Conservative Conference 2024: Contenders compete to hoist low tax banner

Upbeat Tories plot route back to power

Notwithstanding their landslide election defeat just three months ago there was an atmosphere of positivity at the conference, with Conservative MPs and members believing they could return to power at the end of the current parliament on a platform of low taxes and deregulation.

There was a tangible sense of relief among most conference-goers that the long-anticipated election drubbing had finally been put behind them and, rather than defending a record many of them regard as extremely patchy – especially on tax – the party could go on the offensive against a Labour government which has already given them plenty to aim at. Longer-term thinkers, however, acknowledged that the path back to power could be long and will require much soul searching.

The conference was dominated by the four remaining leadership candidates who each took part in a question and answer session on the conference floor as well as making numerous fringe appearances and a 20 minute speech on the conference’s final day. All four contenders agreed that the party should pursue a tax-cutting agenda though there was little in the way of specifics. James Cleverly’s support for scrapping stamp duty land tax and tackling high marginal rates was an exception (see below).

The Liz Truss mini-budget continues to hang over the party’s tax debate. There was something close to a consensus at the conference that the events of autumn 2022 had not discredited the tax-cutting agenda per se but that they did mean that any proposals which looked like unfunded tax cuts would not be credible. Thus tax cuts would have to be presented alongside corresponding spending cuts, alongside major structural reforms (of a kind that would reduce the role of the state) or could only come once the economy was back to a decent level of growth. However few speakers were willing to identify big cuts, reforms or as-yet-untapped growth generators (beyond general exhortations to deregulate and make it easier to build), and those that did (for example a speaker who suggested the scope of the state pension could be reduced) were generally think tank outriders who went unendorsed by parliamentarians.

The critical reaction of most Conservatives to Labour’s proposed planning reforms and means-testing of the winter fuel allowance suggests the party is currently more comfortable taking pot shots at Labour than confronting the difficult trade-offs that any serious tax-cutting agenda would require. The Institute for Government (IfG), in an analysis, characterised the conference as having “a lack of grown-up discussion about spending choices”.

We begin this report with a look at what each of the four leadership candidates has been saying about tax.

Robert Jenrick – we need to fix the broken system

Robert Jenrick, the odds-on favourite to win the contest, used his conference speech to make a fierce attack on the Labour government and the tax cuts he expects them to announce at the Budget.

In a speech delivered without notes Jenrick accused Keir Starmer of presiding over ‘managed decline’, leaving “the hard-working silent majority waiting for huge tax rises, the nation’s wealth creators fleeing en masse and millions of pensioners betrayed”. He said the UK was being let down by “big government and small-mindedness, by high taxes and low ambition”.

Jenrick said Conservatives should celebrate their achievements in government but also be ‘painfully honest’ about their failures including a failure to deliver a strong economy. He told party members: “I have a hard message for all of us today. If we want to be the party of low tax, of growth, of business, as I do, and I know you do too, we also need to be the party of fixing the broken system that stops us… the investment that Britain desperately needs”.

In his Q&A session earlier in the week Jenrick expressed disappointment that the Conservative government “has left the tax burden at the highest it's ever been”. He said he believes in the “dynamic effect of taxes” and that was why he persuaded Rishi Sunak to cut stamp duty.

Jenrick argued that the Conservatives needed to restore their economic credibility and reassure people they would be a “competent professional” in order to safeguard people's savings, pensions and small businesses. He acknowledged that in recent years his party has lost the “low tax and pro-growth” mantra and called for a ‘proper’ plan for growth. In response to a question he told members that abolishing the top rate of income tax would not be his number one priority if he becomes the leader of the next government.

James Cleverly – scrap stamp duty, make work pay

James Cleverly told the conference that stamp duty land tax (SDLT) should be scrapped and high marginal rates should be eliminated.

Cleverly, in a speech widely regarded as the best of the four, told party members that his political hero was former US President Ronald Reagan, in part for his optimism. “Even during the depths of the Cold War he made Americans want to vote for a conservative, not reluctantly, but with enthusiasm… He cut taxes, he cut regulation… and he won a landslide. So let’s be more like Reagan. Let’s be enthusiastic, relatable, positive. Let’s be more normal.”

