Tory tax and spend

Oliver Letwin finally unveiled what has been hinted at for a week in a fantastic bit of politics. The drip-drip effect of policy announcements in the last week has greatly impressed me. Finally the Party is looking like a really serious alternative. Let's keep it up though. And let's not shy away from the real issues - though I have no doubt that Howard & Co. will not.

Today’s spending announcement by has two main components. First, a commitment to increase public spending at a lower rate than Labout, thereby reducing its proportion of GDP from 42 per cent in 2006-07 to around 40 per cent by 2011. Second, a commitment to ‘protect’ spending on health and education, with large increases in these areas, initially above the rate of GDP growth.

It's been met by acceptance as a serious and costed proposal and is well argued. It is vital though that we make it clear that extra spending, in the short-term will only work with radical reform. For here is the real battleground with Labour. I know that Oliver Letwin is sensibly, and correctly, saying that

"The choice at the next election will not be about whether government spending should rise, but about how fast government spending should rise and about how that money is spent"

because he believes that the Conservatives are on the right side of that argument now, and with enough support amongst the country to win if the Party plays its cards right.

Nonetheless the counter of Labour is that "with £2 billion of the NHS budget set to be diverted by the Tories into private health, no one believes that his £18 billion of cuts could be funded without cutting doctors, nurses, hospitals and equipment in the NHS". The crucial ground will be to convince the British public that just spending more will not improve education and the NHS; that the real hindrances are structural and that the Conservatives can deliver real structural reform; that just ploughing more of their money into a leaking bucket will not stop the bucket leaking, but that the Conservatives will not stop them getting the services they need by starving them of money.

Let's wait for those announcements now. After all, the International Monetary Fund and the Downing Street Policy Unit have warned that the huge scale of NHS spending increases means that they may be spent inefficiently. The OECD has reported that NHS productivity has fallen. The NHS improved more quickly between 1991-92 and 1999-00, before the Government’s spending increases began. Change is needed...of Government and the NHS.

LATE NIGHT UPDATE:

From Free Democrat.

'Matthew d'Ancona
If you want to know what's happening in the Conservative Party ask Matthew d'Ancona. This weeks column is as insightful as ever.

Key quotes are about the Michael Howard's Europe speech.

"In truth, there was nothing substantially new in the speech ... But the speech's tone was a radical departure, approaching the EU with relaxed confidence as a house of many mansions, rather than as an innate threat to all that is decent and true (amongst those Mr Howard consulted while preparing the address was the EU Commissioner, Chris Patten)."

And about the forthcoming and highly important Letwin speech.

"The party's high command was furious at last week's story in The Times reporting that the Tories would spend more on health than Labour in their first term in office. The message Mr Letwin wants to get across tomorrow is rather different: namely, that the Tories do want a smaller state - with the proportion of GDP consumed by public spending falling from 42 per cent to 40 per cent over six years - but that some areas of public expenditure may grow as others contract."

The articulation of the tax policy is very important. It will also be a real litmus test as to where the newspapers stand with regards to the Conservative Party. Over Iraq Murdoch is so committed to the war that his papers were backing the government over all stories regardless. Tax is an area where The Sun and The Times ought to be agreeing with Oliver Letwin. It must be hoped that they will do so on Tuesday. '