A nation in search of an impossible dream

Yesterday, Labour turned its big guns on the Conservative tax and spending plans. In a co-ordinated assault, Gordon Brown and his former aide Ed Balls ripped into the economic proposals in the Tory manifesto, claiming that they would result in a £15bn "black hole" in the public finances. Labour argued that Tory claims that they would be able to cut taxes, reduce deficits and raise spending all at the same time are pure economic fantasy.

Yesterday, Labour turned its big guns on the Conservative tax and spending plans. In a co-ordinated assault, Gordon Brown and his former aide Ed Balls ripped into the economic proposals in the Tory manifesto, claiming that they would result in a £15bn "black hole" in the public finances. Labour argued that Tory claims that they would be able to cut taxes, reduce deficits and raise spending all at the same time are pure economic fantasy.

This is, at least, a more plausible critique than the Prime Minister's ludicrous claim last month that Tory plans would mean sacking every nurse, doctor and teacher in Britain. And it is true that the Tory boast that they would be able to cut £35bn in waste over the course of the next parliament, while at the same time trumping Labour's spending on key public services, look distinctly over-optimistic. This appeared to be confirmed by yesterday's admission by George Osborne, the shadow Treasury spokesman, that any Conservative tax cuts would not be implemented until the next financial year.

But it is considerable chutzpah for the Chancellor to accuse the Tories of being on the verge of creating a black hole in the public finances. There is a strong consensus among independent economists that Labour will be forced to raise taxes again to fill a gap in the public coffers if returned to power. And it is difficult to square the accusation that the Tories would irresponsibly hack public service budgets with the assertion that they would plunge public finances into the red. Mr Brown cannot have it both ways. It is also salutary to remember that many of the Chancellor's economic achievements would not have been possible without the foundations laid by the previous government.

There can be little doubt that Mr Brown has been a highly successful - and lucky - Chancellor. However, while he established a progressive personal taxation system with his various "credit" schemes, it is also fiendishly complicated and somewhat inefficient. And the expansion of government with so little quantifiable return remains a worry. There is an argument that we need a simpler taxation system to fund this expansion. Although it is unlikely to fit a British context, it is surprising there has been so little debate over the introduction of a "flat tax" - a uniform levy on all income above a certain level - given its popularity in thriving Eastern European nations.

Tony Blair's latest big idea is an "opportunity society", in which there are no barriers to personal advancement. Yet, while the incomes of the poorest third have steadily increased under this Government, there is still a sizeable underclass in Britain. While Mr Blair and Mr Brown fall over themselves to help "hard-working families", there is too little focus on the most disadvantaged of all, often those unwilling or unable to help themselves, whose position has barely changed in eight years.

Out of the three main parties, only the Liberal Democrats are committed to raising taxes for the social good. Their proposal for a 50 per cent top rate of income tax is a cosmetic solution that would achieve little, but at least it has the virtue of honesty. It is interesting to contrast this stance to Mr Blair's on pensions, where he promises radical action but, in reality, indulges in endless prevarication while the problem escalates.

But none of the major parties is being truly candid. All are committed to restraining taxes while increasing spending. Where is the real debate that this country needs over whether it wants to be a social democracy, with high taxes and a substantial role for the state, or a more liberalised nation, with lower taxes and state activity? We remain a nation in delusion, in search of the impossible dream of low taxes and high public spending. This is the real debate; sadly, it is not one you will hear over the next few weeks.