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banner Thursday, 2 November, 2000, 09:43 GMT
Tax and spend: the guilty parties

By BBC News Online's Nyta Mann

The Conservatives make no bones of their distaste for what many of them view as an unnatural practice.

Until recently New Labour believed it was best done only utterly discreetly and certainly nothing to be proud of.

Only the Liberal Democrats, perhaps predictably, were unashamedly in favour of "tax and spend".

But ignore the campaign rhetoric. It is impossible for either Labour or the Tories to avoid being the party of tax and spend. That is what governments exist to do.

The details left to be decided are the finer points of how much, from whom and on what. That, in large measure, is what politicians exist to fight over.

There has, however, been a notable change in the tax and spend debate in recent weeks. The point when the shift became clear was at Labour's annual conference; the hard evidence is expected in Chancellor Gordon Brown's pre-Budget report.

Caught in the act

From before the 1997 election, the Liberal Democrats ploughed a lonely furrow in making the unembarrassed case for taxation as a public good. It became their unique selling point as Labour and the Tories competed to be the low-tax party.

Suddenly, though, tax and spend is not so bad after all, a turnabout that may have something to do with being caught red-handed.

Comparing the post-election reality of rising taxes with pre-election low-tax rhetoric is a trick Labour knows well, having played it to devastating effect against John Major.

Now it's Tony Blair's turn. Whichever way you juggle, fiddle or otherwise attempt to disguise the numbers, the overall tax burden is higher under his government. Figures from the Office for National Statistics show that since 1996-97 - the year before New Labour won its landslide - it has increased from 35.5% of GDP to 37.7% in 1999-2000.

Knowing the impact of such bald statistics played a role in the tax-defending rhetoric heard from Mr Blair and Mr Brown in Brighton. So too did the fuel crisis, with Brown's suddenly not-so-stealthy hikes in petrol tax in the spotlight.

Add that to William Hague promising tax cuts and overtaking - albeit briefly - Labour in the polls, along with heavy pressure on the left flank for a funding boost for pensions and health, and a Blair defence of choosing to tax more to spend more was the result.

And so we saw unusual sights such as Blair in a pre-conference interview saying he was "not against giving people tax cuts, but it shouldn't be at the expense of investment in the future".

And Brown calling in his conference speech for a "great national debate" on tax cuts versus spending on schools and hospitals.

These is language unfamiliar to the New Labour lexicon.

"It's like when we fight the Tories on law and order or asylum," is the comparison one minister makes. "On tax cuts the Tories will always be able to beat us by going that step further than we can take it, and Tony's seen that now."

For the moment Gordon Brown can afford - and is expected - to give something to both sides, the tax-cutters and the spenders. The real test of the new rhetoric will come when he has to choose between them.

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