When on Sunday Kenneth Clarke said the Tory policy of abolishing inheritance tax on estates worth less than £1m should not be his party's “highest priority” in government, he was hinting at his private view that the plan is misguided and wrong.
By telling the BBC it would merely be an “aspiration” to be fulfilled "sooner or later”, he also demonstrated yet again his instinctive understanding of the centrist, inclusive path the Tories must tread on fiscal policy if they are to be taken seriously by the electorate. That such an understanding is not shared by David Cameron and his never-to-be-sacked shadow chancellor, the inexperienced George Osborne, may well come back to haunt the Conservatives during next year's general election campaign.
For Clarke knows if they remain committed to this populist policy, hastily cobbled together at the party’s 2007 conference in a now-forgotten, desperate scramble to see off the rumoured “snap” election, they will be left exposed not just to the charge that they remain the party of the very rich; but also that they have failed to recognise the new economic playing field that exists in Britain today.
Clarke, who had he been leader would have made dropping the party’s ideological and regressive attachment to tax cuts the party’s own “Clause IV moment”, was characteristically correct when he said, only a week before his surprising recall in January, that any party calling for cuts at the next election would be “asking for trouble”.
This is not just because a majority of the electorate, as long ago as 1992, voted for parties advocating an increase in income tax; part of the electoral and polling evidence suggesting that the British people accepted a post-Thatcher settlement on tax – and the funding of public services – long before Tories at Westminster.
But it’s also because, amid the deepening recession, the rules of the financial game have changed. As well as the banking and credit crises, the UK has seen a steep fall in house prices since Osborne’s acclaimed 2007 pledge on inheritance tax, reducing significantly the potential of a policy aimed at middle class southerners intent on passing on the value of their properties to their offspring.
Meanwhile, the scale of the national deficit (set to rise to £1 trillion in coming years) means that the big priority for whoever is in government after the next election, is going to be repaying a vast debt. The question, then, is which sector of society should pick up the bulk of that tab?
During the few hours in between Clarke’s television appearance at the weekend and the multiple affirmations – including from the former chancellor himself - that the policy is a firm pledge that will feature in the manifesto, Osborne and Cameron are said to have conveyed to Clarke that everything must be done to snuff out further “tax row” stories.
Last week, after all, Cameron had come under fire from his carefully manoeuvring rival Boris Johnson, the mayor of London, for “clobbering the rich” by agreeing to Alistair Darling’s 45p tax proposal for the highest bracket. The timing, in other words, was not right for any rethink on inheritance tax.
It is true that there has been lively discussion in shadow cabinet about the merits of a policy that symbolically marks the Tories out as more on the side of the wealthy than the poor.
And while there were further indications in private to Clarke on Sunday that there could still be room for revision of the – so far unfunded – policy, raising the threshold to two million appears to have been kicked firmly into the long-grass.
But the fact is that Cameron has decided he will definitely fulfil the divisive pledge as a manifesto commitment at the next election.
This is partly because he, and Osborne, genuinely believe it is the right move to help “savers”.
It’s also partly because Cameron is privately gripped by the desire to be seen never to break a promise: which explains his fulfilment this month of the anti-European policy of withdrawing from a centrist grouping at the European parliament, another rushed out proposal designed to see off his right-wing rival for the leadership in 2005, Liam Fox.
But although Clarke was forced into a climb-down this week, there was no angry rebuke from Cameron. That was wise, partly because Clarke is, as ever, more in tune with undecided voters than Cameron, and also because Clarke has the ability to destroy the Cameron project at a stroke in the unlikely event that he were to resign from the front-bench in the run up to next year’s general election.
As usual, Clarke is more far-sighted than anyone in his party, whose officials were briefing against him off the record this week.
That Cameron has chosen to take the advise of Norman Tebbitt and not Clarke speaks volumes for how much the party has “modernised”. And as I observed on Clarke’s return to the front-line, the question for the Tories is to what extent they allow him to lead the way on the policy area that will determine the result of the next election: tax and spend.
If the most effortlessly popular Tory in the country continues to be ignored and silenced by the ideological, neo-Thatcherite leadership of his party, the Tories will fail the crucial fiscal credibility test during next year’s election campaign and, contrary to conventional wisdom, lose once again.