The Shadow Home Secretary argued that “bad taxes” such as SDLT should be eliminated and that government should make sure “work always pays”. Specifically, he said that the government should never take “more than half of every pound” an individual earns. He had also made both these points in his conference floor Q&A earlier in the week, a session in which he emphasised that he was “absolutely determined to get us back to not just talking about, but being a low tax Conservative government”.

Cleverly had been questioned about his tax plans in a Radio 4 interview earlier that morning. Challenged that the biggest group facing a marginal rate was those earning between £100,000 and £125,000 a year he said there were “a number of places including people earning considerably less than that where the marginal tax rate is over 50% and the point is, even if someone is earning over £100,000 a year, if they are working hard, if they are contributing to the economy, particularly if they are employing others, if they are improving productivity, and that’s why they are perhaps getting paid more, we shouldn’t disincentivise that.”

Asked about the rationale for scrapping SDLT Cleverly said it stagnates the market and deters people from downsizing. Asked whether government could afford to lose the £9 billion a year SDLT raises, he said that: “If we don’t start cutting taxes, we stifle the economy and we will ultimately not be able to thrive as a country.” He continued: “We are taxed too highly, and to be honest with you, if we as Conservatives are not prepared to make the case for a more lightly regulated, more lightly taxed, faster growing economy then we will not be able to afford the public services that people rely on.”

Kemi Badenoch – wealth is not a dirty word

Kemi Badenoch proposed cutting corporation tax and capital gains tax, saying the Conservatives must be the party of wealth creation.

Badenoch, the only female candidate left in the race, acknowledged in her speech that, in government, the Conservatives “did not always keep our promises”. This included promising to lower taxes, then raising them. She lamented that the government she was part of had not defended capitalism: “Capitalism does not mean corporatism. It does not mean monopolies. It means free markets and competition. We didn’t always defend those principles. Like Labour we raised taxes on business: corporation tax, capital gains tax; we taxed dividends…”

The Shadow Housing Secretary said that in the 1980s the Conservatives had given the UK “a golden age of wealth creation”. Where is that now, she asked, accusing Keir Starmer and Rachel Reeves of targeting savers and wealth creators. The Conservatives must once again be the party of wealth creation, she proclaimed. “Wealth is not a dirty word. It supports jobs and families. It pays for our schools and our health service. We should defend it and encourage it.”

During her Q&A session Badenoch told party members that the UK has “excessive tax… excessive regulation and excessive government interference”. She acknowledged that the tax burden is high but suggested that to lower taxes “we need to look at how we manage spending and public services… and how we grow our economy”.

Badenoch advocated lower corporation tax, saying she believed that some businesses had not started as the taxes were too high. She suggested reforming capital gains tax to increase the “appetite for risk-taking” which would create growth.

At a fringe meeting hosted by The Spectator, Badenoch expanded further on some of these topics. On business taxation, she said that the Conservatives had “started to see business as a thing people do that we can tax”. She argued for generous ‘entrepreneurs relief’ to reward risk takers and for the party to “cut taxes (generally) where we can”.

Badenoch’s most newsworthy conference moment, however, was a response in an interview with Times Radio which appeared to suggest she thought current levels of maternity pay were excessive. Following a strong negative reaction, including from other leadership contenders, she claimed she was trying to make a more general point about regulatory burdens on business being excessive.

Tom Tugendhat – low taxes mean freedom

Tom Tugendhat called for “a new Conservative revolution”, saying his party should cut taxes because they believe in freedom.

In his conference address, Tugendhat, regarded by the bookies as the outsider of the four remaining candidates, warned that Labour’s policies are already hurting the country, and said that their ‘tax hikes’ are an ‘attack’ on business, slowing growth and hurting families. By contrast, “I will build an economy that works for you, that delivers homes and jobs for our children, that helps people back to well-paid work, that lets you choose what you do with your money.”

Tugendhat promised he would “free the economy” and build an economy that works for everyone. Trust is key to this, he argued. “Trust is the foundation of growth… Trust allows us to simplify our laws and bring down taxes.”

In his Q&A session on Monday, Tugendhat explained his motivation for wanting tax cuts. “Lowering tax is not an ideological point… We don't do it because we worship high or low taxes… It's because we believe in freedom.” He said that the reason Conservatives think taxes should be lower is because “we think individuals are better when they are freer”.

Tugendhat continued that lower taxes lead to economic growth and accused the Labour Party of “state control”, which in his opinion would lead to disaster.

