Boris Johnson thrusts Tory tax-cut obsession into spotlight

Of course, it must be emphasised that the Conservatives’ clamour for low taxes does not generally apply to value-added tax, various rises in which over the years and decades have hit lower-income households particularly hard.

Reading the runes, the debate within the Conservative Party seems likely to be around whether the prospect of tax cuts at some not-too-distant point in the future is flagged as early as next month’s Budget or not.

The Kwasi Kwarteng mini-Budget last September is something that might make Prime Minister Rishi Sunak and Chancellor Jeremy Hunt slightly more patient on this front than you might expect from the Tories in a situation like the current one.

The mini-Budget caused absolute chaos in financial markets, which required intervention by the Bank of England, and sent sterling plummeting to an all-time low against the dollar.

That said, the ruling Conservatives might think the clock is ticking.

Whatever the decision on timing, the big problem is that the Conservatives always seem to be looking in the wrong direction in their supposed drive to boost growth.

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Mr Kwarteng and former prime minister Liz Truss, for some bizarre reason, thought that reversing the planned rise in the main UK corporation tax rate from 19% to 25% from this April, an increase since reinstated, was one of the keys to growth. Even though the Tories’ move to cut corporation tax from 28% to 19%, after they came to power in 2010, failed spectacularly to boost investment or growth in the way they had envisaged.

Yet the low-tax mantra continues, as the Conservatives not only fail to see the answer that is staring them in the face but actually flee from it, presumably on ideological grounds.

So what did Mr Johnson have to say for himself this time?

In an interview with former Cabinet minister Nadine Dorries on TalkTV, Mr Johnson said: “The fiscal position was pretty robust when I left office, we had scope to do all sorts of things and we were going to do them and I have no doubt that when the time comes, the Government will make sure that they start to reduce the tax burden and get the economy growing again and that is what needs to happen.”

It is worth noting that the cutting by the Tories of the top rate of income tax from 50p to 45p in the pound after they came to power in 2010 did nothing to boost growth. And the since-abandoned plan by Mr Kwarteng and Ms Truss in last autumn’s mini-Budget to abolish the 45p top rate of income tax, as well as being obscene from a societal perspective with many millions of households struggling with a dreadful cost-of-living crisis, would surely have done nothing for the economy either.

Of course, tax cuts that mainly benefit those on the lowest incomes would provide a much greater boost to the economy than those for the highest earners or major companies. However, post-2010, the Tories seemed focused on delivering corporation-tax rates way below those required to be competitive in an international context and on tax cuts for the highest earners.

The child benefit taper has meanwhile ensured those who are more middle than higher earners have had to endure much more onerous marginal tax rates.

Lower and middle-income households are being squeezed hard by the freezing of income-tax thresholds, amid rampant inflation in the UK, with this pressure set to intensify under current Tory plans.

And the Conservatives have since 2010 implemented a savage austerity programme, with their dreadful clampdown on welfare benefits a lamentably permanent feature of life these days from a societal perspective and a major drag from an economic viewpoint.

The UK has turned in a dismal economic performance since 2010 and is forecast to be the worst-performing among the Group of Seven leading industrialised nations this year.

Yet the Tories still do not get it.

If the Conservatives are serious about boosting the economy, they might want to think again about the enormous and miserable squeeze on public spending implemented by Mr Hunt in his Autumn Statement last November, which adds to the slew of grave policy errors delivered by the Tories since 2010.

The Conservatives should sit down and think about what would actually boost growth.

Priorities could be realigned dramatically to put more money in the pockets of those who have to spend all or most of what they have to live. This money would then go straight back into the economy, and would help the businesses whose interests the Conservatives claim to champion.

The Tories could also stop their mean-spirited clampdown on pay rises for crucial public-sector employees, including teachers and nurses, who are rightly unwilling to accept huge real-terms cuts in their incomes.

Such a rethink would also help enable a solution to pay disputes in the public sector in Scotland, if the Tories released the purse-strings.

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In the context of public-sector pay, First Minister Nicola Sturgeon rightly noted in November: “There is a hard limit without additional resources from Westminster in what we can do.”

The Scottish Government correctly pointed out last year the lack of regard for prevailing inflation rates in the UK spending review.

Stopping strikes would surely be a good thing for the economy.

And enabling the incomes of workers in the public sector to get somewhere close to keeping up with inflation would provide a fillip to aggregate demand.

The Conservatives might also want to think about whether they could find some money for more major infrastructure projects.

These are the sorts of things that the Tories should be looking at if they are serious about growth.

Instead, Mr Hunt has decided to strangle public spending and now we have Mr Johnson trying to drum up support for tax cuts.

It is typical, but utterly lamentable. And we have been here before.