Anding, or “stability”, is a favourite term of the slogan-loving Chinese Communist Party. It is also now, apparently, to be the bedrock of the Conservative Party’s economic policy. In an interview published yesterday, David Cameron declared that while the creation of a low-tax economy was a virtue “over time”, reducing tax would be a lesser priority for him than ensuring “stability and responsibility”. His approach was reiterated by George Osborne, the Shadow Chancellor, in a speech to the Cass Business School.
Like much of what the Conservative leader has said since winning his post, his words are an act of political positioning, not of deep philosophical pondering. The Labour Party has battered home the message — “boom and bust” — that the Tories are the party of economic turbulence, and (far more dubiously) that “slashing taxes” had been the trigger for that trauma. The tax cuts promised in 1997, 2001 and 2005 were not believed by the electorate, not least because that pledge was made in 1992 and reversed within months of polling day. Mr Cameron is right to recognise that the Tories must recapture the reputation for economic competence that they lost.
They also, though, have to present, if not a precise programme, some plausible first principles to the voters. These have to emphasise that markets are the means for generating wealth and that those markets operate best in a benign tax and regulatory climate. Stability, of itself, is not a virtue, or the catalyst for economic growth. Graveyards, after all, are extremely stable places.
That seems to be understood by Mr Osborne. The Shadow Chancellor’s address yesterday was a curious construction. The first two thirds involved an astute analysis of globalisation and the massive change that it has and will continue to generate. It called for a “supply-side revolution”.
In the course of those remarks, Mr Osborne observed that Gordon Brown had “increased taxes at a time when our competitors are reducing theirs”, that taxing and spending levels here were approaching those of Germany and that “tax is crucial to the competitiveness of the British economy”. The rational consequence of this, and the Commission on Tax Reform that the Shadow Chancellor has established, is that reducing tax should be more than a medium-term aspiration.
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Exactly how this would be done cannot be elucidated yet, but the Tories have to offer an alternative vision to electors. Marketing, after all, does involve product differentiation.
Mr Cameron should not close down Mr Osborne’s options. It may be true that tax cuts have been portrayed as a euphemism for greed in certain quarters, yet those quarters tend to be economically illiterate. It cannot, by contrast, be credible for the Conservatives to contend that: (1) high taxes are hurting the country; and (2) they do not intend to do much about the problem for fear of imperilling stability. Despite the party slogan, “stable” China is being transformed by growth rates of 9 per cent a year. Britain will not secure close to half that figure without becoming more dynamic.