(A round-up of the recent party conferences)
So, the dust has settled on another Conservative Party conference and most accountants, economists, bankers were glued to the nightly summary of announcements looking for any clue as to would the Tories cut inheritance tax, income tax, corporation tax or even National Insurance rates? Or would they continue to use stealth taxes to pick our pockets?
In advance of what is expected to be the final Conservative Party conference before the next general election, the Chancellor and Prime Minister might have hoped to see positive headlines. However, as per usual, we had a constant drip of hints and minor announcements, many of which contradicted one another.
Unfortunately for Rishi and his mate Jeremy, before they’d even opened the show in Manchester those well-known party-poopers, the Institute for Fiscal Studies stepped in. On the eve of the conference the Institute released a report stating that during “the biggest tax-raising parliament on record” the overall level of taxation will have increased from 33% to 37% of national income (an extra £3,500 per household) in the past four years and predicted “a decisive and permanent shift to a higher-tax economy”.
Taxing Times: The magic money tree has died
The first victim led to the podium was the Chancellor Jeremy Hunt. He rather hesitantly told the waiting press pack that there is currently no spare cash available to cut taxes. Instead, he helpfully pointed out that halving inflation would effectively be the best tax measure that anybody could hope for, whilst persistently denying that he had raised any taxes. It didn’t take most journos long to work out that his blanket freezing of various allowances, such as freezing income tax personal allowances, were tax rises by another name.
Then a former Chancellor rode to his rescue with a tactical leak of his own. This was none other than Rishi Sunak, who quietly promoted the idea of reducing the rate of inheritance tax (IHT) by four percentage points. Whether a 36% rate of IHT will be a sure-fire winner with the electorate is a moot point.
However, our wonderful leader went on to indicate that this might merely be a brief stopping point on the road to full abolition. If you will recall, I wrote a Blog on the subject of ‘Britain’s most hated tax’ only two weeks ago. So, I leave this subject for a while, but if it hasn’t been abolished in the meantime, I will return to the topic in the not-to-distant future.
Taxing Times: Any other comments?
You might imagine that once the PM and Chancellor had spoken on tax matters, there would not have been very much said by anyone else. That was far from the case, as there were a number of significant contributions from those who are concerned that the party is heading in the wrong direction.
At the vanguard of dissenting voices was Liz Truss, who held her own rally at the party conference. This supposedly forgotten woman, who trashed the economy in a single month last year, seems determined to repeat the trick. Her primary demand is for corporation tax to return from 25% to 19% and then cut even further. To be honest, if she was given free rein, she would probably go on to abolish taxation completely, at least for the top 10% of earners.
Whilst Liz was holding forth, a group of 60 right wing Conservative MPs called the Conservative Growth Group, and which includes Priti Patel, former party chairman Jake Berry and Jacob Rees-Mogg have said they will not support any government motion that increases taxes. This left me wondering, are they including stealth taxes? If they are, then we will definitely see tax cuts as by increasing thresholds, as it will reduce the tax burden by around 10%.
Is anyone in the Tory party suggesting anything remotely plausible?
Well, just when things were at their bleakest, Michael Gove rode over the brow of the hill to have his say. In one interview on Sky News, he even went as far as making a number of suggestions that sounded dangerously like sanity. He wants to reduce taxes on work, hinting that the main villains were income tax and national insurance contributions. He even had the temerity to suggest that the obvious route would be to increase exemptions and allowances, thus helping those at the bottom of the pile.
While such ideas might make Gove a something of a pariah in the Conservative Party, they could be drawn directly from a Labour or Lib Dem manifesto. At the moment, it is impossible to know who will win this internecine war but the biggest beneficiaries might just be the Labour Party, with the Lib-Dems picking up a few scraps.
Other UK Conferences
The Labour Party conference
As an economist and former Bank of England Monetary Committee member, I have a lot of time for Shadow Chancellor Rachel Reeves. Unfortunately, the lady has had a straight-jacket forced on her By Kier Starmer, who appears to have only one tax pledge, namely tax the Non-Doms. This will apparently solve most of the country’s financial ills, but I have a feeling that Sir Kier will have a rethink and commit to a few more, closer to the election.
The Lib-Dem Party conference
I’m sure that Lib Dem leader Sir Ed Davey is a decent human being, but his almost childlike stunts at various recent by-election events would suggest that he knows he has zero chance of being in power and seems a little out of his depth.
In my personal opinion, this year’s party conference season has been a series of damp squibs, with none of the parties seemingly willing to commit to anything significant, for fear of upsetting the electorate.
Oh, where oh where is Ed Balls now, at least he had some! And on that dreadful pun, I will say goodbye until next week.