Will anyone break the tax taboo?

The planned pace of cuts is unachievable. All parties need to talk about tax rises.

The new Resolution Foundation report on public spending (of which more on The Staggers later) is a reminder of the grim inheritance that awaits whichever party wins the 2015 election. Based on Osborne's current fiscal envelope, which Labour has said it will use as its "starting point",  the next government will have to increase the pace of cuts by 50% between 2016 and 2018 in order to meet the deficit target. Departmental spending will be reduced by an average of 3.8%, compared to 2.4% in 2010-15 and 2.7% in 2015-16. Should the ring-fences around health, international development and schools spending remain, some departments will have had their budgets more than halved by the end of the programme (which, based on recent form, is likely to be further extended to 2020), with a 64% cut to the Foreign Office, a 46% cut to the Home Office and a 36% cut to defence. 

Tasked with delivering a Tory majority in 2015, Osborne has pushed the bulk of austerity into the years after the election. But as both the Resolution Foundation and the IFS now argue, the forecast cuts are implausible. At some point, if they are to eliminate the structural deficit (one that exists regardless of the level of output), which stood at 4% last year, our politicians will need to talk about tax rises. Even to maintain the current level of cuts (as opposed to a more aggressive pace), the next Chancellor will have to raise taxes by £10bn.

But, as in the past, both Labour and the Tories appear determined not to broach this subject. Osborne perpetuates the myth that as much as 80% of the remaining consolidation can be achieved through cuts, while Labour talks only of possibly reinstating the 50p rate and introducing a mansion tax (partly in order to fund the reinstatement of a 10p rate), which wouldn't even raise half of the £10bn required. 

In practice, both parties will almost certainly raise taxes on all earners immediately after the election (as new governments so often do), but will they have the decency to warn us in advance? During the 2010 election, David Cameron repeatedly stated that the Tories had "absolutely no plans to raise VAT".

We have absolutely no plans to raise VAT. Our first Budget is all about recognising we need to get spending under control rather than putting up taxes.

That first Budget, of course, saw VAT increased from 17.5% to a record high of 20%, a move Osborne and Cameron had been planning all along (you don't raises taxes by £12.5bn on a whim). 

If this insult to democracy is not to be repeated, the parties must avoid colluding in the conspiracy of silence that so often affects tax. It should not be beyond our political class to engage the public in a reasonable debate about how best to raise new revenue. A land value tax; aligning income tax and capital gains; a higher top rate; a penny on income tax; all of these options should be discussed. But if recent history is any guide, don't count on our politicians doing so. 

David Cameron and Ed Miliband look on during the service to celebrate the 60th anniversary of the Coronation of Queen Elizabeth II at Westminster Abbey in London on June 4, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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