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Tax cuts R us! Ten points from David Cameron’s Marr interview

29 September 2013

Here’s what jumped out at me from David Cameron’s interview with Andrew Marr in Manchester this morning:

  1. Tax cuts: the Tory weapon ‘As this economy has started to recover, it’s very difficult for people to make ends meet. Their wages are relatively fixed, and the prices are going up. That’s why cutting people’s taxes is so important. That’s why lifting people out of the first £10,000 of income tax is so vital. That’s why freezing the council tax matters.’ So Cameron acknowledges Miliband’s premise, that the cost of living is an issue, then presents tax cuts as the solution. Precisely the right strategy, as tax cuts are bankable and Miliband’s claim to freeze energy bills is less so. Cameron’s problem is that he has so few tax cuts to point to so far, and has to use the mainly rhetorical device of saying he has ‘lifted people out of tax’. To blunt Miliband’s attack, he’ll need more of these tax cuts. But anyway, he’s offering…
  2. Low energy prices until 2033 ‘I want low prices not just for 20 months, I want them for 20 years,” he said. “we’ve got to make these markets more competitive, we’ve got to make sure companies behave properly and put people on the lowest tariff and we’re legislating for that.’ A good line, rehearsed in his recent Yorkshire Post interview.
  3. Rules out wealth taxes. ‘To go after someone’s house each year with a wealth tax: I don’t think that’s a sensible thing to do.’ He’s right.  As I revealed George Osborne planned to give the Liberal Democrats their ‘mansion tax’ by creating two extra bands of council tax. Cameron vetoes him, saying it would hurt Boris as it was, in effect, a tax on Londoners. But it’s good to know, now that he’d veto it if Prime Minister. As he said, it’s a crazy idea being dropped over Europe because it doesn’t work.
  4. Cameron knew he lost before polling day Cameron was asked about one of the (many) disclosures from Matthew d’Ancona’s long-awaited book: that he, Osborne and Hague concluded before the election that they could not win it so he’d have to cut a deal with the Liberal Democrats. He gave a non-denial denial (“That’s not how I remember it,”) so I think he can take that as a yes.
  5. Depressingly, Cameron weds himself to low interest rates. ‘But don’t let’s forget this issue about mortgage rates. If a Labour government came in and said it’s okay to borrow more, spend more and tax more and the deficit goes up, interest rates go up, mortgage rates go up, and that would wipe out any gain of anything else that is done on any other price. Because mortgages are such a big part of so many people’s family budgets in this country. ‘This is unwise. Bank rates are at rock bottom, 0.5 per cent, and a successful economic recovery will see them back to average at about 5 per cent. But Cameron has just told us that this would be a calamity, which we should vote Tory to avoid. If re-elected, he’ll have to eat these words.
  6. Britain’s problem? Not enough debt. ‘Today, the average family cannot afford the average house. And that’s not a problem with our housing market, it’s a problem with our banks and our mortgage market.’ He’s quite right: if banks offer mortgages at below the rate of inflation they’re effectively paying people to borrow and creating an asset bubble. But no, Cameron’s problem is that there’s not enough debt and he wants to force banks issue lots more. And to those deemed the greater credit risks. ‘I’m not going to stand back’  he said, with Syria-style solemnity. ‘We need to act.’ Come on ladies, cheap cheap debt…
  7. ‘Talk of a housing bubble here in Manchester or Salford and they would literally laugh in your face’ So is he saying houses there are affordable? In which case, why interfere with Manchester’s housing market? And if Cameron were to go to Oldham, where prices are up 7 per cent year-on-year at a time when incomes are flat, they may not laugh in his face. Or to Bolton, where they’re up by 5 per cent.
  8. And if it goes wrong, blame Mark Carney! ‘Let’s put our trust in the Bank of England’ he said. In other words: if the market goes tits-up then blame that Canadian bloke we’ve just hired at great expense. Unfair because Carney is not the one hawking Help-to-Buy and Funding-for-Lending; the vote-hungry Osborne is. And teh Chancellor is working to a May 2015 deadline. Interesting to see how quick Cameron is to lay so much at the door of the Bank of England. Including his line that:-
  9. ‘The Bank of England have advised that there is no housing bubble’ and we all remember them warning us about the bubble last time, don’t we? Em, no. The Bank did not spot anything wrong during what we now know to be the worst economic overheating in decades. As Alan Greenspan said, central banks are useless at spotting bubbles. It’s unnerving to hear Cameron claim otherwise, as it (again) suggests key lessons from the crash have not been learned.
  10. Might HS2 have a reverse gear after all? ‘Of course there’s a limit – we’re not going to just spend any money on this,’ he said. So what might that limit be? As Transport Secretary, Philip Hammond suggested the limit might be if the cost-benefit ratio, which started at £2.40 for every £1 spent, sank below £1.50. A recent Newsnight analysis suggested it was below £1. ‘HS2 is going to happen,’ the PM said – but, clearly, not at any cost. I do hope Cameron has started to prepare as well for dropping HS2 as he prepared for coalition with the LibDems.

But overall Cameron gave a strong performance, as usual. Far better than Ed Miliband’s attempt on Marr’s sofa last week. He’ll try to deflate the Miliband bounce by posing as the statesman, who is already doing plenty for the poor – versus Ed Miliband who is promising crazy “nuts” schemes that fall apart under scrutiny. Most encouragingly, the Miliband offer to freeze energy prices seems to have amplified his tax-cut message. Let’s hope there’s more to come this week.

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  • Mark McIntyre

    NO2 HS2 – the gearings a gonna !

  • Nick

    When I look at Cameron I see Blair………Natural born idiots.

  • Marky_D

    ”Cameron’s problem is that there’s not enough debt and he wants to force banks issue lots more. And to those deemed the greater credit risks.”
    You mean in a ”sub-prime” kind of way? What could possibly go wrong?
    The problem with housing is a supply/demand thing. Far too much demand due to open door immigration, far too little supply due to red-tape and nimbyism.

  • Russell

    So Fraser….even before the Tory conference kicks off yoy are tearing into Cameron..Mmmmmm…I didn’t notice you tearing Milispins so called policies (like Looking at strengthening minimum wage) to pieces.

    • Lordmuck

      I’m sorry, but have I read this right?!

      The media reaction to Ed ‘Milispin’ before and after the Labour conference was appalling in the amount of hysteria and vitriol it generated.

      By the way ‘Milispin’ is genius. Ever considered auditioning at the Edinburgh Festival with rapier wit like that?

  • Alex

    In what strange world is being wrong on every issue a ‘strong performance’?

  • Lordmuck

    Oh come off it Fraser.

    Cameron could’ve defecated all over the sofa, nutted Marr and eaten a baby and you would’ve praised his performance. Cameron gets such an easy ride in the media its a joke.

    Why is he never asked about the affordability of his policies like Miliband is? Why is he never questioned about the ballooning national debt? Or the fact that ‘Help to Buy’ is yet another example of socialising risk for private gain? What happens when interest rates go up and the tax payer is expected to foot the bill? And even better, this scheme covers people who can afford to spend 600k on a property!

    Yet Miliband gets crucified for proposing long overdue reforms to the energy ‘market’ (which is little more than an unaccountable cartel) on the basis that state intervention is ‘bad’.

    And I’m sorry, but a ‘Mansion Tax’ is way overdue. This could be done quite easily by re-writing the Council Tax bands as Osborne apparently supported in your article.

    • Fergus Pickering

      Ask Marr. He’s a beeb lefty. Nutting Marr seems an excellent idea. Perhaps we could bus in Prescott or Joyce to do it.

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