Without hard thinking on tax and the state, Kemi Badenoch is doomed to fail

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The Conservative party lost the 2024 general election for a number of reasons — chief among them that they won the 2019 election by promising to improve public services, not to raise taxes, and to reduce the number of immigrants coming to the UK. Public services got worse, taxes and immigrations both went up. The “Partygate” scandal cost the Tory party the benefit of the doubt and Liz Truss’s economic experiment cost it its economic credibility. The ingredients for a landslide defeat were all in place before Rishi Sunak became prime minister, though he did not help matters.

So in some ways the task before the party’s new leader, Kemi Badenoch, is simple. Apologise for the Truss disaster whenever you are able. Don’t belittle the anger that people felt at Partygate. That thus far she has refrained from doing the former and enthusiastically leaned into the latter does not bode well for her leadership.

Her difficulties are compounded by the fact that opposition leaders have far fewer opportunities to show that they have changed their party than prime ministers have chances to refresh their government and improve their standing.

But one thing Badenoch is right about is that the Tories need to focus on making promises they can keep, and that they should start by undertaking a full audit of what the state does and why it does it. People did not hand Labour a landslide majority because they thought the state needed less money and that public services were working fine. Nor did Boris Johnson or Sunak preside over record amounts of immigration for the fun of it.

Part of the problem is that the Conservative party has, for too long, pursued what could be called the Ikea model when it came to public services: first establishing how much they were willing to spend and then trying to work out how good the service can be for that price.

Then, as is often the case with cheap furniture, Conservative MPs became restive and irritable at the compromises involved, pressuring their governments both to spend more on public services and to tax less. The result was always going to be something like the Truss budget, in which radicalism on tax cuts was not matched by radicalism in reducing spending.

To avoid a repeat of that in the future, the Tories need to start by deciding what they think is an appropriate level of public provision. (And, also, by considering what the voters they are targeting want and will accept.) Then, and only then, can they start thinking about the promises they want to make on immigration — and only after that can they get to talking about who they want to tax and how much.

The reason for that sequencing is simple. The biggest single driver of the UK’s “doom loop” of ever-worsening public services and higher taxes is that we have an ageing population. Added to that, our ageing population is not uniformly distributed geographically: many more people chose to spend their retirements in coastal cities, which means that Britain’s care-dependency ratio is actually considerably worse in real terms than it might at first seem.

If you are a party that wants or needs to win most of the retired population then you need to be able to provide first-class support for the elderly in the places they live. That costs money and involves hiring people. If you want those care staff to be British-born then that costs more money still. So it is only when you have decided what services you are going to provide and who is going to provide them that you can start thinking about what level of tax you need to pay for it all.

As recent history has shown, the Tories can win power by promising to increase spending and keep tax flat, but they can’t hold on to it. Promising that again would mean committing to rerunning the 2019-24 parliament — but with a different leader and hoping for a materially different outcome.

The great hope for Badenoch is that Labour might come unstuck, derailed either by global events or because of problems with its own model, which is not so much Ikea as Klarna (work out what you want, rule out several ways of paying for it, then hope that the method you have chosen doesn’t have negative consequences for you later down the line). But the risk is that the answers the Tory leader reaches for on public services turn out to be as ill-judged as the ones she has already reached for on Partygate and the Truss experiment.

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