“Them’s the breaks” – Those are the words that triggered the race for Number 10, as Boris stood down as party leader and ultimately, Prime Minister. But as those words echo into the distance, the new chatter is all about who will replace him and more importantly, will we see a move to the centre or can we expect a more traditional Tory as the next PM?
Tories are low tax, smaller government
A truly Conservative leader is likely to uphold the traditional values of low tax and small Government, something that many within his own party felt that Boris was not reflecting in recent times as he and Rishi Sunak delivered increases in taxes and stepped in to support most people during the pandemic.
But whilst these are the traditional Tory values, is it possible for anyone to deliver that ambition in the current economic climate? With inflation expected to peak above 10% before the end of the year, a cost of living crisis, high numbers of job vacancies, a skill mismatch and billions of pounds of public debt as a hangover from Covid, there may not be much spare to support tax giveaways immediately.
The forecast is not strong
Even if a new Prime Minister were elected on the basis of an ambition to lower taxes but could recognise that doing so could not happen quickly, the reality of current economic forecasts may lead some to question if not now then when?, as the situation doesn’t look likely to improve for some time. Book ending the recent dramas at Downing Street, were warnings from The Office for Budget Responsibility (OBR) and OECD about record levels of debt and limited or non-existent GDP growth forecasts, respectively. These warnings will mean that any new Tory leader wanting to lower corporation tax or VAT or increase income tax thresholds, will have to do so gradually with reductions drip fed into the economy, rather than arriving as something of a windfall.
As the runners and riders begin to line up, one thing is for sure, the subject of taxation will play a key part in the election process as each candidate tries to woo their colleagues and prove that they truly are a Conservative Prime Minister.