Ban the (tax) bomb(shell)

One of the pictures above is from the Labour Party speakers’ handbook of 1949. It’s a small book that could be carried around in a Labour candidate’s jacket pocket and contains a little guide to the party’s policies on familiar things like “The cost of living and “Social security” and slightly less familiar policy topics like “Iron and Steel” and “Planning the Private Sector”. This is from the section called “The Conservatives”:

The Tory policy statement…. cynically offers bribes to every sectional interest in the community – regardless of expense. The Conservatives are going to cut taxation [this is followed by a quote from the Conservative policy statement]… then the Conservatives start systematically to bribe individual sections of the community. And all these bribes are going to increase Government expenditure. [Another set of quotes follow]. This programme of bribes is both malicious and dishonest. It is hard to assesses just how much all these things will cost. They must amount to at least £50 million a year. They could only be paid for through an increase in taxation.

The other pictures are the covers of similar attacks made by the governing party on the opposition in the 1992 and 2010 elections. I suspect there hasn’t been a General Election since my 1949 book was printed where the government has failed  to accuse the opposition of making dangerous promises it couldn’t keep (the contradictions on that last point used to be a bit of an obsession of mine).  This is from a mid-noughties briefing for MPs that I wrote when I was working in the successor team to those 1949 Labour researchers – ignore the breathlessly long sentence and note the slight – ahem – surface similarity between our attack on the Tories and events later in the parliament:

The Tories are repeating the same mistakes as 1992 when they promised more spending and less tax, leading to higher interest rates, three million unemployed, negative equity, rising inflation and Black Wednesday – all when David Cameron worked as an economic adviser to the then Chancellor Norman Lamont.

This long tradition could be coming to an end.  This week, Ed Balls proposed changing the legislation that governs the Office for Budget Responsibility (OBR) and empowering it to work out the cost of any pledge made by any major political party in an election. I know, I know, this sounds like a dull little change – but then fixed term parliaments sounded like a dull little change and they have radically changed the way that politics works. This could change how elections work.

Firstly, it would force political parties to say what they intend to do. If it involves money, it has to go to the OBR. If we didn’t put it to the OBR, we were fibbing. No more standing up on the soapbox and saying “This is a dreadful problem” and hoping that everyone listening hears “This is a dreadful problem and I intend to do something about it”. No more “as resources allow” promises. And, if you do work with the OBR beforehand to make sure all the sums add up before you publish them, no more “tax bombshells” either.

Secondly, although the Balls amendment seems ambivalent on this, it would inevitably give the OBR the ability to come up with a forecast of what will happen to the economy differently if a Labour or Conservative government wins office in the future. Most of the time the answer, if you really look at the numbers in detail, will be “not a lot, at least in the short term”.  But oppositions are frequently defeated because their own desire  to sound radical and important conspires with the government’s desire to make them sound dangerous.  An OBR ruling saying, “well this is slightly more pleasant in the short term but has a slightly higher price in the long term” (or vice versa), could change all that.  This time round that would help Labour, but last time it would have helped the Tories.

It would, of course, be bad news for anyone who thinks that large tax cuts or massive public spending programmes pay for themselves in the long run – but if you do think that, you’re going to end up trying to abolish the OBR anyway, so you might as well have the fight now.  The OBR might be completely wrong of course, but comparing two different policy programmes is a much easier task than its “day job” of predicting the future path of the economy.

We spent months of the last election – and it felt longer – debating whether David Cameron had promised marriage tax breaks, what they would really cost and who would pay for them. We still don’t know the answer.  But the debate on whether they were a good idea became irrelevant.  One way to improve politics is to take away all the little proxy issues that exist, both between and within the parties, to keep score.  If we don’t do this,we may just stop caring whether or not a party’s programme adds up.  Of course, there would be many more proxy issues to jump to, but we’d be a little bit closer to having a political debate that resembled the decisions that actually face us.

 

 

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