Votes and Taxes

This week's U-turn by the Conservatives on tax has at last opened up a clear policy gap between the parties on one of the central issues in any election: the Tories are now committed to reducing the tax burden, even if this means cuts in public spending, while Labour will pursue its public spending plans, even if this means increasing taxes. This, of course, now frees the Tories for an all-out attack on tax increases under Labour without being scuppered by the reply that the figures in their own alternative do not add up.

Is this a vote winner for the Tories? It is true, of course, that all other things being equal most tax-payers would prefer to pay less tax; but most are concerned about the standard of public services. There are many people who believe that it was fear of Labour tax rises that kept the Tories in power through the 1980s, and especially that delivered John Major his narrow victory in 1992, reasoning that the most important factor in the electability of "New Labour" was Tony Blair's pledge not to raise taxes, which removed the greatest obstacle to attracting middle-class votes.

This theory doesn't really stand up. The Tories have already got their message about tax rises under this government home to the electorate - last month, only 26 per cent of Britons thought that since May 1997 this Government has "kept taxes down", while 61% think it has not. [STATE OF THE PARTIES POLL] Lest it be thought that this perception has been a factor in the government's tumbling satisfaction ratings over the last few weeks, we should also note that the figures were barely different last December (28% "has kept taxes down", 57% "has not"), when satisfaction with Mr Blair and with the government were still "in credit" and seemed immovably solid.

But, in any case, we can go back much further than that, for it is clear that the voters did not expect Labour to keep taxes down when it was put into government: two days before the election, 63% said they expected a Labour government to increase income tax, even though Tony Blair had given a pledge that he would not. (These figures were little different from those applying to Neil Kinnock in 1992, when 66% expected him to raise income tax if elected - perceptions of Labour tax policy were really not the difference between 1992 and 1997.)

Nor do the current polls give much indication that tax has become a key issue since 1997. Every month in our political poll for The Times, we ask respondents to say what they think are the most important issues facing the country. (These answers are unprompted - we don't offer them a list of possibilities to suggest what they ought to be thinking about, but let them suggest whatever is at the top of their mind.) The issues that persistently top the poll are the National Health Service (as often as not mentioned by more than half), education, Europe or the EU and crime/law and order. Unemployment, a few years ago the undisputed top dog of this poll is now mentioned by only one in five or so. But taxation is nowhere to be found among the top few issues. Last month, only 7% thought to name it as one of the most important issues facing the country, and the percentage has not been in double figures in any MORI poll under Blair's premiership. The public may believe that Mr Blair has raised taxes, but for the moment it is not preying on their minds.

But that is not to say that Tory change of tack is a necessarily a mistake. While the public are prepared to tolerate taxation, they naturally expect the public spending that results to be productive. As already mentioned, health, education, and law and order are the key domestic concerns of the electorate, and were the subject of three of the four pledges that were at the heart of Labour's last election campaign. Only 24% of the public believe that since 1997 the government has improved law and order, 25% that it has improved the NHS and 36% that it has improved the standard of education. Overall, just 25% believe the government has kept its promises. It is this perceived failure to deliver that is surely at the heart of the disillusionment with the government that is clearly setting in, and only concrete achievements are likely to be enough to reverse it.

Yet this still leaves the Conservative policy precariously placed. Mr Hague will be on firm ground if he attacks the government for failure to achieve anything useful with its tax increases; but the ice immediately thins if he invites the country to conclude from this that it should prefer his policy of not levying the high taxes in the first place, if the voters' prime concern remains the state of public services. At the moment, the indications are that the alternative the public wants is a government it can trust to deliver improvements in public services, not one that promises not to try. Mr Hague needs to put together a coalition of those who either believe that taxation to fund public services is wrong in itself (a group who are pretty thin on the ground) or that extra expenditure is futile because it is simply impossible that it can achieve the improvements the voters want. Ultimately to carry this policy off, he may have to argue in effect that Mr Blair has tried and failed, because he was attempting the impossible, and is certainly a dangerous tactic to exculpate one's opponents in this way.

Mr Hague has a lot of work to do on this policy. During the Thatcher years, low taxes for their own sake looked like a vote winner and a natural Conservative policy. But those days are beginning to seem a very long time ago.