Towards the Budget - contenders united in rejection of rumoured tax rises

All four leadership candidates, as well as the Shadow Chancellor and Shadow Business Secretary, are united in their condemnation of Labour’s tax increases – both those already announced, such as VAT on school fees, and those being speculated about, such as increases to capital gains tax (CGT).

Robert Jenrick described Rachel Reeves as an “unimaginative chancellor”, claiming that her proposed plans for the upcoming Budget will not be good for growth. He suggested that investors are fleeing en masse from the UK due to potential CGT rises, and that family farmers are concerned that they will no longer be able to hand down their farms to their children or grandchildren without having to pay for tax advice, as they fear they might get “clobbered by the tax man”.

Tom Tugendhat thought 30 October would be “one of the most consequential budgets in our lifetime”. He suggested that it is going to “destroy growth… opportunity, and destroy hope for people”. Citing conversations with financial advisers and accountants, Tugendhat claimed that due to fears of Budget outcomes, businesses and individuals are selling everything, cashing out and moving abroad.

James Cleverly said the upcoming Budget would ‘define’ the Labour Party, indicating that a strong opposition leader could highlight their “economic incompetence”.

All four contenders stated their opposition to placing VAT on private school fees. Cleverly called it a “tax on aspiration and hard work”. Tugendhat said it was “vindictive and nasty” and suggested that the policy makes the UK a “complete outlier” because, he said, the only other country in the world that charges any tax on education is New Zealand – where they charge the same small rate of VAT on everything.

Shadow Chancellor Jeremy Hunt did not make a conference speech but instead was interviewed on the platform on Monday morning. He used the opportunity to defend his record in government, describing Labour’s claim of having the worst economic inheritance since the second world war as “nonsense”. He said that, over the next six years, the UK is projected to grow faster than Germany, Italy or Japan. He once again challenged the idea that there is a £22 billion ‘black hole’ in the public finances.

Hunt suggested that the economy has “very solid foundations” and expressed concern about Labour “believing its own propaganda” and “taking a whole series of decisions, particularly on things like capital gains tax, which have a massive impact in deterring the investment in the economy that we really need”.

Shadow Business Secretary Kevin Hollinrake told a business event that he was “deeply concerned” about what Labour are going to do to business tax incentives. There are good reasons why CGT is not equal with income tax, he said. As for business property relief, that was his biggest concern at the moment in relation to small business. “It’s there for a purpose,” he said, and it would be “pure madness” to scrap it. A survey had found 20 per cent of family businesses would have to sell up to pay inheritance tax if it went. “How damaging would that be for our economy?” he asked.

Hollinrake urged businesses to speak out about their concerns ahead of the Budget, saying: “Don’t go quietly! Make government understand!” He backed this up with some flattery, telling them: “You are the strong horse that pulls the full cart.”

Employment taxes: high marginal rates under fire from all sides

The 60 per cent tax rate on income between £100,000 and £125,140 is “fundamentally immoral”, a shadow minister told a fringe meeting. One of the leadership contenders has this in his sights.

Greg Smith, a shadow business minister, described as “perverse” the 60 per cent marginal rate of income tax on incomes above £100,000 (note this rate will be even higher in Scotland due to the higher ‘advanced’ rate of tax). He said there had been a four-fold increase in the number of people captured by this rate, describing it as “absurd” that the government was taking this much money from people. He suggested a starting point for debate would be around reducing this to 50 per cent while acknowledging even that appeared to be high.

He wryly observed that as MPs’ salaries increase, by 2028-29 there will be many new Labour MPs who will be directly impacted by this rate and speculated that this may spur them to lobby the Chancellor for a change.

In a later Q&A Smith was asked whether the 60% rate was “fundamentally immoral” (question from an audience member who lost his wife and saw his survivor’s pension taxed at 60%). Smith said “Yes”, adding: “HMRC don’t really have a conscience”.

As noted above, leadership contender James Cleverly is also advocating a maximum marginal tax rate of 50 per cent. He may have got the idea from this 2018 pamphlet by Tom Clougherty, then of the Centre for Policy Studies, now of the Institute of Economic Affairs (IEA). Clougherty was asked about marginal rates at a fringe meeting hosted by The Spectator and agreed that they should ideally not go higher than 50 per cent, but warned that some are challenging to address, especially when you are dealing with overlap with the benefit system.

