A fundamentally Conservative document: what have we learnt from May’s manifesto?
In 2015 David Cameron led his party into the general election genuinely unsure of the outcome, not knowing whether he would be returning to Downing Street until the early hours of election night.
In 2017, enjoying a huge poll lead over an opposition in total disarray, we can be sure that Theresa May won’t be booking a removal van just in case.
Theresa May’s proclivity for playing her cards close to her chest makes the launch of the Conservative Party manifesto all the more interesting – not only for what it contains, but for what has been left out. In the latter category, Chancellor Philip Hammond has won his battle to scrap the restrictive 2015 tax pledge which caught him out in his first budget, namely the promise not to increase VAT, National Insurance or income tax for five years. This leaves the door open for a return to the modest (and mildly progressive) proposals to reform NI that he was forced to abandon in March.
Known to be something of a technocrat, Hammond might also have in mind a more ambitious, and long overdue, reshaping of the way income is taxed. In Spring 2016, a little-noticed report was published by the Office for Tax Simplification (yes, there really is such a thing), containing ideas for closer alignment of income tax and national insurance contributions.
The proposals were welcomed by the government and may yet be revived, and could be presented within May’s preferred narrative of being ‘on the side of working families’ by shifting some of the burden of taxation from earned to unearned income. But that might all be dependent on whether Hammond himself is out of a job on 9 June.
Also disappearing from the manifesto are commitments made by David Cameron in 2015 in an effort to shore-up his party’s support with older voters. At that election he pledged to retain all existing pensioner benefits on a universal basis, and to protect the ‘triple-lock’ system for uprating the state pension (in line with inflation, average earnings, or 2.5%, whichever is higher).
As well as being rather expensive, these promises raised questions of intergenerational fairness, which Theresa May has moved to counter by means-testing the Winter Fuel Allowance, and (from 2020) replacing the triple-lock with a double-lock (removing the 2.5% minimum uprating in the event of earnings growth and inflation both falling below that level).
The money saved by restricting Winter Fuel Allowance is to be directed towards social care, but there too the Conservative plans are not without controversy. The new arrangements will protect the first £100,000 of assets of those who need care, but (unlike under the present system for those requiring care at home) that figure will include the value of main residences. The impact will be to leave more people paying for care at home, but offers greater asset protection for those going into residential care homes (where properties were already included in the threshold calculation).
May is gambling that her enormous opinion poll lead amongst older voters – of 49 percent to 26 percent for Labour in the 50-64 age group, and 69 percent to 16 percent amongst the over-65s – will not be seriously impacted by these plans, despite Labour’s rather more generous offer on pensioner benefits. It is of course these groups of voters that wanted to leave the European Union (there was a majority for Remain amongst the under-50s), and the Conservatives have comprehensively locked down the Brexit issue as their own, sweeping up much of the UKIP vote in the process.
One promise the Conservatives have retained is the pledge to cut net migration to ‘tens of thousands’ annually, a level not seen since 1997. This target has been drastically missed every year since 2010, but rather than taking the opportunity to water it down, if anything Theresa May has doubled down on the issue. The 2017 manifesto promises tougher visa requirements, a doubling of the ‘Immigration Skills Charge’ levied on companies employing non-EU workers, and an increase in the Immigration Heath Surcharge.
What does not get a mention in the manifesto is how the costs of reducing migration would be paid for, in the event of the policy being fulfilled.
Lobbying from the Higher Education sector to have international students removed from the immigration figures has been ignored. What does not get a mention in the manifesto is how the costs of reducing migration would be paid for, in the event of the policy being fulfilled. Last year the government’s own Office for Budget Responsibility estimated that a reduction in net migration of 80,000 a year (to 185,000 a year, still well over target) would cost the government some £6billion a year in lost taxation revenue. Only a radical improvement in productivity, and a fundamental reshaping of the UK’s recent growth model, would plug that gap.
May’s positions on Brexit and immigration are clearly part of her electoral strategy to capture the UKIP vote and target swathes of Labour seats where a majority of voters backed leaving the EU. But they can also be seen as part of her wider shift towards a more blue-collar conservatism, dubbed Erdington modernisation by her guru Nick Timothy, which professes to prioritise the concerns of working class voters over those of liberal free market capitalism.
This has led some right-wing commentators to label May a ‘Red Tory’, downgrading the commitment to fiscal rectitude (the elimination of the deficit, first promised for 2015, has now been deferred until at least 2025), and offering a more state interventionist approach on issues such as housing and energy. This line of argument is, however, rather overblown.
This manifesto does not mark a rupture with the conservatism of recent decades, but a recalibration of priorities in some areas. Unsurprisingly, it is a fundamentally Conservative document, that set out a both to occupy, and reshape, the fabled centre ground of British politics.