Along with the sunshine and the chance to relax there was another reason to celebrate the Bank Holiday Monday. May 31 was Tax Freedom Day. “In 2021, we worked 150 days just to pay our tax bill,” announced the Adam Smith Institute. “From May 31st onwards, we’re working for ourselves. Tax Freedom Day is now later than at any time since 1995 – as far as the best quality data goes back.”
Eamonn Butler, the Institute’s Director, writes for ConservativeHome: “The UK government – a Conservative government – plans to extort £730 billion from us this year. Yes, that’s £730,000,000,000 – an amazing £10,953 each, including every child and infant, or £43,811 for a family of four.” That’s before we get started on borrowing – which is a bill that will fall on future taxpayers.
So not that much to cheer about after all. You can vote Conservative, Labour or Lib Dem. Whoever ends up in Government the tax burden goes up. We are told that the ‘small state’ doctrines of the Thatcher era might have been ‘right for the time’, but that state intervention is the modern way to get results.
Yet the free marketeers in the Conservative Party have not given up. Attentive followers of the Adam Smith Institute’s Twitter account will have noted they quoted the endorsement of 17 Conservative MPs for their concerns. They included senior figures, such as former Party leader Iain Duncan Smith, as well as new recruits from the 2019 intake. There were some – Alun Cairns, David Simmonds, Tim Loughton – that could scarcely be regarded as ideological zealots but did feel the growth of the state might be getting a bit out of control.
Steve Baker said: “In order for us all to be prosperous, eventually Conservatives must stand up for the formula we have always believed in – that means lower taxes.” His colleague Andrew Lewer was right to say: “The trend for Tax Freedom Day to get ever later in the year was well established before the trauma of Covid 19 hit us. We have had a Conservative-led Government since 2010 and so we are well overdue for this trend to be reversed”.
This was not the only sign of a resistance movement. In April the Guido Fawkes website reported that “40 Conservative MPs have joined forces with the Institute of Economic Affairs to form a new Parliamentary branch of their Free Market Forum.” A look at the Forum’s website shows the tally is now 59.
Dehenna Davison and Greg Smith are the Forum’s Co-Chairmen. “The Conservative Party must not fall into a trap of thinking we can do socialism better than socialists,” they wrote in an article for The Times. “Now is the time to refocus the political debate after the disruption of 2020-21 and to once again make the case for a smaller state and individual liberty. It means removing barriers so businesses can compete fairly to offer customers the best products and services. It means eliminating the obstacles that hold segments of the population back from reaching their true potential. It means increased competition and openness to ideas.”
Some pundits will scoff that these high minded principles will quickly be jettisoned by political reality once pressure from vested interests is applied. Perhaps. But we have recently seen the protectionists in the National Farmers Union defeated in their opposition to a free trade deal with Australia. Plenty of Tory MPs – including those from rural areas – were prepared to speak up for free trade.
Another battle is the Government’s proposal to ease planning restrictions to allow an increase in the housing supply – with the proviso that the new homes are beautiful. That will be an important shift towards allowing the market to work. Some Conservative MPs – including Theresa May – are vocal in their opposition. But others recognise that it is imperative for the reforms to proceed.
Then, of course, we have the argument about just what ‘levelling up’ will mean for the ‘red wall’ constituencies. Some see it as more subsidies and increased public sector employment. That would either mean higher state spending and taxation overall, or less many for southern areas – with the risk of a political backlash of which some tentative signs have already been detected in the local elections.
Yet most of the Tory MPs for those ‘red wall’ seats do not regard handouts as a firm foundation for prosperity. They want real jobs from private enterprise – to be achieved by the Government getting out of the way of the wealth creating process. Freeports do provide a mechanism for speeding that along in certain places. But the basic idea is making poorer areas richer is not dependent on making rich areas poorer.
After the upheaval of Brexit and coronavirus, we are waiting for the dust to settle. Then it may be easier to clarify the direction the Government will take us in terms of increased state control or allowing more individual freedom.
Dominic Cummings – a ‘big state’ enthusiast – has, of course, left Downing Street. But there is still a tendency by Ministers to measure achievement by the amount of our money they are spending. The Prime Minister has a weakness for big projects that he can point to as a physical legacy. Often he and the Chancellor offer contradictory messages about the free market and state intervention. Policies may also be mixed – nationalisation of this, privatisation of that. Some more “nanny state” or “net zero” rules imposed – but some red tape left over from the EU scrapped.
We will see how it all turns out. But there are plenty of Conservative MPs who did not go into politics inspired by a mushy egalitarianism. Their vision was articulated by Margaret Thatcher’s ambition for our country to be a place where the “state is servant not master”. It would be a mistake to assume that cause has been abandoned.
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