Gordon Brown's policy proposals, outlined over the past few days, attempt to fill this gap. As of yesterday, Labour now has a list of programmes to help the under 25s and the long-term unemployed to find work. Sure, it will cost a lot; at least a billion in the first year. But now the Shadow Chancellor, when asked how he'll pay for it, can brandish his windfall tax on the utilities. "Look," he cries, "in my left hand I have a programme, and in my right hand, hey presto! I have the money!"
It is a neat bit of political footwork. But is it right? Hypothecating the windfall tax to pay for unemployment is a device to explain how expensive policies and not increasing individual taxes are compatible. It is not necessarily the economic structure most appropriate to solving the problem of unemployment, or utility taxation. If, for instance, the windfall tax were to raise less money than expected, would the training programme be reduced by that amount? Of course not. It would be better (if less spectacular) to keep the two commitments separate.
The second major theme of the Shadow Chancellor's address shares some of these rather showy characteristics. In calling for a cut in VAT on fuel to 5 per cent, Mr Brown is attempting to shift the tax/spend debate in a different direction again. By avoiding any judgement about the overall level of tax, or about when tax cuts would be preferable to spending increases, he is focusing instead on the structure of taxation, and which kinds of tax cuts would be preferable to others. On the face of it this is a much easier argument for Labour to win. Cutting VAT on fuel is more progressive than most tax cuts because it benefits even those who are too poor to pay tax altogether. But leaving aside the environmental arguments about taxing fuel consumption, is a wholesale cut in VAT on fuel better than, say, reducing the level of VAT on a wider range of items?
Most important, the really difficult questions about the overall burden of taxation, or who would win any possible trade off between pounds 500m on VAT cuts and increased education spending, all remain unanswered. For Gordon Brown there is little to be gained and much to be lost by giving any more detailed commitments on tax and spending so long before an election. But at the moment there is the slightly unhealthy whiff of low politicking about Mr Brown's proposals: a politicking which next week the Tories will be only too happy to match.Reuse content