Cameron’s Tax Cut is a Tax Con – but it’ll be popular, and highlights Labour’s missed opportunity

David Cameron’s conference speech today was well-delivered, punchy and memorable. It had a clear top line to grab the evening news headlines, and his populist tax cuts will be the overwhelming focus of tomorrow’s front pages.

This was cheese to Miliband’s chalk.

Whilst the Labour leader appeared to lack energy last week, and his headline announcement leaked in advance (and wasn’t sufficiently headline-grabbing to grab headlines), Cameron was surprisingly pumped up, energetic and forceful. He was also doling out policy like it was going out of fashion. It will have been a chastening experience for Labour MPs to watch a PM under fire come out fighting like that – and shows how much of a missed opportunity last week was for Labour, with little spring placed in the step of either Labour activists or voters.

But does any of this alter the fundamentals of how the two parties are perceived?

As long as Labour leads on “making my family better off”, then today’s announcements haven’t had the desired impact – although £400 extra for millions of voters might chance hearts and minds via pockets, nevermind those who escape the 40% tax rate bracket, who will benefit twice over.

But if you truly believe Cameron – that the Tories are the party of tackling inequality, of providing affordable homes, of the NHS and of better pay- then I have some magic beans and tartan paint to sell you.

Yet the most important question after this speech is – how are these tax cuts going to be funded?

Cameron promised to raise the personal allowance (benefitting not just the low paid but millions more) and lifting the threshold for the 40% tax rate (benefitting the best paid 1/6 of workers). Yet he hasn’t explained – even tangentially – how this would be funded. If the plan was to fund these tax cuts through the benefits freeze announced by Osborne yesterday, then a) it’s largely taking from the poor to give to the better off and b) the IFS say that it’d only cover half of the cost of these tax cuts. So these are unfunded tax cuts. So will there be even further punishing public sector cuts to pay for an election tax gimmick? Or will this mean more borrowing?

As George Osborne said himself back on the GMTV sofa in November 2008 “Well if he doesn’t explain how it is going to be paid for then it isn’t a tax cut, it is a complete tax con”. Now the party who once promised to eliminate the deficit and who have slashed public spending in trying (and failing) to do so, now want to offer massive tax cuts on the never-never.

Cameron undoubtedly gave a strong speech today, delivered well, with popular messages. Miliband should look on this speech as the kind he himself should have given last week – clear, passionate and popular. But that said, this could all easily unravel. Prepare to begin reading the small print – the devil of these pledges is entirely in the detail.

Warning – tax cuts may be smaller than they actually appear…