1) Staying the course on deficit reduction
One of David Cameron’s strategic successes in the lead up to the last election was to secure a mandate for austerity. He stood before the country and said that times were going to be hard, that we had a huge debt, and that the economy was not growing. And he explained that the only sensible response when facing huge debt is to reduce spending, which means everyone has to tighten their belts. With reduced spending, economic growth would return and prosperity would increase. Of course the return to growth has been slower than predicted. But the economy is now growing and unemployment is going down (it’s lower now than when Mr Cameron took office in May 2010). Now is not the time to go wobbly on the economic plan and risk the progress that has been made.
2) Defend the 45p income tax rate
Labour loves to denounce the government’s “tax cut for millionaires”. But the evidence suggests that the 45p tax rate for the highest earners has actually brought in more revenue than the 50p rate. That’s more money to spend on those who need it most. More money for childcare, hospitals, infrastructure, etc. By opposing this policy, Labour is saying that they would rather punish the rich than help the poor. Mr Cameron needs to challenge Labour on their narrative about the “tax cut for millionaires” and explain why the 45p rate makes good economic sense. Right now Labour are winning the argument because they are shouting the loudest.
3) Announce that marriage will be recognised in the tax system
It’s high time Cameron made good on his longstanding promise to recognise marriage in the tax system. This was a Conservative manifesto commitment, it was in the Coalition Agreement, and Cameron has said on numerous occasions he still intends to do it. Next week he should announce exactly when and how he’ll introduce it. To his credit, Cameron has always been an advocate for strong marriage and strong families. Over the last few years, however, all the political discussion around marriage has focussed on gay marriage (much to the despair of many conservatives). Earlier this year I asked Treasury Minister Greg Clark about this issue and he assured me that it is still in the government’s plans during this parliament. But time is fast running out.
4) Recognise that Miliband has the right diagnosis but the wrong prescription
The “cost of living crisis” that Ed Miliband described is a powerful message. It will play very well on the doorsteps and during the campaign. Mr Cameron must acknowledge this problem but set out a different solution. Many people are experiencing a cost of living crisis. Part of the solution is to ask people to keep tightening their belts as the economic recovery continues. Another part of the solution is to set out clearer policies for helping those on low incomes (like taking more low earners out of the income tax). Another part of the solution is to encourage greater competition between energy providers so that bills don’t rise sharply. But Mr Cameron should be very clear that you certainly can’t solve the problem by legislating to prevent energy firms from raising their prices (the unintended consequences of which have been discussed in detail).
5) Be Positive.
Finally, the tone of Mr Cameron’s speech is very important. To those on the left, Ed Miliband’s speech was spot on in both content and tone. Where necessary Mr Cameron should rebut Labour proposals. But overall he should set out a positive, clear message outlining his vision for Britain. And he should highlight the government’s successes. There is much to be proud of: lifting more than 2 million low earners out of tax altogether; reforming the welfare system to make work pay more than benefits; bringing rigour back into the education system; opening 93 new free schools at the start of this new school year alone; a benefits cap to ensure that claimants won’t receive more than the average family earns; vaccinating, educating, and feeding millions of the world’s poorest people by sticking to the overseas aid commitment; and the list goes on.
These five are just a few that came to mind and are in no particular order of importance. I hope that at least some of them feature in Mr Cameron’s speech on Wednesday.
UPDATE 28 Sept: The PM is obviously an avid reader of my blog. Just minutes after I posted he announced plans to give married couples a tax break. One down, four to go…