At the same meeting Shadow Chief Secretary Laura Trott agreed there is a need to look at the tax and benefits system in the round. She said the Conservative government had looked at rates of child benefit withdrawal. There is a similar problem on childcare credits, which also needs addressing, she said. Andrew Griffith, Shadow Secretary of State for Science, Innovation and Technology, warned: “We’ve let high marginal tax rates creep back in for some of our youngest and brightest people.”

Paul Johnson of the Institute for Fiscal Studies (IFS) reminded the panel that Labour and Conservative governments had created these high rates. He said they were a political choice, partly caused by “the obsession with keeping some headline rates”.

At another fringe meeting Kate Andrews, economics editor of The Spectator, said that high marginal rates were “unacceptable” and acted as a disincentive to earn more. Arun Advani, Director of the new Centre for the Analysis of Taxation (CenTax), agreed that high marginal rates cause distortions in the system and said that addressing them “seems a very obvious thing” for the Conservatives to consider.

Advani agreed with a questioner’s suggestion that national insurance contributions (NICs) should be extended to all forms of income, including pensions and dividends. This could fund a 2p cut in income tax and help create a better designed and fairer tax system, he suggested. However Andrews argued that the party was “onto something” with its plan to abolish employee NICs, warning “NI is a myth”, that it is not a special pot of money set aside to help in retirement, it sits in the Treasury and helps fund day to day spending. She suggested more honesty is needed about this.

Gemma Tetlow, chief economist at the IfG, expressed support for the merging of income tax and NICs. Nick Timothy MP said NI was “a really bad tax” and not progressive. He said that the chopping and changing of leaders and cabinets over the 14 years of Conservative rule meant it had not been possible to establish a clear narrative on tax.

At an event on the Future of Conservatism, Rachel Wolf, who co-authored the Conservatives’ winning manifesto in 2019, said that she ‘loathed’ the last Conservative government’s attempts to take people out of paying tax and that she was against the abolition of National Insurance. Wolf argued that having people pay tax instilled a sense of contribution by giving taxpayers a stake in society.

At an event hosted by the Popular Conservatism movement (a.k.a. the Pop Cons), John O’Connell, Chief Executive of the TaxPayers’ Alliance (TPA), told the audience that the interactions between the tax and welfare systems were “completely messed up” and disincentivise work, especially in relation to taking up temporary work. He suggested that Covid had had a profound effect on the welfare system, resulting in an increasing number of people who expect the state to look after them. He said a “big dose of personal responsibility” is needed.

In response to a later question, O’Connell said that wholesale reform of the income tax system is needed, referring to the 2017 TPA report ‘The Single Income Tax’, which advocated replacing a complex swathe of direct taxes with a single tax on all income charged at a single rate of 30 per cent. He and Pop Cons director Mark Littlewood both criticised the complexity of the tax system, with O’Connell accusing George Osborne of letting it ‘balloon to new levels of complexity’ and saying a lot of the businesses his organisation talks to would trade an additional 1p on income tax for massive simplification. Littlewood argued that a stable and simple tax system is just as important as a low tax system and that the complexity of the tax code is a ‘disaster’. He said the Office of Tax Simplification should have had a job for life.

Tax reform: shift towards consumption taxes under consideration?

A member of the shadow cabinet was among those suggesting a shift from taxes on labour towards those on consumption.

At a Spectator fringe event titled ‘Is the Conservative Party ready to talk about tax?’ a questioner asked the panel what tax they would put up to pay for the scrapping of distortions in the tax system. Shadow Secretary for Science Andrew Griffith offered the view that, “in general, we overtax property, physical infrastructure and labour and we undertax consumption compared to other countries”. He said he would like to see that pivot over time. He returned to the same topic in response to a later question, criticising the complexity of doing business in the UK and arguing for a pivot to a “simpler, flatter, consumption based tax system”.

Tom Clougherty of the IEA went in the same direction with his answer, saying we should expand our “incredibly narrow” VAT base, which he compared unfavourably to New Zealand’s. 20 per cent VAT on all consumption would pay for the scrapping of inheritance tax, CGT and SDLT, he said. Clougherty’s IEA colleague Reem Ibrahim made a similar point at a separate event (see below).

