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Wednesday, July 13, 2005
The new Conservative economic vision

George Osborne made a thoughtful and positive speech to the Centre for Policy Studies last night on the four objectives for a "modern economic policy". He rightly said that "a taxation policy does not equal an economic policy" and identified macroeconomic stability, increased productivity, reduced demand on the state and lower taxes as his four aims.

The shadow chancellor argued that lower taxes are essential to Britain's competitiveness in the global economy. "We need to make not just the moral case for lower taxation, powerful as that is, but also the economic case. The global economy will not tolerate high tax systems of the kind Gordon Brown is building."

In order to lower taxes, the Conservatives must produce "a number of significant, real and credible reductions in the long-term demands on the state." That should start with the chancellor's tax credits system and particularly the benefits paid to well-off families, he said. "We should ask ourselves whether taxpayers earning incomes of, say, GBP15,000 should really be providing means-tested benefits to people earning up to GBP66,000 a year."

Public sector pensions are a second area in which the Tories should look to make cuts, he suggested. "When millions of people in the private sector have seen their pensions reduced and their final salary schemes closed, how can we justify making them pay taxes to support generous, unfunded public sector pensions?"

Osborne also identified paying for new roads through tolling as another way of shrinking state responsibilities.

The most encouraging part of the speech was when the shadow chancellor acknowledged that they "need to make the case for lower and simpler taxes from the beginning of the Parliament, not in the last weeks before polling day." If Osborne continues to reiterate the case for lower taxes between now and the next general election, there is every chance that the Conservatives will feel confident enough to have a more taxpayer-friendly economic policy in four years time.

Posted by Matthew Elliott | Permanent Link

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