We need to live within our means, cut the deficit and balance the books
“Inflation is largely a self-inflicted wound” said Mrs Thatcher in a speech in Preston in 1974. Rachel Reeves would like to blame everyone else except herself for Britain’s inflation problem, but she would be wise to heed Mrs. Thatcher’s words before she writes her budget.
Today the OECD published its latest report on the world economy. Ignore the Government’s spin: the verdict on Britain was damning.
Across the G20, only Putin’s Russia and Brazil are expected to have higher inflation than Britain. We are now forecast to see the highest rate of inflation of the G7 advanced economies.
This is Labour’s legacy from their first year in office. At the time of the general election we had inflation bang on target at two per cent.
A little over a year later, inflation is almost twice that at 3.8 per cent. We face a toxic combination of high inflation and weak growth, driven by Reeves and Starmer’s tax, borrow and spend binge. Last month growth literally flatlined at zero per cent.
So, if you have found yourself looking at your weekly shop, or scanning your energy bills, wondering when everything got so expensive, you’re not alone. We are all getting poorer and the cost of living crisis keeps getting worse.
Inflation had spiked after the Covid pandemic. It didn’t drop back down to 2 per cent automatically. It took endless difficult decisions to get it back under control. Conservatives understand that. We know that saying yes to endless spending give-aways simply stores up problems for later.
What happened when Labour got into office? The Chancellor handed out inflation-busting pay rises to their friends and donors in the trade unions.
Then they hiked taxes on jobs by raising Employers’ National Insurance. The jobs tax didn’t just make hiring more expensive. It didn’t just mean that unemployment has risen practically every month under Labour.
It has made everything more expensive, because companies across Britain are having to pay a Rachel Reeves’s penalty for every staff member. And those costs are passed straight on to consumers in higher prices.
Our inflation is particularly driven up by food costs. Yet as those costs are rising, Labour’s war on farming continues. The last thing hard-pressed British farmers need is the family farm tax.
If inflation is one nightmare, the other side of Labour’s double whammy is stagnant growth. Economic growth in the UK is predicted to slow to one per cent next year, from an anaemic 1.4 per cent this year.
Britain is teetering on the edge of stagflation (last seen in the 1970s) thanks to Labour’s doom loop economics of higher taxes, higher inflation and lower growth.
You would have thought Keir Starmer and Rachel Reeves might have learned their lesson from the last 12 months. But no. They look like they’re gearing up to do it all over again in the budget this winter.
Just yesterday, Labour’s “favourite think tank” (one that used to be helmed by Torsten Bell MP, who is now writing the budget) recommended hiking taxes on pensioners, landlords and the self-employed.
And as if that wasn’t bad enough, the contenders for Labour’s deputy leadership election have joined Reform in their Left-wing promises to scrap the two-child benefit cap. This would add another £3.5bn hole to a budget that is already well in the red.
The endless taxing, borrowing and spending of Labour and Reform is not the only option. Living within our means. Cutting the deficit. Balancing the books. These are not slogans; they are the Conservative plan under my leadership to ensure we leave a better financial legacy for the next generation.
I believe the people should be able to keep as much as possible of what they earn, not have it eaten away by ever-increasing taxes and spiralling inflation. I believe that we need to be honest about what the Government can do but also about what it cannot do. That will mean we have to cut government spending.
Labour and Reform aren’t serious about doing this. They try to talk about growth and lower taxes, but look at what they are promising and it’s more spending and more borrowing. This will be a disaster for Britain’s finances; we can’t borrow any more. The Chancellor has maxed out Britain’s credit card with her record borrowing. We are spending £100bn a year alone on debt interest. That’s more than we spend on defence. Our borrowing costs are already higher than in Greece or Italy.
Margaret Thatcher was also right when she said inflation is caused first by governments, through rapidly rising public expenditure. Inflation is the mother of unemployment and a stealth tax on all our savings.
To cut inflation, we have to cut government spending, especially welfare. But despite a majority of 146, Keir Starmer is too weak to take the tough decisions required. His party is stuffed with hard Left-wingers who only want to spend.
That’s why I made him a serious offer: work with us to find savings for the welfare bill and the Conservatives will vote with you to deliver them. So far he hasn’t bothered to respond.
To be fair he has had other things on his mind, such as the Mandelson scandal, the questions over his chief of staff, and losing his deputy prime minister for dodging the very taxes he wants to increase for the rest of us.
The article was originally published in The Telegraph