Paul Johnson of the IFS answered the question by saying that he would do anything to get rid of SDLT. The most obvious measure, he thought, was more council tax bands for expensive homes. However if he wanted serious money he would put up the basic rate of income tax.

Shadow Chief Secretary Laura Trott declined to suggest a tax increase, saying taxes are too high across the board and should come down.

The Laffer curve is always a popular topic on the conference fringe. A questioner asked if there was a way to increase the tax take by cutting rates. Griffith said he is “a disciple of Laffer. I think you’d generate more economic activity with lower taxes”. Trott said that when the higher rate of CGT was lowered, the amount of revenue raised came up. Johnson was more sceptical, naming tobacco duty as one tax where this might apply but adding that he did not see many others. Clougherty agreed that tax cuts raising money are “few and far between”, though he did see a ‘Laffer effect’ in cuts often not costing as much as you would expect them to.

At the same event Clougherty called on the Conservatives to pursue “a serious pro-growth agenda”, saying this was partly about tax reform but also about regulation, the bureaucratic state and the supply side agenda. He warned against making tax policy ‘budget by budget’ saying that instead you need a ‘clear roadmap’.

Panellists united around low tax destination, less so on how to get there

An event organised by the Taxpayers’ Alliance posed the question: ‘Can the Conservatives be a party of low tax again?’ Of course, said the panellists, but it will mean we’ll need to get serious about spending cuts. Some right-leaning commentators and former advisers think the party’s opposition to the means-testing of the winter fuel allowance suggests this has not yet happened.

Former minister Lord Frost spoke first in the discussion, unifying the panel with his answer: “Yes they can, yes we must”. We won’t solve the productivity problem until we start to reduce tax and spend levels, he argued.

Frost identified three trains of thought in the Conservative Party on tax and spending:

1.           Nothing can be done to the existing high levels (defeatist and reminiscent of Gordon Brown, he thought).

2.           We can cut at the margins, talk about tax cuts but in reality do little (mainstream of party opinion).

3.           Need to identify a long-term plan to reduce the size of the state over a 10-year period (his favoured approach).

“We need a serious plan to reduce the size of the state”, said Frost, arguing this would avoid the ‘pile in’ that happens when people suggest just one area to cut. He suggested a target of cutting spending to around a third of GDP, but did not identify any specific areas to cut.

Greg Smith, the shadow business minister, spoke in the same discussion. He began with an acknowledgement that, in government, the Conservatives “let down the British public in many ways, including with the tax burden”. However, if the Conservatives don’t return to being a genuine low tax party, “we won’t get back to winning ways”. While Labour was “messing up on an epic scale already” there was no guarantee of automatic swingback to the Conservatives, he warned. He said that in order to win power again, the party must “have a clear, compelling and reasonable argument to pay less tax”.

Smith questioned the term “unfunded tax cuts”, calling it a “myth we need to blow out of the water”. He argued that if you choose the right tax cuts you can bring in more money. He referenced George Osborne’s corporation tax cuts in this respect. He said that the “last thing we should have done in [the last] government was to increase corporation tax”. He argued that the party needed to be honest about the damage this caused. This included businesses in his own constituency cancelling contracts as a result.

Smith also questioned the value of the Office for Budget Responsibility, saying that as an “arbiter of affordability” it was ranked among the poorest economic forecasters. “Why should an unelected quango tell a Chancellor what they can and can’t do?” he wondered. Lord Frost intervened to say that he would abolish the OBR.

Reem Ibrahim of the IEA spoke in the same discussion. She described the tax burden as too high and too complex (Smith agreed on this) and argued for lower taxes on labour paid for by an increased focus on taxes on consumption. She suggested full expensing for “everything” in relation to corporation tax and full income tax relief for savings. She wants to see a communication plan from government setting out the “moral and just way” to reduce taxes.

The fourth panellist was Rachel Wolf, the 2019 manifesto co-author, who said she had a “strong personal and corporate interest in lower taxes”. She posed the question of whether Liz Truss’s mini-budget did irreparable harm to the low tax movement, answering: “No, but it did harm the idea you can do it through borrowing.” It shows we need to be serious about reducing spending, she argued.

