Sunday, August 12, 2007

Cameron caves into right wing again - Are the Tories insane?

John Redwood has been granted his tax cut policy which he has been dreaming of. A deregulation package, to be announced by the Tories next Friday, would give businesses a £14 billion saving, which Redwood says "would be a tax cut by any other name".

Interesting isn't it? When the Liberal Democrats propose tax cuts it is to relieve the plight of the less well-off.

When the Tories propose "tax cuts" it is to relieve the plight of those poor hard-up businesses.

The Observer says that "The Conservatives hope John Redwood's call for cuts in red tape will spark a fightback against Gordon Brown".

An ardent Thatcherite, Redwood will outline plans for dramatic cuts in red tape to save British business £14bn a year. His targets will include the European Social Chapter - Britain's opt out would be restored - EU working time regulations and British laws which restrict the ability of companies to make workers redundant.

Oh, I see. So the Tories hope that they will steal a march on Brown and become popular again by helping businesses and allowing them to make it easier to sack people and make them work longer.

Are they mad?


  1. "Are they mad?"

    Not more than they have always been. But this is very interesting. It seems to me, that the Tories have finally run out of patience with Cameron's adventures to the political centre, and he has been told to return to the clear blue waters or kiss the leadership goodbye.

    Actually I'm for tax cuts, and I hope, that Lib Dems would also propose some, but by using more consideration. There are ways to get the same or better public services with less money, for instance by competitive tendering of public services instead of trying to produce everything publicly with any cost. The guiding principle should be "more value for less money".

  2. Actually, strangling businesses doesn't help anybody, least of all their employees.

    Glenn Hubbard, dean of Columbia Business School, has argued that the burden of corporation tax falls largely on the employees.

    For example, one comparative study suggests that a 1% increase in corporation tax results in a 0.8% reduction in manufacturing wages.

    Similarly, tight labour laws in France have left business reluctant to employ new staff whom they cannot "try before they buy", so leaving France with an unemployment rate of 10% (and over 25% among the young).

    At present, the UK's corporation tax rate is around the OECD average, but we could learn a lot from the competitive model presented by (for example) Ireland.

    The simple choice is, do we want to spend now and be poorer later, or grow now and have more to spend later.

  3. Thank you for bringing me down to earth Tom, and good luck with your by-election

  4. So long as these are across the board and not preferrential towards any sector they're a good thing.

    Regulation costs so much, and disproportionately harms small businesses.

    Its a sad thing when cutting taxes is seen as evil yet taking people's money to waste and restricting people is seen as good...

    The government rarely spends money well. When it does spend it on good things it seems to do it very badly.

    Of course, this isn't even a tax cut, its a cut in regulation which doesn't affect the government's income (it would probably lower government expenditure and raise income due to more business activity)