The Tories would take much less of your cash – and spend it extra correctly

Just over three weeks to go until election day, and the Tories still lag Labour in the polls by more than 20 points.

Rishi Sunak has had the worst week imaginable, having ducked out of part of the D-Day celebrations, for which act of stupidity he has consumed endless quantities of humble pie.

So yesterday’s launch of the Tory Manifesto was billed as an opportunity to strike out in a new direction, and grab the flagging attention of a country that seems to have made up its mind not to give the Conservatives another chance. There was even talk of a last-minute rabbit being pulled out of the hat.

The launch of the Tory manifesto was billed as an opportunity to strike out in a new direction

In the event, there were only a succession of white mice of varying sizes and, individually, not enormously impressive 

In the event, there was no rabbit — only a succession of white mice of varying sizes and, individually, not enormously impressive.

There was no undertaking to withdraw from the interfering European Court of Human Rights, which might have won back not a few former Tories who are planning to vote for Reform UK. All Mr Sunak would say was that if the ECHR tries to thwart his Rwanda plan, he knows where his loyalties lie.

Nor was there any pledge to abolish or reduce inheritance tax, which is widely unloved. Such a dramatic measure could have attracted many voters. But the instinctively managerial and ever cautious Rishi was evidently —wrongly in my view — frightened that he would have been accused of favouring the rich.

The largest mouse — about a quarter the size of a full-grown rabbit — was the promise to get rid of national insurance for four million self-employed workers. This will be welcomed by many, and could conceivably make a difference to the Tories’ electoral fortunes.

I’m less convinced by the manifesto’s commitment that, if re-elected, the Tories would cut a further 2p off national insurance paid by employees by April 2027. Two recent reductions to NI of the same size have failed to boost the Conservatives’ standing in the polls, and one wonders why Rishi thinks that the promise of a third will be more effective.

Most over-65s don’t pay national insurance, but many of them do pay income tax. This Government’s concentration on NI, while freezing income tax thresholds until 2027/28, is surely questionable.

Other non-financial Tory policies outlined in the manifesto may not have commended themselves to many voters. The promise to cap legal immigration, which has soared to record levels under this Government, will be met with widespread scepticism, though it’s a racing certainty that Labour would do worse.

Equally, Rishi Sunak’s vow to build 1.6 million homes in the course of the next Parliament challenges credulity, given that after huge exertions only one million have been put up in the past five years. The new figure appears to have been plucked out of thin air, and is designed to top Labour’s doubtless no less fanciful target of 1.5 million extra homes during the next parliament.

Whatever the Tories pledge will of course be met with the same response. Why should we believe that they will do any better next time, in view of their failures not just since the last election but during the past 14 years? This question is particularly apposite in relation to immigration.

Yet it seems to me that in one area at least Mr Sunak has a right to be taken seriously: taxation. The reason is that he and Jeremy Hunt delivered those cuts in national insurance last autumn and this spring, which, though arguably misdirected, have begun to lessen the tax burden.

In addition to the further cuts to national insurance, stamp duty will be abolished for first-time buyers on homes with a value up to £425,000. Child Benefit will be reformed so that families remain eligible for it until their combined income reaches £120,000, delivering a potential benefit of £1,500 a year.

According to the Institute for Fiscal Studies, the Tories are promising some £17 billion a year of tax cuts. At the same time they are proposing annual reductions to the welfare budget of £12 billion — targeting what Mr Sunak called ‘working age welfare’, which has ballooned since the pandemic —while cracking down on tax avoidance, and curbing civil service numbers.

Rishi Sunak spoke of a ‘moral mission’ to put money back in people’s pockets, recalling the rousing rhetoric of Margaret Thatcher

Given the planned increase in defence spending, some will question — Labour certainly does — whether the Tories can fund tax cuts of this magnitude. Nonetheless, the manifesto’s undertakings on tax are undoubtedly significant, and mark a new departure for the Conservatives.

In launching the manifesto, Mr Sunak spoke of a ‘moral mission’ to put money back in people’s pockets, recalling the rousing rhetoric of Margaret Thatcher. For the first time, he really is creating some clear blue water between the Tories and Labour on tax.

For Sir Keir Starmer has only said he won’t increase income tax, national insurance and VAT. Unlike Mr Sunak, he hasn’t undertaken to reduce the personal tax burden.

At the same time, several Labour spokesmen have declined to rule out rises in capital gains tax and property taxes. Shadow health secretary Wes Streeting yesterday refused four times to exclude increasing capital gains tax if Labour wins.

Who can doubt that the party would put up some taxes to fund its ambitious spending plans? And who can bring themselves to believe that personal taxes such as national insurance, income tax and VAT would ever go down under Labour rule?

I daresay the Tories have been somewhat economical with the truth in claiming that the Treasury has endorsed their assertion that Labour’s spending plans will cost each working household some £2,000 in extra taxes.

Nevertheless, we can be practically certain that the tax burden will increase under Labour, partly because their sums don’t add up, and partly because historically the party has been addicted to high taxes and high spending. There’s no reason to believe that Sir Keir Starmer and his crew are any different.

The promise to get rid of national insurance will be welcomed by many, and could conceivably make a difference to the Tories’ electoral fortunes

So this is the stark new dividing line, and after Rishi Sunak’s tax pledges yesterday — which I am inclined to believe because the process of tax reduction has already started — there really is a substantial difference between the Conservatives and Labour.

It’s anyone’s guess whether it will be enough to narrow the gap between the two parties or — miracle of miracles — lead to an astounding victory for the embattled Rishi Sunak.

My suspicion is that many voters will wonder why the Tories didn’t reduce tax previously when they had the opportunity to do so, and will think that it’s rather late in the day for them to present themselves as committed tax cutters. We’ll see.

By the way, I trust that reports of Right-wing Tories producing their own more radical manifesto are unfounded. Nothing could be more disastrous, as a teetering Rishi Sunak is getting back on his feet, than for the Conservative Party to advertise its differences in public.

There are, alas, no alluring rabbits in this manifesto, but there is a glimpse of what a future Sunak government might be like. It would take less of your money, and spend what it took more wisely.

Too late for most, I fear, but voters shouldn’t be in any doubt that there are, after all, profound differences in the way the Tories and Labour would govern this country.