Wolf observed that while many in the party grumble about spending on HS2 and international development, these budgets were ‘miniscule’ in comparison to spending on pensions and healthcare. We need to develop answers to how you reduce spending on these areas, she said. Continuing, she argued the party needed to be “honest and serious” about what it would cut in government and that it couldn’t just be reactionary in response to the government. She was one of several people across the conference fringe who questioned why the Conservatives have flat out opposed Labour’s decision to end the universality of winter fuel payments, challenging Smith on this point. (Another was Kate Andrews of The Spectator who said she had been ‘shocked’ by the Tory reaction to Labour’s announcement. However the two shadow ministers on the panel with her both defended strongly the party’s position.)

During questions Ibrahim said she would like to see a “fundamental rethink” of the role of the state pension, suggesting it would become unaffordable. She suggested more could be done to support “last time buyers” through SDLT exemptions to free up asset income. However Lord Frost disagreed about the affordability of pensions. He said they cost 5 per cent of GDP at the start and end of the Conservatives’ time in power (driven by state pension age increases) and that it should be a political goal of government to keep it at this level. He did favour private sector involvement in pensions, arguing that many freedoms giving pensioners the power to invest privately were eroded by the 1997-2010 Labour government.

At a separate event Mark Littlewood of the Pop Cons said he would give people the option to opt out of public services in return for a tax break. “I would be very happy to waive my right to NHS treatment in return for a tax break. I am happy to waive my right to the state pension in return for tax break or NI contributions. If you give people the option of saying, I don’t want the state service, I’d rather run the money myself, you begin to unravel it. It’s not a silver bullet but it’s not a bad bronze bullet.”

Shadow ministers warn on non-dom plans

Two shadow ministers have claimed that Labour’s changes to the previous government’s non-dom proposals would have a harmful impact. Another shadow minister has questioned whether the previous government’s proposals were right.

At a fringe meeting organised by The Spectator, an audience member asked about a news story suggesting Labour were thinking of backtracking after a Treasury analysis found the changes could cost money. Shadow Chief Secretary to the Treasury Laura Trott replied that she found the Treasury briefing “delicious”, adding: “It makes me so happy because it’s what we’ve been saying.”

Andrew Griffith, Shadow Science Secretary, said he likes it when Conservative politicians defend people like non-doms. He continued: “We should remain an open economy. We’re now seeing a brain drain due to multiple factors.” He said the Labour plans were a “great shame” and “very short sighted”.

Tom Clougherty of the IEA weighed in on the topic, saying he was uncomfortable with people in similar positions paying different rates of tax. He suggested that if you abolished inheritance tax people wouldn’t care about the non-dom rules so much.

This followed comments from the Shadow Business Secretary ahead of the conference in which he seemed to question whether the Conservative government had been right to announce the abolition of non-dom status for tax purposes in the first place.

Speaking to the Mail on Sunday, Kevin Hollinrake said: “I'm not sure we got it right.” He added: “I think it's something we should look at. We don't want people deterred from coming here and investing in the UK.”

New MP argues for ‘virtue tax cuts’

At a fringe meeting hosted by the centre-right think tank Onward and Warwick University’s CAGE Research Centre, an influential new MP argued for a cautious approach to tax cuts, targeting those which would encourage innovation, investment and families.

Nick Timothy, who was Theresa May’s joint chief of staff during her time as Prime Minister, argued that the party needed to have a “really frank conversation” about how it lost the election. He warned that the Labour government was going to “rinse the country with tax rises” and would have to tax ordinary people to raise the sums they need. This was, he said, an opportunity for the Conservatives, but they would “need to avoid the temptation to rush too early into some kind of radicalism on tax that we will later regret”, especially as Labour, by setting the baseline for changes, would control the narrative. The party’s policies would need to be “copper-bottomed”. “Trussonomics”, he commented, had been “toxic on the doorstep”.

Timothy argued that lower taxes are still part of the Conservative philosophy. They are good in the right places and can support economic growth. He suggested that Conservative tax policy should line up with the following principles:

• Recognise tax cuts are not an end in themselves, they need to be built on a good society, which in turn needs a strong economy and fiscal responsibility.
• Acknowledge the need for a new economic model focused on greater industrialisation and public sector reform. There are “parts of the state that we could strip away” but rising demand for health, social care and national security mean these services need to be properly funded.
• Reform (in the short term) and growth (in the long term) are the key to realising the potential for tax cuts
• Target ‘virtue’ tax cuts as a counter to Labour’s “vice taxes”. These would reward/encourage innovation, investment and families.

