Attention! The Tories’ deficit disorder.

by Stephen Tall on April 10, 2010

Cross-posted from the International Business Times:

It’s not often you’ll find me agreeing with Labour’s uber-spin-doctor, and Tony Blair’s apologist-in-chief, Alastair Campbell. But precisely because he helped write the New Labour election-winning manual, he is highly attuned to the failings in the Conservatives’ attempts to plagiarise it, and in particular David Cameron’s and George Osborne’s habit of mistaking tactics for strategy.

The latest example he highlights on his always-entertaining blog is the Tories’ attempts to force Labour onto the defensive by promising to reverse the increase in employers’ National Insurance contributions:

The Tories assume that if they get a good media hit out of something, they have won the day. And they think if they win enough days in the media war, they will win with the public. … the Tories were wrong on the recession and wrong on the recovery. Tactics will only take you so far if your strategic response to the single most important event of the last Parliament, and the single most important issue for the next one, is wrong.

He’s absolutey right. Yes, it’s still possible that the Tories’ decision to turn their campaign fire on the NI rises will prove to be the tactic which wins them the election. After all, they have been able to pray in aid the support of a number of business leaders, endorsements which have played well in the media – although the public seems to be less impressed.

But “new tax on business unpopular with businesses” is scarcely news. And all voters realise: nothing comes for free. The reversal of the NI rise will cost the Tories £13 billion to implement. They claim the money can be found from vague ‘efficiency savings’ in order to try and dodge accusations that they’ll have to put up other taxes, or slash public spending faster than the still-fragile economic recovery can sustain.

Yet the Tories’ themselves admit that the savings they want to make for 2010-11 through outsourcing back office functions won’t actually come through fully until January 2012. In other words, for all the talk of cutting the deficit – remember the air-brushed “We can’t go on like this” posters? – the Tories’ reversal of Labour’s NI tax rises will actually increase the deficit.

This smacks of panic. The polls narrow, and the Tories’ knee-jerk reaction is to announce a tax-cut and hope no-one will ask how it’s going to be paid for: suddenly cutting the deficit is no longer the number one priority which David Cameron pledged it would be just a few months ago.

But the Lib Dems are asking how the Tories intend to pay for their tax-cuts for businesses – and have been quick to highlight one way in which Messrs Cameron and Osborne may choose after the election to make up the difference: by increasing the standard rate of VAT by 3%. This would cost the average family an additional £389 a year, with who knows what potential damage to the economy.

Contrast this with Nick Clegg and Vince Cable’s fully-funded plan to raise the income tax threshold to £10,000 – cutting the average individual’s tax bill by £700, and lifting four million of the poorest in society out of tax altogether – paid for by tax increases for the wealthiest in society. Not only will this boost the economy, given the greater propensity of low-earners to spend, it will also help build a fairer Britan, reversing the income inequalities which have actually increased during Labour’s 13 years in power.

Elections are always about choices – and at this election it could not be clearer.

You can vote for the Tories, whose unfunded tax-cuts will increase the deficit and likely hit ordinary voters hard through VAT increases.

You can vote for Labour, which has presided over widening inequality in which low-income workers face marginal tax-rates of up to 92%.

Or you can vote for the Lib Dems, who have already identified spending cuts – scrapping Trident replacement and ID cards, for example – to reduce the deficit, and who would cut income taxes for people on low and middle incomes.

It’s your choice. Who do you think has the right strategy?