It is quite possible Labour’s bid for economic growth is already having the opposite effect

GILES DILNOT

“Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone.” – Frédéric Bastiat (1801-1850)

I was never much engaged with the debate over whether Chancellor Rachel Reeves was a ‘real economist’. It seemed petty. I was, however, interested to know how much she has engaged with the works of real economists.

Bastiat for example, a French economist of the 19^th Century rather put his finger on the central problem with Labour’s whole economic outlook, fifty years before they existed.

The problem has always been that Labour still thinks the state can not only do everything for people, but it is better at it. They still believe, like every incarnation of their governments, that the solution to society’s problems is more taxpayers money ploughed into the public sector. A sector with worrying productivity right now.

To compound this, they’ve handed out money to their supporters with indecent haste and asked for nothing whatever in return to improve that woeful productivity.

We all remember when a smiling Rachel stood at the dispatch box, new bob abobbing, rightly proud to stand amongst the shards of a smashed glass-ceiling as the first female Chancellor. She was about to lay down the economic future of a country to, among others, a party who has now had: four female leaders, three of them Prime Minister, two non-white leaders…. and a partridge in a pear tree. (Give over, it’s Christmas).

She repeated the Labour mantra of Tories smashing the economy, and that her over riding mission was to boost growth. It’s a laudable ambition, but every party wants to boost economic growth. Then with the smile of the righteous, she challenged that party opposite – those awful Conservatives – to say what vital public services they’d cut if they didn’t back her tax splurge.

Rishi Sunak (remember him?) stood up and tore into the narrative with the vigour of a man who’d had three Weetabix and chased them down with a dose of “I told you so”. What was that prophetic line from the failed election campaign:

“You name it, they’ll tax it”

Now despite that final flourish the Conservatives have learned the hard way (and if they haven’t, they really must) something that is still heresy in Labour circles:

The public’s expectation of what the state can deliver has long outstripped its actual ability to deliver it. Politicians should come clean about this.

New thinking is needed, old taboos may need to be broken, and honesty is needed. As many have warned, including Health Secretary Wes Streeting himself, if we can’t boost real growth, we risk becoming a Health Service with a small country attached. You’ll have heard similar predictions around the welfare state.

Also watch how Labour frame things. Bastiat was writing back in the 1840’s put he accurately explained the left assumes if you are against the state providing certain services, you are therefore against those services being provided. This is disingenuous nonsense.

Here, however, are the challenges Kemi Badenoch’s team and the Conservative party must wrestle with for the future; the best ways to put people in charge of their own money, provide for those truly in need and reduce what the state does, or tries to do, and thereby ensure that what it does do, in Badenoch’s own words, “it does with brilliance”.

Did the Conservatives make mistakes in these areas? Yes, lots, and it cost them. Labour’s mistakes could cost everyone.

The effects of months of Labour doom mongering, before the Budget, about their inheritance (while hungrily eyeing other people’s) has damaged business confidence. The “not-at-all-a-manifesto breach” of raising employer national insurance was the equivalent of kicking them when they were feeling down.

Add to them, the farmers, pensioners (the Waspis and the cold), parents of private school children, all furious, and you start to imagine those massed ranks of new Labour MPs are thinking “this better be worth it”. There leader says it will be, but increasingly looks unsure, as does his Chancellor.

Given “growth” is their number one priority. Has it been worth it?

Well inflation has hit an eight-month high of 2.6 per cent, and many forecasters expect it to rise further in 2025. Growth is down, not up, albeit by 0.1 percent but certainly not the “growth people can feel in their pocket” that the Prime Minister is promising. With concerns over firms laying off staff next year it’s no wonder the papers are peppered with warnings of ‘stagflation’ and praise for Argentina’s President who has done the exact opposite to Labour, with far better results.

Even charities, care homes and hospices are pointing out the brutal side effects of Labour’s difficult medicine. Both the Prime Minister and Chancellor assure everyone that the hard bit is now, that they won’t come back for more tax, and all will be better tomorrow. However it seems a fair question to ask how many people now believe they mean what they say? Or even know with any certainty.

Anyone who has watched politics for years will tell you: nothing is inevitable.

Maybe it is the bad times now and soon the economy will surpass that worse-than-mediocre five-year growth forecast Rachel Reeves read out in her Budget. Don’t hold your breath, but it might. The Conservatives might come roaring back or they might crumble to dust. Reform might suddenly come up with an explanation of what their ‘reform’ would actually look like, and how it would work, beyond soundbites. Who knows?

But as the Government continues stubbornly sailing on their imaginary ‘£22bn-black-hole’ life raft, echoes of their once passionate cry that ‘the Tories crashed the economy’ feel a bit hollow.

Labour may not have crashed the economy, yet, but the economic foundations they are so proud of ‘fixing’ are already starting to look decidedly crumbly.

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This article (It is quite possible Labour’s bid for economic growth is already having the opposite effect) was created and published by Conservative Home and is republished here under “Fair Use” with attribution to the author Giles Dilnot

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