A fragile recovery needs tax cuts – not Miliband
04-30-2015
Telegraph View: Only David Cameron, George Osborne and the Conservatives can get the British economy back on track
George Osborne has warned Conservative colleagues not to
Prime Minister David Cameron and Chancellor George Osborne arrive in St. Petersburg for the G20 summit Photo: EPA/KONSTANTIN SALOMATIN
By Telegraph View
The latest GDP figures showed that economic growth halved in the first three months of the year. Labour and its supporters gleefully took this as good news for Ed Miliband just a few days before the election. But the opposite is true. What this demonstrates is how fragile the recovery is and reinforces the Tory message that it would be put at risk by parties already planning to spend the proceeds of extra wealth we do not have.
Labour has no coherent plan for the economy and has based its electoral appeal around a series of disparate spending promises ranging from the fanciful to the reckless. The Conservatives, as George Osborne has said ad nauseam, do have a plan; but they have never claimed to having fulfilled it. It is a work in progress. Indeed, one of the great dangers of an election campaign based almost entirely on an auction among the parties to spend yet more money is that voters will feel the economy is out of the woods. Far from it; and matters could worsen if there is a eurozone crisis triggered by a Greek exit.
The idea that a Left-wing Labour government sustained in office by the SNP will be good for the economy at such a critical moment in its emergence from recession is clearly for the birds. Thousands of businessmen and women have written to this newspaper warning of the deleterious impact of Labour’s policies on wealth creation and jobs. The country needs to listen to what they have to say. As the Institute for Fiscal Studies pointed out, Labour’s flagship tax plans will raise “very little money” and inhibit aspiration.
With just over a week to polling day, David Cameron now lays out this choice in the starkest terms, emphasising that a Tory government’s intention would be to cut taxes, and certainly not to raise them. Such is the modern politician’s credibility problem that he feels it necessary to enshrine such a pledge in law since it may not be believed otherwise. As he is only promising not to raise income tax, VAT or national insurance he will inevitably be asked why other taxes – on property or pensions, for instance – are not similarly protected.
None the less, this is the first time in the campaign that tax cuts rather than spending pledges have taken centre stage. So far, much of the economic debate has been based on a false dichotomy – that lower earners are always hard-working while the better off are rapacious and should be taxed more. The real issue, though, is that without generating wealth, all the arguments over what to spend it on are redundant. Economic growth not only leaves room for tax cuts; they are also its motor.