What cost of living crisis? Tory hopefuls’ fuss over tax cuts is devoid of reality
By the time the Conservative party gets around to electing a new leader, Britain will either be in recession or perilously close. The cost of living crisis will be entering a new, more painful phase with a fresh surge in energy bills. A tough autumn will be approaching, with inflation – already at a 40-year high – heading for 11%.
These are far from ideal conditions for an incoming prime minister. Yet so far, none of the candidates is offering real solutions to the cost of living challenge. Instead, the leadership contest is taking place in some parallel universe where the biggest tax cutter is king.
With the tax burden heading for the highest level since Labour’s Clement Attlee was prime minister in the late 1940s and early 1950s, this game of tax-cutting Top Trumps is perhaps understandable. The party feels it has lost its way, and needs a major reset. However, it’s a debate that is devoid of reality.
The Sunday newspapers are full of pledges to cut rates for businesses, workers and consumers, with promises worth billions. Taken together, they would eradicate the tax base of a small country. In a big economy such as the UK, they would blow a serious hole in the public finances – something past Conservative leaders told us could turn Britain into Greece.
Tax cuts, big spending and budget deficits aren’t always bad news if they are backed by sound economic reasoning. However, planning fiscal policy to woo a narrow group of mainly affluent Tory party members isn’t likely to meet the needs of wider society amid the worst hit to household finances of our times.
Outside of this world of fantasy politics, economists warn some of the tax cuts being dangled would throw petrol on the inflationary fire and turbocharge inequality.
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