My column for ConHome: The Tories’ 35% strategy and the paradox of Tall’s Law

by Stephen Tall on July 16, 2013

con home cartoonMy second column for ConservativeHome — The Other Side — ran this morning. You can read it here (replete with an array of, erm, thoughtful comments) or below. It’s fun to write for a new audience, and kudos to ConHome’s editor Paul Goodman for allowing a Lib Dem a regular slot on the site.

What’s the Coalition’s most popular policy?

No, it’s not the £26,000 benefits cap. That is popular, it’s true: almost three-quarters of the public support it in principle, despite the lack of evidence that an out-of-work family is ever better off than an in-work family.

But it is not the Coalition’s most popular policy. That accolade belongs to the increase in the income tax threshold. In Labour’s last year in office, you started paying income tax once you earned a penny more than £6,475. You now have to earn more than £9,440 before you start handing your money over to the Treasury. For the low-paid and ‘squeezed middle’, in particular, it’s a massive tax-cut, one that’s worth £700 to each and every one of the 24.5 million working people across the UK. Not surprisingly, almost 9-in-10 (89%) of the public approve of it.

Its very popularity has sparked a battle between the two Coalition parties: which of us gets to own the Government’s most successful policy? The Conservatives claim it for themselves: “Help for hardworking people” shout the campaign posters. This is an understandably cheeky piece of chutzpah. Raising the personal allowance to lift the low-paid out of income tax didn’t rate a mention in their 2010 manifesto. It was even dismissed out-of-hand by David Cameron in the first leaders’ debate: “I would love to take everyone out of their first £10,000 of income tax, Nick…We cannot afford it”. My party hasn’t taken this piece of policy poaching lying down: “Cutting taxes for working people is our number one priority. It is so important to Liberal Democrats that we put it on the front page of our manifesto, argued for it in the coalition negotiations and are delivering it in government.”

Such squabbles are the stuff of Coalition politics. My fear has long been that, no matter that the Lib Dems authored these tax-cuts, the Conservatives will bank the electoral dividend (at least in those areas where the Lib Dems don’t have an active campaigning presence). Brands are built over decades, not in years: most of the public will assume a tax-cut that takes place on a Tory Chancellor’s watch is thanks to the Tories.

That would be a bitter pill for the Lib Dems to have to swallow. Elevating tax-cuts for the low-paid to the top of the the party’s manifesto priority list was a smart piece of triangulation within my party. It pleased those on the economic liberal wing (who argued the tax burden had been pushed too high under Labour) while satisfying those on the social liberal wing (who recognised the injustice of taxing the poorest). Best of all, it was a clear, compelling campaigning message. After years and years of Lib Dems pushing for tax rises — a penny on income tax for schools, or a higher top-rate of tax — we finally found a way of selling tax-cuts in a progressive way… only to find George Osborne was the minister responsible for implementing it.

It seemed likely, therefore, that the Conservatives would win this propaganda war. But I should know by now never to under-estimate the Conservatives’ capacity to score an own goal. Because instead of enjoying their cheery plagiarism of this Lib Dem tax-cut, Conservative MPs have decided to cede the advantage back to us.

Under pressure from their backbenchers (a sentence that can almost be taken as read these days), Messrs Cameron and Osborne have confirmed that a tax break for married couples will be included in the Chancellor’s forthcoming Autumn Statement. At first glance, this might be seen as a tricky one for my party. After all, the Coalition Agreement commits the Lib Dems to abstaining on the issue. However, what it doesn’t stop us doing is speaking out against the policy, and that’s exactly what Nick Clegg has been doing, passionately, taking the fight to the Conservatives:

What does it mean for someone who let’s say was married but has lost their husband or wife, what does it mean for a widow, for instance, who is suddenly widowed and is told you’re not going to get the tax breaks you’ve got, or a woman who is abandoned by her husband? The woman still believes passionately in her own marriage and in marriage generally, but suddenly has the tax break taken away from her. I just think the problem is the moment the state starts trying to use the tax system to hand pick people for behaviour that the state thinks is good, I just think you get into a really sort of slippery slope of trying to divide one set of people off from another. So, if it’s going to cost hundreds of millions of pounds we’ll see what proposals the Conservatives come up with. I would much prefer to use that money for instance to make childcare cheaper for all working families up and down the country, regardless whether the mums and dads of those children getting that childcare are married or not.

This latest Conservative push for a married couple’s tax break gives the Lib Dems the perfect opportunity for a bit of easy differentiation. While my party continues to push for raising the personal allowance — a tax-cut for all that’s targeted at the low-paid — the Conservatives can advocate a marriage tax allowance that excludes most married couples. All I can say is to Tim Loughton et al is Thank You for giving us this chance to re-claim ownership of our policy while simultaneously exacerbating your party’s very real problem with women voters. I think that’s what was once called a double whammy.

By default, and perhaps without consciously realising it, the Conservatives’ have adopted their very own 35% strategy. Instead of reaching out to the Labour and Lib Dem voters who didn’t vote Conservative in 2010, George Osborne is focusing on shoring up the party’s core vote, desperate to staunch the flow of voters to Ukip through a combination of welfare crackdowns and tax gimmicks. As a defensive tactic, it may succeed in getting David Cameron back to 35% in the polls. But as a way of winning 40% and a workable majority in 2015? No chance.

There’s a paradox in all this: and like all good paradoxes it deserves a law. So I’m going to call it Tall’s Law: the more right-wing the policies the Conservative Party enthusiastically pursues the more likely it is it will be reliant on a second coalition being formed after the next general election; yet it is those very same right-wing policies which are likely to make it impossible for the Lib Dems to accept a second coalition. Which leaves me with one question: What’s your Plan B?