Don’t believe Labour’s claims they inherited a terrible economy

We must hold the new Government to account, and that starts with insisting on honesty about the nation’s finances

Source - Daily Telegraph - 21/07/24

Labour must start being honest.

Since arriving at HM Treasury, the Labour Party have done all they can to try and pretend they are inheriting a previously unknown and malign economic legacy from the Conservatives. This is dimly predictable, but simply not true. The economy is very clearly turning a corner, and anyway Labour made their promises during the election in full knowledge of the economic situation, and to pretend otherwise in the words of Paul Johnson from the IFS “simply won’t wash”.

Let’s first examine the realities of the economic situation.

It is of course true that we are in the aftermath of two generational economic shocks, the pandemic and the energy price spike caused by Putin’s illegal war in Ukraine. But despite that, the UK has the fastest growing economy in the G7, with inflation on target, business investment growing and taxes starting to come down. We are moving in the right direction.

And let’s compare the inheritance a Conservative Chancellor faced in 2010 versus where we are now.

At the last Budget before the 2010 general election, the deficit was forecast to be 11.8%, it’s 4.4% now. Inflation in 2010 was 3.4%, compared to 2% today. Unemployment was 8%, compared to 4.4% today.

See? Significantly better in 2024 than in 2010.

But the next and most important point that follows is this. Labour knew the economic situation before coming into government. In 2010 we set up the OBR (Office for Budget Responsibility) and this means the Government books are completely transparent. As Paul Johnson from the independent Institute for Fiscal Studies has rightly said: “The books are wide open”. Even Rachel Reeves said in an interview with the FT: “We’ve got the OBR now. We know things are in a pretty bad state. You don’t need to win an election to find that out”.

I said in a speech during the election campaign that “it’s obvious that what Keir Starmer wants to do is cynically claim the books he inherits are much worse than he thought as justification for imposing tax rises, he hasn’t told you about.” Unfortunately, the first part of this has already come true.

The fundamental truth is Labour made their promises in the campaign knowing the situation with public finances. Our job now is to hold Labour to them.

They promised no tax rises on working people and no plans for tax rises beyond what is in their manifesto.

Labour have lots of difficult decisions coming their way, but they need to be honest that they knew about these before the election.

We Conservatives now have to reflect on the election result and take time to elect a new leader.

But whilst this is in process, we will not let up on holding Labour to account, the important job of opposition on behalf of the country. And that starts with insisting on honesty about the economy.