Saturday, June 28, 2008

Lib Dems - The Low Tax Party - has Nick Clegg got it right?

Mark Littlewood, ex Lib Dem Head of Media and well known exponent of dragging the party kicking and screaming to the right, urges Nick Clegg in an article in the Telegraph yesterday to make us the low tax party.

"Greatly to his credit, Nick Clegg has dropped some hints that the LibDems could become the party of low taxation at the next election. But he has yet to adopt the policies to make such a claim truly plausible"

He also has some wise words to say about our desperate need for a meaningful narrative and clear messages, though clearly his view is that the clear messages should be about low taxation alluding to the idea that this could be the only way our MPs in vulnerable seats can tackle the Tories. But my question is, if the choice is between a large low tax party and a small low tax party, why would you choose the small one? This for me gets to the crux of the issue. We are trying to get policies that will appeal to soft Tory voters so that we can hang on to our Southern seats, rather than returning to our values to discover what should drive us.

We are tying ourselves up in knots about narrative and clear messages, actually we have a clear message which is the sure foundation for our's the preamble to our constitution:

The Liberal Democrats exist to build and safeguard a fair, free and open society, in which we seek to balance the fundamental values of liberty, equality and community, and in which no-one shall be enslaved by poverty, ignorance or conformity

(My emphasis). This morning The Centre for Crime and Justice Studies, Kings College London published research that criticised the government's approach to tackling knife crime. They argue that the government's punitive approach is counterproductive and that it is the underlying root causes of poverty and inequality that needs tackling. So, my argument is, a drive for being seen as a "low tax party" without explaining how that relates to our core values is vacuous. We are starting at the wrong end. Now, if Mark et al could explain how lower overall taxes will contribute to ending poverty and inequality then there is a conversation to be had.


Tristan said...

Its taxes and the state which make people poor and drive inequality.

You cannot reduce poverty and inequality by taxing. The state operates to give favoured groups advantages, at the expense of the most vulnerable (that it often tries to dress this up as helping the vulnerable is besides the point).

As for moving to the right - tax cuts are left wing. Reducing the state is left wing. Just because the state socialists abandoned the left, it doesn't mean the opposite of them is the right.

Douglas said...

The problem with quoting the preamble to the constitution is that no decent person would argue against it.

The concerns around how poverty, ignorance and conformity are defined and dealt with are concerns that we, as Lib Dems, are failing to articulate at a national level.

You asked about the difference between a large low tax party and a small low tax party - presumably the same could be asked about the difference between a large high tax party and a small high tax party.

We need to recognise that taxes are hurting many people and that reducing the 'fixed' taxes like income tax will benefit the economy.

By the way, why does a low tax position have reflect a right-wing position. What about championing our social liberalism?

Mark Littlewood said...

Linda, Just to clarify where I’m coming from on the tax issue…

I believe that there are good economic and ideological reasons for supporting lower taxes (as a liberal, I instinctively prefer individual men and women spending their own money rather than politicians spending increasing amounts of it on their behalf). I support this stance on principle. However, not only is such a stance a liberal one, it could also reap electoral dividends.

You ask why the electorate would choose a small, low tax party rather than a large low tax party. But the Conservatives are definitively and explicitly NOT a party of low taxation. It is fundamental to the Cameron-Osbourne narrative that they would match Labour’s tax and spending plans. So, at present, all three main parties appear to be in complete agreement about the total levels of tax and spend – and although they differ on exactly how to raise and how to spend public money, this is a situation in which the voice of the third party is likely to go unheard. Combine this with the harsh electoral reality that our key electoral battles are disproportionately against the resurgent Tories in the disproportionately affluent and disproportionately “anti-tax” south and I think being the party of low tax hits the double bullseye of being sound in principle AND a useful electoral weapon.

I agree with those who say that our preamble is rather too vague and begs too many questions. But you’re quite right to ask how cutting taxes could help reduce poverty. Well, we are halfway there in our approach already. But it’s a shame in my view that we didn’t manage to capitalise more on the abolition of the 10p tax rate – which hits the working poor very hard. Many of the taxes we already have are deeply regressive (for example, ever higher taxes on tobacco) and a good number of changes being mooted (e.g. an end to the sale of cheap alcohol in supermarkets) are both illiberal and likely to penalise the less affluent. It’s a shame that the party has been so silent on these issues.

We need to get away from the assumption that tax-cutting is an economic strategy that is right-wing or bound to favour the rich. And we need to break the cosy cross-party consensus that has led to a phenomenal growth in tax and government spending. That would be part of a pro-freedom, anti-government narrative that would set us apart from both the Tories and Labour and could yield increasing returns at the ballot box.

Linda Jack said...

Hi Tristan,

Haven't heard from you for a while?! The problem for me is making tax the issue. The issue is what are our values, how are they best reflected in policy? I am long enough in the tooth to remember the days of Thatcher when cuts in tax meant cuts in services that were designed to help and support people. I also lived through years of a Tory County Council where services endured massive cuts every year. The result? Poor quality and poor outcomes for those most marginalised in our society. Where is your evidence that cuts in tax equate with better outcomes for the poor?

