Michael Howard and the myth of low taxes

In reality, you either believe in equality of opportunity or you believe in a small state

Michael Howard is gradually crafting an eloquent, stirring rendition of one of the great myths of our time. His speech this week to Policy Exchange, a Tory think-tank, was the clearest statement yet of his political philosophy. "I believe," he says, "that the state should be small so the people can be big."

As Michael Howard looks out over Britain and all its problems, he sees one big culprit: the state. "What holds people back is the one thing that's supposed to help them grow. In attempting to try and solve problems, government creates new ones. The size and scope of government in this country is simply too big," he claims. Lower taxes are a moral imperative. Decrease government and personal freedom automatically increases. Government bad, un-government good.

The trouble with this philosophy is it is based on a series of errors. The first and greatest is that it takes the world view of the rich and generalises it to the whole population. When the state is weak, the rich are undoubtedly more free. Denis Thatcher once complained that he hated "big government" because "the bloody socialists' high taxes meant I could not afford a Rolls Royce." But are the poor - or even the middle classes - really more free with a crippled state?

Look at my own family for starters. Would my sister really be more free if Michael Howard prevailed and the working families' tax credit - which tops up her poverty-level wages - was dismantled? Would my nephew really be better able to realise his potential if Sure Start - a government scheme to make sure poor pre-schoolers keep up developmentally with middle-class kids - was slashed? Would my cousin really walk taller if the state retracted from his life, the minimum wage was no longer enforced and he returned to earning £2 an hour? Would my grandmother really be better able to live "the British dream" if state funding for her old people's home was cut and the number of harassed carers looking after her shrank even more? Would the battered wives my mother works with be less "held back" if government funding for their shelters was cut?

In the real world, the basic equation at the heart of Howard's thought - less government means more freedom - holds only for one social group, the mega-rich. The rest of us need a dynamic market economy and an activist state. Look, for example, at one of the areas Howard refers to fleetingly in his speech: childcare. Britain is full of knackered working parents who need childcare centres. The market simply isn't meeting that need, so the Government is considering, as a bold third-term initiative, establishing national children's centres funded by a combination of government taxation and personal contributions.

So what does Howard have to say about it? Bizarrely, in a throw-away line, he says "government is still getting in the way. We must remove the obstacles for families to finding the best childcare." This exposes the poverty of his world view. Here is an issue where there is a market deficiency (yes, they do sometimes happen, Mr Howard). As in healthcare and a number of other areas, the market alone cannot meet the needs of real people.

Yet still Howard sticks to his inane mantra: government is the problem, get rid of government and somehow everything will be alright. This is not a practical policy pronouncement. It is a piece of marketeering dogma. Try to explain to a mum who can't find a child care centre in her area that any government programme to build one up the road is "an obstacle" to her.

Howard claims he wants true equality of opportunity, where somebody can rise from a log cabin (or its modern equivalent, a sink estate) to Downing Street. In reality, you can either believe in equality of opportunity or you can believe in a small and shrinking state. You can't have both.

If you want a child from an estate to have a chance of getting to the top, all the academic research (reality, as opposed to dogma) indicates you have to spend public money on nurturing him or her. It's not quantum physics: you have to build quality childcare to ensure that the child is as stimulated before schooling as a middle-class kid; you must redistribute wealth to his or her school; you should employ access regulators to ensure the child gets into university. None of these is compatible with fetishising small government.

When it comes to the issue at the heart of British politics - the public services - Howard's philosophy has nothing to add. It is absurd to claim that vast sums could be saved by cutting back government waste. Lower taxes will obviously mean less money for public services. (And, yes, less freedom too, because more people will be stuck in agony on waiting lists, or trapped in illiteracy and ignorance). It's very simple: you gets what you pays for. We will only have European-quality public services if we have European levels of tax and spending. The Government is quietly, slowly nudging towards this target; Howard would slam us into reverse gear.

This was never a tax cut-hungry country. At every election where Margaret Thatcher led the Conservative Party, 56 per cent of those who turned out voted for parties committed to increasing tax. It is only a silly voting system that allowed our taxes and public services to be slashed to the dire levels we are only gradually recovering from today. Even greater majorities can now see through the great tax-cutting lie: the promise of more freedom and better services on less and less cash. Howard's speech was reheated Thatcho-Reaganism with a flash of Bush. Listening to it was like hearing the cheesiest old pop hit from 1979. The only rational response is: did anybody ever really buy this stuff?

j.hari@independent.co.uk