted about the media briefings to that effect last November.

* He says of the ConservativeHome (self-selecting) poll of activists that "80% of Tory members said we should oppose 45p or adopt a 'wait and see' policy". True - and yet that seems quite over-spun to me. By the same token, 55% said the party 'should support it or adopt wait and see'. (41% wanted to oppose it; 16% to support it; 39% to wait and see). Of course, most Conservative voters back the new top rate.

Of course, as we now see, the 'wait and see' policy was never going to hold. Neil Kinnock got into significant trouble trying to get through an election campaign in 1992 without giving a view about proportional representation. I would love to see the Tory leadership try to do so on the top rate of tax, but of course they needed to, in effect, promise to repeal it or to accept they would keep it.

A final thought: these kinds of debates between activists, columnists and other opinion formers (as opposed to between members of the frontbench team) can be healthy and useful. That was a major theme of last night's Fabian 'lessons from Obama' debate (liveblogged here), so I don't see any sense in screaming "split" when Conservatives hold an open debate about their values and aspirations for a government, and where taxes and a smaller state fit into that.

A particularly useful feature of the blogosphere is that it isn't simply a case of different views being projected past each other in "broadcast" mode, but of an interrogation and defence of positions. I think we would have a better internal Labour debate if there was more genuine and serious engagement across left, right and centre: Compass and Progress have held joint events together trying to do this, but too much of what passes for internal debate can still end up in mutual caricature.

Montgomerie and Finkelstein have taken the internal tax debate out into public. Even if the rest of us still can't be sure what the Tories think on tax.

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