Douglas, you make a fair point, however the issue is about how we sell ourselves, I never heard of any party selling itself as the high tax party! It is the lack of connection with what taxes are for that I object to. We pander to the right wing media when we seem to be saying taxing is for taxings sake as opposed to pay for the services the electorate say they want. We compare ourselves unfavourably for example with Scandanavian countries, yet fail to recognise that good services cost. Our lack of investment in really tackling poverty and inequality has lead to us being bottom of the league when it comes to the wellbeing of our children. My argument is that we need to invest to ultimately save. What cost benefit analysis is ever done when taxes are cut and services are reduced?

Linda Jack said...


Thanks for your explanation and of course I agree with you re the 10p rate and I would like to see us raise the threshold so that those at the bottom end paid less tax. I also agree that people should have more choice - but frankly manufactured choice is in my mind no choice at all! Also tax cuts at the bottom don't have any impact on dealing with the benefits trap and for those on benefits. We surely have to recognise that cuts in services disproportionately impact upon the poor? Where do you think the cuts should come from? Now clearly there are some obvious areas (like Trident and pulling out of Iraq and Afghanistan which I know you agree with) but we also have a huge commitment to the pupil premium for example. But you have highlighted the real debate we need to have around economic and social liberalism in the party. I would like to reopen the tax debate - but for different reasons to you!

Mark Littlewood said...


The party has already highlighted a good range of areas for cutting (scrap the DTI, scrap the Child Trust Fund etc). Whilst it might be too late to change policy now, I would also have liked us to oppose renewal of Trident, support withdrawal from Afghanistan and oppose the 2012 Olympics (the bill for the Olympics is now almost certain to eclipse that of the Iraq war).

All you actually need to do to be a tax-cutting party is not to recycle 100% of these savings into other public expenditure. Some of it can go to otehr high priority areas, for sure (e.g. pupil premium), but some of it could go to e.g. increasing income tax thresholds. What's odd about our accounting at the moment is that there is an unwritten (and too often unchallenged) assumption that if we identify £1 of savings, we should identify £1 of new spending - rather than, say, a 50-50 split between alternative spending and tax cuts.

I think I disagree with you that tax cuts at the bottom end don't help combat poverty and the benefits trap. The poverty trap would be mitigated by ensuring lower tax rates on relatively low paid jobs. I also support Chris Huhne's assertion that the green tax switch would assist the poor (my affluent girlfriend gets whacked for driving her Porsche, but many poorer families can't afford a car at all and rely on public transport).

At least we are agreed, I think, that this is an important debate that the party needs to have!

Linda Jack said...


Well.........I for one would like to revisit Trident! You are right about the unwritten rule. The other unwritten rule is that even if we think it is worth spending money on, if we can't find it we won't do it. This is where the lack of cost benefit analysis comes in and somewhere where I think we need to do some serious thinking. If a lack of investment (an you might imagine my particular bugbear is in youth services) what is the ultimate cost in failing to provide the service? And that is not just financial cost - for example in the cost of locking up children - it is more importantly the human cost. But, yes, we need this debate so we can come up with a clear direction for the party. It is in danger of becoming the elephant in the room.

Douglas said...

Hello Linda

No party has claimed a high tax postition for a while but Mark Littlewood makes the point that the other parties are high spenders.

Taxes and Public expenditure in this country have increased by billions and billions of pounds yet many of the hopes and aspirations around helping the poor and the 'youth' of today that have had more spent on them at any time but are still seens as a high expenditure area. Why is this? What has been the benefit of those billions?

I live in Scotland and the Scottish Government now gets almost twice what it did in 1999 but there is no evidence of it. Old people still die of infections in hospital, old people still can't get decent podiatty services and social services are moving to meals-on-wheels and ending house cleaning services, both of which massively increase social isolation of older people (spot my bug bear).

Gordon Brown has shown that high spending does not work. We need to try something else.

Linda Jack said...

Hi Douglas,

Yes, of course you are right, spending of itself is no panacea. It is often related to meaningless targets, or is unaccountable. But, my argument is that a huge percentage of those billions are swallowed up by private sector companies who put their profits before people. Plenty of evidence for this. And we are on a slippery slope whether Labour continue or their mantle falls on the Tories. We need to look at what works, not what looks good and keeps the focus groups happy. Hmmmmmm, expediency, the watch word of the 21st century!

Bernard Salmon said...

I agree with you that the preamble to the party constitution provides the basis of values on which we build our narrative and over at my blog I've made a stab at explaining what our narrative should be.
Although he makes some fair points, I'm not sure that Mark Littlewood's approach would give us a distinctive narrative, as it sounds rather close to the Cameronian position of "sharing the proceeds of growth between spending and tax cuts".