David Gauke is a former Justice Secretary, and was an independent candidate in South-West Hertfordshire at the 2019 general election.
I have a theory I want to try out on you. It is a very simple one and I am sure not original, but, if it stands up, could provide a useful guide for evaluating political and policy choices.
The theory is this: more often than not, a political party is better at evaluating its opponent’s political weaknesses than its own.
One can see how this makes sense. Generally, it is always easier (and less painful) to evaluate someone else’s strengths and weaknesses than one’s own. When determining your own policies, there may be many factors in play – such as holding together your internal coalition of support or even (and this really does happen) trying to do good.
Any of these motivations might create a conflict that contaminates political judgement.
(That is not to say that political considerations should trump doing what is best for the country; rather, that the desire to implement a policy of which you approve can result in under-estimating the political perils. All the biggest political mistakes I ever witnessed first-hand or was heavily implicated in related to high-minded decisions.)
Opponents, on the other hand, will look at a policy more dispassionately and politically ruthlessly. There will be far fewer conflicting motivations, any assessment will be almost entirely based on whether it is a vote winner or vote loser.
Even political operations that are notoriously bad at politics, such as Jeremy Corbyn’s Labour, were noticeably better at identifying and exploiting their opponent’s weaknesses than in recognising and eliminating their own.
The upshot of this theory is a political party should take seriously an attack coming from its opponents.
That is not to say that one’s opponents should be able to dictate one’s policies, or that every line of attack must be closed down. If so, nothing would ever be achieved. Sometimes you want the row, confident that the other side has got it wrong.
But an opponent’s political attack may give a clue as to where the politics might really lie on an issue, rather than where we would like them to be.
Labour’s commitment to spend £28bn on its Green Prosperity Plan is a useful illustration. The Conservatives saw this as a political vulnerability: ministers mentioned it at every opportunity and were determined to demonstrate that this showed Labour would either borrow or tax much more than the Conservatives.
For months, Labour hesitated. They hesitated because they worried about antagonising some of their core supporters, they did not want to upset Ed Miliband, and they really liked the idea of having £28bn to spend on green industries.
None of this was a concern to the Tories; they just saw a chance to make an argument that might cut through to the swing voter. Belatedly, Sir Keir Starmer concluded that the £28bn pledge was a political vulnerability and scrapped it. Implicitly, he was accepting that on this issue his opponents had demonstrated better political judgement than he had.
Let us take an example from the other side. Last week Jeremy Hunt announced a 2p cut in National Insurance contributions. Not surprisingly, Labour supported it (it is hard for a political party to oppose a tax cut).
But the Chancellor also went further. He suggested a long-term ambition to scrap employees’ NI altogether. The Prime Minister also focused on this ambition, complaining about “double taxation” on people’s incomes.
Here, Labour’s reaction is interesting. Without hesitation, they went on the attack. “This is an unfunded £40bn tax cut”, declared Pat McFadden. “How are they going to pay for it?” Labour even mocked up a picture of a face half of which was Rishi Sunak, half Liz Truss under the caption: “Rishi Sunak is planning unfunded tax cuts bigger than Liz Truss’… you know, the ones that crashed the economy and left you paying more on your mortgage”.
Before turning to what this attack tells us, we should address why the scrapping of employees’ NICs was floated. Presumably, the sense within government was that the Chancellor had not delivered a particularly exciting Budget.
In truth, he could not do so because the fiscal space for dramatic tax cuts simply was not there. (Even those that have been announced are not really affordable given the implausible assumptions on spending and fuel duty.) Hunt went as far as he could offering tax cuts whilst still retaining fiscal credibility (and possibly further than he should).
For the second fiscal event in a row, the Chancellor chose NICs as his tax to cut. If we can afford to cut a big tax, that is an admirable choice in that it does create distortions, impacts people of working age (who have generally done badly compared to pensioners) and will encourage people into work.
We have two taxes on income, and this is the worse one. There are perfectly good reasons for wanting to cut it further.
Putting the autumn statement and Budget together, the NICs rate has been cut by a third. To bring the policy to life (and to appease Tory MPs wanting bolder tax cuts), Hunt and Sunak have floated finishing the job – presumably in the next parliament. This will be the big offer to the country in the Conservative manifesto.
What should worry ministers is that Labour evidently welcomes the fight.
Labour’s response tells us two things about how they want to position themselves. First, they want to convey themselves as fiscally responsible; if they can define themselves against the Conservatives on this front, so much the better. The last time that Labour could credibly argue that they would take fewer risks with the public finances than the Tories was in 2005. It was also the last time that Labour won.
Second, Labour thinks it is well worth linking the Sunak Government with Truss. Starmer did this last month, when raised her at Prime Minister’s Questions and they have done it again with the NI policy by arguing that this was a Truss-like unfunded tax cut.
At one level, this is unfair. There is a very big difference between setting out a long-term aspiration to abolish a tax at an unspecified time with a series of specific announcements in a mini-Budget.
But any mention of tax cuts without a plan to fund them will be vulnerable to criticism, particularly after the events of autumn 2022. By the weekend, the Prime Minister was talking about funding them through welfare savings, but we are still a long way short of a plausible plan.
Labour’s confidence on this issue demonstrates the extraordinary damage the Truss government did to the Conservatives reputation. Whereas Hunt and Sunak soon restored the UK’s standing in the markets, the Tories’ reputation for economic competence with the electorate will take longer to recover.
Big, bold promises to reduce taxes in future unaccompanied by a credible plan as to how to pay for it will only put back the date of recovery.
When it comes to the Conservatives’ tax policy, Labour has a clearer-eyed view of what they should do than they do themselves. Don’t be seen to be taking risks with the public finances. And don’t, whatever you do, be seen to resemble the Truss Government. Sunak and Hunt should take note.