Tax wealth or lose election, ex-May aide warns Tories

The Tories will lose the next election if they back “unbridled capitalism” and refuse to tax wealth to help the “struggling many”, one of Theresa May’s former advisers has warned.

Higher tax on sales of expensive homes, more rights for workers and curbs on immigration should all be backed by the Tories if they are to reach the voters who feel abandoned by globalisation, according to Will Tanner, the former deputy head of May’s policy unit.

His comments come as other influential Tory figures also express fears that the party’s disastrous election campaign will lead it to abandon May’s early attempts to intervene in broken markets and consider taxes on the wealthy – moves treated with suspicion by many pro-free-market Tory MPs.

Tanner’s intervention, in an article for the Observer, comes after Nick Timothy, May’s former chief of staff who quit in the wake of the election, warned that the party would fail if it retreated into its comfort zone. He said the Tories had stumbled at the polls because May’s early pledge to take on “untrammelled free markets” had been contradicted by a campaign that was all about continuity.

“If the party retreats to a much more orthodox Conservative proposition, then I worry that won’t be sufficient to tackle the big problems that the country has, and in five years’ time we do risk the election of a dangerous leftwing alternative,” Timothy told the Telegraph.

Writing in today’s Observer, Tanner said the election result was evidently “not an endorsement of the way the economy is run. Nor was it a vote for unbridled capitalism, nor a call for a smaller, less interfering state.”

“Conservatives can restate the case for markets as much as they like: it will not win the next election,” he writes. “The liberal consensus that has dominated British politics for decades is crumbling. Markets remain the best way of distributing wealth, but have tended towards narrow interest when left unchecked.”

While he condemned Jeremy Corbyn’s policy prospectus, he said Labour had used “smart politics” in offering a radical alternative. Tanner backs cutting employer national insurance and placing capital gains tax on the sale of primary homes over a certain value.

“Rent-seeking, including ownership of commercial, second and empty properties, should be taxed more,” he writes. “The first rung of the housing ladder should be lowered, for example by abolishing stamp duty, in favour of a capital gains tax on expensive properties that would be progressive across incomes, generations and geography.”

It is understood the party seriously considered imposing capital gains tax on homes worth over a set value at the election, but backed away from doing so as the decision was taken to focus on May’s call for a “Brexit mandate”.

Tanner also warns the party must not retreat from a Brexit that cuts immigration – May’s red line in securing a future deal. “Brexit must be delivered in spirit as well as deed,” he writes, adding: “The current debate about the terms of our departure is unedifying and superficial. A transition period is sensible, as is realism over our financial obligations. But what must be avoided is a dilution of resolve around migration or sovereignty. Such a betrayal of the referendum would not be forgiven; the victory for liberalism would be short-lived.

“The next election may be months away or years away, but the challenge is clear. Conservatism must be remade for the challenges we now face, or brace itself for inevitable electoral defeat.”

Robert Halfon, the former deputy chair of the Conservatives, has been among those pushing the party to reach out to low-paid workers.

“If we don’t get this right, in my view we face a potential cliff-edge moment. Workers’ conservatism has to be at the heart of what we do,” he said.

“The election campaign went wrong because part of it seemed to go precisely against those principles – telling people we were going to take away their school meals and so on.

“The reason people vote for Corbyn is they feel there is something romantic and noble about voting Labour. We have to have a noble and romantic message, too. My view is we do that by being the party of the ladder of opportunity, helping people climb up it. For too long, people have voted Conservative with their heads orand not their hearts.”