He wrote about this in greater detail in an article for the Telegraph on 30 September.

Kate Andrews of The Spectator said that the 2022 mini-budget had made it easy for the rest of the world to argue against tax cuts. However, she argued, the reason it blew up was principally because of the government’s need to find £100 billion in borrowing to subsidise energy prices following the energy price spike.

Andrews noted that UK debt has now risen over 100 per cent of GDP – something she called a ‘terrifying milestone’. In this environment, she said, if there is to be a debate on tax cuts, it needs to be accompanied by discussions on spending restraint, house building, the future of the state pension, NHS reforms and tax simplification. Otherwise, it will be a meaningless debate and would demonstrate that the Conservatives were not serious about tax cuts.

Arun Advani of CenTax acknowledged that part of what the Conservatives will do on tax in opposition will be reactive but said that they will also need to set out a coherent picture of what they would do if re-elected. He argued there are two questions the party will need to ask itself: what is the size of the state you want and how will you pay for it? Following on from this, what does a functioning tax system look like? Currently, it is littered with “weird corners and quirks” that don’t work well, he suggested. There is a need to question the value for money of tax reliefs.

Gemma Tetlow of the IfG told the meeting that the tax burden has risen to pay for the welfare state and an ageing population. She argued that there was little between Labour and the Conservatives in 2024 in regard to the overall size of the state and suggested that a “poor quality, superficial debate” dominates the UK’s tax discussion. Tetlow said that, in addition to challenging the government, the Conservatives should take a strategic view of the tax system, drawing on outside experts to build an evidence base around the economic harms it creates, its distortions and incentives, and, if proposing to reduce taxes, be brave enough to admit those they will need to increase.

Asked by the chair what tax lever he would pull if he was Chancellor for the day, Timothy said he would remove disincentives and create incentives, like encouraging investment in plant and machinery to support innovation and reindustrialisation. Advani said he would expand VAT to cover all spending, using revenue raised to compensate the poorest. Andrews said she would scrap SDLT, describing it a “distortive” tax that penalises families. Tetlow would address the issues around the taxation of different forms of work.

News in brief

Former Prime Minister Liz Truss spoke on the conference fringe, defending her record at a packed event. She claimed it was “economic illiteracy” to suggest that Labour having to make cuts and raise taxes now was a consequence of the economic legacy she left.

While most Conservatives at the conference were optimistic of the party’s chances of bouncing back at the next election some sounded warnings that worse might be yet to come. Mark Littlewood of the Pop Cons said “the end could come pretty quickly if we don’t get our act together”. Ted Bromund of the Heritage Foundation, a US think tank, warned that if the Conservatives don’t get to grips with the challenges they could go the way of their centre-right equivalents in France and elsewhere.

The conference saw a further shift away from the party’s support for measures to reach net zero carbon emissions, with leadership contenders launching strong attacks on the government’s approach. Robert Jenrick argued against what he said were “crazy interim binding targets.” Kemi Badenoch said while she was not a climate change sceptic she was a net zero sceptic. Tom Tugendhat said that Ed Miliband’s policies would ‘destroy Britain’.

At a discussion on the Skills and Growth Levy former Skills Minister Robert Halfon welcomed the new government’s commitment to apprenticeships. Asked what the party should do if it was still in government, Halfon said he would increase the levy to increase support for apprenticeships and argued for a skills tax credit similar to those that were introduced for R&D and plant machinery. He suggested its value could be increased for those businesses who invest in apprenticeship opportunities for the disabled and minority communities.

At a discussion on economic crime Shadow Foreign Secretary Andrew Mitchell said the UK had been ‘a receptacle for dirty money’ for too long. He defended the record of the last government in tackling this, such as beefing up the powers of Companies House. He praised the Cayman Islands for acting on transparency, saying they had shown “that if you clean up your act American banks will come”. James Bolton-Jones from Spotlight on Corruption said that we now have decent laws in this area (though loopholes remain) and need to start focusing on enforcement. He claimed anti-money laundering regulations are not enforced in the UK, pointing the finger at professional body supervisors.

At a discussion on the role of financial and professional services, speakers stressed the importance of financial literacy. Miles Celic of The City UK said it was “on the national curriculum but we’ve not equipped teachers to teach it”.