We need an honest debate on taxing issue of spending, says STEPHEN POLLARD


Inflation is 5.1 per cent and widely tipped to hit 6 per cent very soon. Energy costs are soaring and steep tax rises are set to add to the misery. It’s a deeply gloomy picture, and no wonder Tory MPs are getting angsty.

As one was reported to have said at the weekend: “People are p***** off about parties in No 10 now but it will pass. What won’t pass is the anger people will feel when, far from being levelled up, they find their standard of living has been levelled down.”

Labour’s poll lead fluctuates, but it is clearly ahead. And while a poll just two years into a Government with a huge majority means next to nothing, it is a useful guide to the state of public opinion now. That’s borne out by a poll yesterday showing 33 per cent of people expect their fuel bills to become unaffordable this year, while 67 per cent are worried about rising prices overall.

Robert Halfon, the thoughtful Tory MP, called the cost of living crisis the “number one issue facing the Prime Minister”, saying: “People voted for Boris because they believed their financial security and prosperity would be better – he has got to make it happen.”

But if it is easy to diagnose the problem, it is far less so to prescribe what must be done. Because there is an air of unreality about much of the current debate.

In recent years, we seem to have forgotten one of the most important lessons we learnt in the 1980s under Mrs Thatcher: money doesn’t grow on trees.

Spend more than is economically sustainable and you’ll make things much worse. Print more cash to cover your spending and you risk not only inflation but economic damage.

But the talk from both sides of the debate has moved away from the real world. On one side, some Conservatives say the overwhelming need is to cut taxes and spending. Yet if there is one policy with which this Government is associated it is “levelling up”.

Covid delayed plans to turn that slogan into reality, but a White Paper is due soon and the PM is well aware he must use the next two years to show real and fast progress. That means, and can only mean, spending money.

The idea that Boris Johnson of all people can suddenly do a 180 degree about-turn and turn into a tax and spending slasher is away with the fairies. However, there is no less unreality from those demanding yet more spending to “soften the blow” of rising costs, without a clue as to where the money will come from.

It is astonishing that this needs to be pointed out, but the pandemic changed everything – not least the public finances. To avoid an economic catastrophe Chancellor Rishi Sunak
introduced furlough, at a cost of more than £70billion. Test and Trace cost over £37billion.

Altogether, the cost to support business, households and public services through Covid has been put at £315billion.

To put that into context, in 2020 the NHS spent £212billion and the education budget was £99billion. We spent more on Covid measures than on the NHS and education combined – and not a penny has gone on levelling up or reforming and improving public services.

That is the prism through which all future decisions need to be viewed – such as the plan to tackle the social care crisis.

For decades there have been calls for government action. Finally, this one has acted. Imperfectly, yes – and with the huge downside of an increase in National Insurance to pay for it.

But on the one hand there are those saying the plans do not go far enough – in other words, that we need to spend even more money – and on the other are demands the Government scraps the NI rise due to the cost of living crisis: creating a greater social care funding gap.

Similarly, the call to scrap VAT on energy bills to ease the cost burden is bandied around as if it is some kind of easy solution, but it simply isn’t.

There are no cost-free solutions – only choices to be made about what spending is needed and how it can be paid for.

That could mean, as ex-chancellor Norman Lamont has said, that instead of measures like tax changes for all, targeting help at those who most need it – recognising that it will cost money but understanding special help is needed. That would apply especially to energy bills. Politics and economics are both, at root, about choices and consequences. The sooner we relearn that lesson, the sooner we can have a rational debate about where we are heading.


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