POLITICS

The candidates insist that the polls are wrong.

Perhaps we're not a nation of Mandies

BRUCE ANDERSON

Mr Major was promising a whole range of incremental improvements on present policies: more privatisation, greater effi- ciency in government, an intensified drive for higher standards in education. None of this is exciting, and some of it — especially education — should have been a higher pri- ority much earlier. But it is all practical, sensible stuff. Mr Major wants the state to do less and do it better. His economic poli- cies can be summarised as Fabian Thatcherism. If re-elected, he aims to ensure that year by year the Government will own a smaller percentage of the nation's wealth and spend a smaller amount of its income.

These pledges aroused some scepticism at the manifesto press conference. It was pointed out that according to the figures in the Red Book — the Treasury's projections of future expenditure and revenue — the tax burden would increase over the next few years. This is an accurate account of the Red Book's contents; it is also misleading.

The Red Book assumes unchanged tax rates. But as real incomes rise in a growing economy, unchanged tax rates would bring in more revenue, so that tax rose as a per- centage of GDP. But this does not mean that the government intends to increase the tax burden. On the contrary, it means that there is scope for tax reductions.

As Mr Major made clear on Wednesday, all his tax proposals for the next Parliament are based on affordability; they are aspira- tions, not pledges. On the face of it, he is committing himself to some ambitious aspi- rations. Public borrowing is to be eliminat- ed, despite the estimate of £19.2 billion for 1997/8, the standard rate of income tax is to fall by 3p, and there is to be a new system of transferable tax allowances, at a cost of £1.2 billion. There will also be additional concessions on capital gains tax and inheri- tance tax, plus annual increases in expendi- ture on health.

This is an expensive package, with a total cost of over £25 billion. That might seem incredible, and so it is. It is too pessimistic.

In 1997/98, tax revenues are expected to be around £300 billion. If the economy grows by 10 per cent between now and 2001/2, that figure would rise by £30 billion if tax rates are unchanged; more than enough to fund all of Mr Major's aspira- tions. But on present trends, 10 per cent is too low a figure. Twelve per cent is by no means unattainable. The Prime Minister's aspirations all assume firm control of pub- lic spending, which is set to rise more slow- ly than the national income will grow, and hence consume a diminishing proportion of GDP. But 12 per cent growth plus all the aspirations would still allow total spending to rise by almost £10 billion.

Government estimates of future tax rev- enues are always unreliable. They tend to underestimate the effects both of a reces- sion and of healthy growth. In the early 1990s, the public sector borrowing require- ment (PSBR) kept on exceeding expecta- tions, which is why the government was forced to increase taxes. There are now signs of errors in the opposite direction. A combination of buoyant tax receipts and a faster than expected fall in unemployment will mean that if this government stays in office next year's PSBR will not be as high as the £19 billion estimate. A re-elected John Major could attain all his aspirations, and more.

In 1959, the Tories won the election with the help of a slogan which has always been part of the Tories' appeal: 'Life is better under the Conservatives. Don't let Labour ruin it.' This year's version is more demotic: `Britain's booming: don't let Labour blow it.' But the public are still not taking any notice — or are they?

I have talked on confidential terms to a number of Tory candidates who have already started their election campaigns. They come from a cross-section of con- stituencies, they are all realists and I believe them to be telling the truth, at least as they see it. Some of them are fighting good seats for the first time, which always encourages nervousness; John Major has the best political nose in the business, but even he was worried about losing Hunting- don in 1979. My various candidates are all saying the same thing: that the picture they are building up bears no relation to the opinion polls. One or two of them tell me that they are getting as good a reception on the doorsteps as they did in 1992. This elec- tion is not over yet.

But Mr Blair has made a skilful begin- ning. He keeps on declaring that he will not exploit the sleaze issue, and then keeps on exploiting it. He keeps on insisting that he is keen to debate with Mr Major, and then keeps on refusing to do so. He is happy to talk to Sinn Fein but not to John Major.

Apropos of Sinn Fein, there is further evidence of Mr Blair's ability to tell his audience what it wants to hear. Some weeks ago, a couple of senior Unionists had a session with him. Both of them are hard- headed characters whose instinctive response to any assurance is scepticism. They came away believing that if he became Premier, Mr Blair might well pull out of the peace process. At that stage, of course, he still hoped that the Unionists would pull out of supporting the govern- ment. That, of course, is no longer relevant, so Mo Mowlam, the shadow Northern Ire- land Secretary, has lowered the conditions for Sinn Fein's entry into the talks. Mr Blair's team have turned cynicism into an art form; we can expect four more weeks of high-minded rhetoric and duplicitous foot- work.

It may succeed; it has so far. The spin- ners and sound-biters must be taken seri- ously; after all, they re-elected President Clinton. But Britain is not America and John Major is not Bob Dole. There is a possibility that Labour has underestimated the voters and overestimated Peter Man- delson. Mr Mandelson is a remarkable fel- low, with unique qualities. His confidence in the British electorate's gullibility is only equalled by his contempt for the concept of political principle. But are the British peo- ple made in Mandy's image?

Mr Mandelson believes that he can safely protect Mr Blair from debates and tough questions because the public will not notice. We will know in about three weeks whether he is right. If by then the voters are coming to realise that the thought of debates has the same effect on Mr Blair as a crucifix did on Count Dracula, Labour will be in trouble.