Will Osborne hold out against a tax cut for Middle England? Tory MPs are getting restive

Personal allowance increases are all well and good, but what about the people who vote Tory, asks Nick Wood

I can remember the day when the Conservatives abandoned the aggressive tax cutting agenda of the Thatcher era. On the campaign trail in the 1992 general election, when I was working for The Times, I asked John Major at a press conference if he planned to reduce the then top rate of income tax of 40p in the pound.

Major was dismissive of the idea. And with that dismissal of the spectacular tax cuts of the Howe/Lawson chancellorships, which had reduced the top rate from 83p in 1979 to 40p, so ended the Thatcher revolution. And so ended the overt linkage of the Tory party with the restless army of entrepreneurs and upwardly mobile folk who transformed the performance and reputation of the British economy in the 80s.

Despite his rejection of a further round of middle class tax cuts, Major went on to win the 1992 election – not least because Neil Kinnock and Roy Hattersley were swiftly skewered by their incoherent plans to raise taxes.

Later, as he struggled to cope with the recession of the early 90s, made far worse by his membership of the European exchange rate mechanism, Major stumbled from one crisis to the next and was actually forced to put up taxes.

But Tony Blair learned the lesson of the Thatcher years. Despite the plate-throwing of his grumpy neighbour in No 11 Downing Street, Blair insisted that the top rate of tax stayed at 40p. It was only in the dying days of the Brown administration that it was raised to 50p.

All that history comes back into focus today. With the Budget due next Wednesday, growing numbers of Tory MPs are pressing George Osborne to reduce the tax burden on the middle classes – the people who are meant to vote Conservative in their millions.

Courtesy of a very helpful article in yesterday’s Financial Times, the MPs have noticed that the persistent failure of the Coalition to uprate the 40p threshold means that literally millions of people have been dragged into paying the higher rate.

Back in 1997, only 1.5 million paid it – today that figure is 4.5 million and it is set to rise to nearly 6 million by the election next year.

The threshold for the 40p rate is a measly £41,450, meaning that swathes of Middle England, such as teachers, doctors, nurses and middle managers, have been caught in its suffocating embrace. The tax-free personal allowance has been raised to £10,000, helping the low paid, but the benefit to the middle classes has been largely wiped out by holding down or reducing the 40p threshold.

The most striking figure in the FT story is the one that tells you what the threshold would be today if it had been kept at its 1978 value. Under that regime, you would have to be earning £75,700 a year to pay tax at 40 per cent.

The chorus of disapproval from the Tory benches is growing, yet there is no sign that the Chancellor and David Cameron will pay any heed. They choose to emphasise their support for the tax cuts for the low paid championed by their Coalition partners.

All well and good, mutter backbenchers in marginal seats fearful for their future. But what about the people who vote for us?

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Nick Wood

Chief Executive at Media Intelligence Partners
Nick started MIP in 2004, having been the Conservative Party's Director of Communications and Chief Political Correspondent at The Times

3 Comments

  1. ‘All well and good, mutter backbenchers in marginal seats fearful for their future. But what about the people who vote for us?’

    Answer: They don’t anymore.

    In fact there is no coherent small government low tax party anymore. There is no one worth voting for, hence my prediction is that when the fixed term is finally up the proportion of the population that don’t bother to vote will go up again.

    Will the political party that wins (that’ll be Ed Milliband) reinstate the ability of the Queen to dissolve parliament? I think not.

    We will end up with a government voted in by a minority with the silent majority drifting rudderless under the yoke of politicians whose answer is to tax the majority based on the whims of people who don’t have to pay it.

    It isn’t much to look forward to, will the last person to leave please turn out the lights (again)?

  2. Never thought I’d see the day that the Conservatives were the high tax party but it’s rapidly heading in that direction. Their love of high tax rates for those who have the nerve to work hard and strive to better themselves is just an absolute discgrace.

  3. It doesn’t really matter what the issue is anymore the Cameroon clique will always totally discount the views, wants and needs of Conservative voters, preferring those of their left wing dinner party chums in Notting Hill.

    The Tories have badly lost their way, and helped the rise of UKIP immeasurably in doing so, and they will not return to either a conservative agenda or power until the guilty rich posh boys death grip on the party is removed, along with them.

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