To pretend ‘the books’ are worse than expected is not just shameless, it’s an insult to the British public
Source - Daily Telegraph - 28/07/24
Nick Timothy
28 July 2024 • 7:00pm
‘We have fully costed, fully funded plans,” Labour told the country during the election campaign. “Nothing in our plans requires any additional tax to be increased.” Ramming home that message, Rachel Reeves promised every Labour policy was “fully funded and fully costed – no ifs, no ands, no buts … no additional tax rises”.
In total, Labour pledged not to put up taxes at least 50 times before polling day. But in private, it appears it was planning to do exactly that. Labour’s secret plans were leaked to the Guardian in June, with party sources saying that, once in power, Reeves would claim to be surprised by her inheritance and seek a “doctor’s mandate”, increasing taxes across the board. The sources said she would take a “kitchen sink” approach to tax rises, but admitted, “that is not what they are presenting the public with right now”.
Everything those sources said is turning out to be true. The newly-installed Chancellor now says, “I don’t think anyone realised quite how bad things were.” She repeatedly claims Labour has inherited “the worst set of circumstances since the Second World War”. Although the BBC fact-checkers appear to have taken an early holiday, this is verifiably untrue. Inflation, borrowing and unemployment are all lower than when Labour last left office. Debt is lower than in the 1950s, and lower than in countries including France, Italy and the United States. The economy is growing.
Before the election, Reeves admitted she could not pull off the trick she is now attempting. Such was the suspicion that she would indeed claim things were worse than expected, she was asked if this was her intention during an interview with the Financial Times. She answered: “We’ve got the Office for Budget Responsibility now… You don’t need to win an election to find out [about the public finances].” She even joked about a lie-detector test.
Now, the polygraph needle has gone veering off the page. Reeves’s trick is to publish an audit of public spending pressures she has commissioned and overseen in the Treasury. She has already told the media the audit has found a supposed £20 billion black hole. But this is ridiculous, for several reasons.
First, it was already known that there were fiscal pressures and that choices would need to be made in a government spending review. The Conservative answer was spending restraint, welfare reform and, by the end of the parliament, tax cuts. The Labour answer was denial.
Before the election, the independent Institute for Fiscal Studies said Reeves would have to find £20 billion to avoid making cuts to unprotected spending departments. This is, of course, the same number she now uses, citing supposedly surprising, new information. But when this number was put to her before the election, she denied it, insisting she did not need to put up taxes. “I don’t believe that fiddling around with tax rates is the best way to grow the economy,” she said.
Second, and as the past Conservative position implies, there are still choices for the Government. For example, Reeves has made it clear that she will give teachers, doctors and other public sector workers a 5.5 per cent pay rise – more than twice the rate of inflation – which will cost up to £10 billion. And ministers have started direct pay negotiations with Aslef, the train drivers’ union, cutting out the employers – the train operating companies – altogether.
This instinct – always to side with the most militant of unions – is baked into Labour’s identity. But the money thrown their way is a choice. Even as the Treasury has briefed that Reeves will increase public sector wages by more than the rate of inflation, she has also said she will cut back infrastructure investment – something entirely incompatible with her promise to prioritise growth – and plans to put up taxes.
There are other choices, too. Labour’s ideological approach to energy and climate-change policy – led by the fanatical Ed Miliband – will lay on costs for taxpayers and customers. Despite the Government suspending, for example, the hospital-building programme and proposals to reopen old railway lines, it has recommitted to spending £11.6 billion in “overseas climate aid”.
It still intends to decarbonise the power grid by 2030 – an objective said by some experts to be impossible – but has no plan to pay for it, and seemingly little consideration of the costs involved for consumers. And while the new government will not grant new oil and gas licences in the North Sea, it is creating an £8.3 billion nationalised company to fund renewable technologies not backed by the market.
In other words, what Labour plans is based on a double dishonesty. We are not in the worst economic circumstances since the Second World War. And neither Starmer nor Reeves can claim, at least not with a straight face, to be surprised by either the public finances or pressures on departmental budgets. Everybody knew what the choices were before the election, and the experts and insiders knew that Labour’s response would be to rinse the public with tax rises – yet Starmer and Reeves made the decision to peddle falsehoods.
Labour has absolutely no mandate to do what it is about to do. The cynics among the commentators observe that they are playing smart politics, and compare the tax rises to come with George Osborne’s Budget of 2010. But then, Osborne and David Cameron had declared an “age of austerity” and campaigned on a manifesto promising to cut spending. Not only did Labour make no equivalent commitment, it explicitly promised the opposite of what it always knew it would do – “no ifs, no ands, no buts”.
This is why what the new Prime Minister and Chancellor of the Exchequer are planning to do this week represents the biggest lie in British politics. They are going to put your taxes up. They always knew they were going to put your taxes up. And they are pretending they have no choice. But from welfare to energy policy, they are making their choices. They want to deny that reality, and blame their own decisions on the Conservatives. And they want you to believe they had no idea they might do any of this as recently as a few weeks ago. We must not let them get away with it.
Comments
Post a Comment