David Cameron made a lot of very expensive promises today. The tax-free personal allowance will be raised to £12,500, the top rate of income tax will only kick in at £50,000 and 100,000 new homes will go on sale 20% below the market price for British first-time buyers under the age of 40.
The prime minister did not explain where the money was going to come from. In fact, he seemed to rule out ways of costing the proposals.
He pledged the UK's level of corporation tax would always be the lowest in the G20 – a promise which puts us at the mercy of the internal political debate in other states. So it won’t come from corporations. He also repeated George Osborne's insistence yesterday that tax rises are not the way to address a deficit. So that appears to be ruled out too.
The tax cuts are very good policy. By boosting the incomes of low and middle earners, the economy can be kicked into high gear. It is also morally sound, handing spending money to the people who need it most. Politically, it goes some way to addressing the outrage of freezing tax credits, which will heavily penalise precisely the hard-working, low income families the government purports to support.
But without some idea of where the money comes from, this is like a Robin Hood who gives to the poor without having stolen from the rich first. Precisely what does he have to give them?
The Institute for Fiscal Studies say the pledges will cost £7 billion a year by 2020 – twice the cost of the money saved by freezing working age benefits for two years.
Presumably answers about where the money is coming from will be forthcoming. If not, the speech will unravel in hours. On the radio a moment ago Michael Gove was struggling to explain it, but that does not in itself mean it is not understood. He is not as clever or as impressive as his admirers say.
Regardless of whether answers are later given, the absence of costings in the speech itself was a massive political failure because it contradicted its central premise.
Cameron's argument is that only he can guarantee social justice, because it is pre-conditioned on the successful running of the economy. It’s clever stuff. He is behind in the polls on understanding the lives of ordinary people. So the speech saw him address that by making it conditional on the area in which he polls strongly: management of the economy.
But that image of responsibility is only believable because the Tories don’t throw money around all over the place without figuring out where it is coming from. His failure to cost the tax cuts took the legs out from under his central argument. As Osborne said about Gordon on Brown in 2008: "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."
This is the natural end point for Tory economic theory. They refuse to increase the tax burden on the very wealthy – be they individuals or companies. So now when they want to reduce it for ordinary workers, they struggle to articulate how. Robin Hood understood how personal finance worked. If only the prime minister did too.