Is Labour working?

A week after the chancellor’s spring statement, former Hastings and Rye Lib Dem candidate Guy Harris looks at the government’s plans.

After 14 years of Conservative mismanagement, Brexit, Covid, fuel shocks, Ukraine, Truss and now Trump, Labour were in a hole from the moment they took office. I suggest they stop digging…

Before the election, Labour spent many months talking the economy down as part of their political strategy. It helped deliver victory for Labour, but it failed for us. Consumer confidence fell and growth has been practically non-existent during the first eight months of the Labour government. The Office for National Statistics has just revealed that the UK economy grew by just 0.1 per cent in the last quarter. That means we’re still hovering perilously close to recession. It’s not all Labour’s fault, of course, but many of the government’s actions seem counter-intuitive, if not downright counter-productive.

This month, last autumn’s tax increases will take effect. The rise in employer’s national insurance is an effective tax on jobs and runs counter to Labour’s declared aspiration for growth. It’ll freeze business investment and recruitment, likely increase prices, and, according the Office for Budget Responsibility, will be passed on to employees in reduced wages.

The NI rises are of course going to hit the high streets in Rye and Hastings, but they’ll impact GP practices and the struggling care sector too. The Homecare Association and Care England described the measure as “a devastating blow that seals the fate of thousands of care providers”. But we can’t fix the NHS without fixing the care sector, and our economy can’t grow with an ailing workforce. So, again, it appears an entirely counter-productive measure.

It was abundantly clear before the general election that with rising borrowing costs, a debt-to-GDP ratio of nearly 100% and a public sector at breaking point, huge transfusions of cash were going to be needed to stabilise the ailing British state, let alone heal it. During the election campaign last year, I therefore repeatedly posed the question, “Where’s the money coming from?” The Lib Dems have always been clear they would raise tax revenue from banks, billionaires, tech and gambling companies. During the last eight months, Labour have finally answered my question about how they would fund their manifesto pledges.

Rather than taxing the richest individuals and institutions, Labour have turned on the poorest – pensioners, children, the sick and the disabled. Instead of making someone like Elon Musk pay a fair share of his UK profits to fund OAP’s winter fuel allowances, or to repeal the two-child benefit cap, which drives children into poverty, Labour have opted to cut personal independence payments and the health top up for universal credit. It’s all done under the guise of “helping people back to work”, which is a laudable and necessary intent. But will the “incentive” of financial loss make our friends, relatives and neighbours less disabled or mentally unwell? Will it make their work places more accessible or their anxieties less? Or might it in fact make them far worse, accordingly rendering them less able to work? Quite apart from the glaring moral injustice of preying on the most vulnerable, it once again feels like flawed logic which may just exacerbate the problem and displace the need to another part of our public sector. We definitely need to encourage those who can work to do their bit for the economy, but we also need to strenuously avoid reviving the divisive Victorian notion of the “deserving and undeserving poor”. In a hugely unequal society, if Labour are going to ask more of the weakest, they should have the political courage to ask more of the strongest too.

Instead of pushing 250,000 families deeper into poverty, I’d urge our MP and the government to consider tax-raising measures that are not only more compassionate, but more pragmatic and just. Let’s review capital gains tax to ensure earnings from wealth are taxed like earnings from work. Let’s ensure the super-rich, financial institutions and tech billionaires pay their fair share before we pick the pockets of family farms, small businesses, the elderly, the sick and the poor. And while we’re at it, if we really want to boost growth, let’s capitalise on this moment of renewed European consciousness, and look seriously at restoring not just our transport links to Europe, but our trade links too.

The Liberal Democrats would re-negotiate Boris’ flawed Brexit deal and work toward re-joining the single market. It may well be a policy close to many Liberal hearts, but it also happens to be a pragmatic means of reviving our economy so it can sustain increased defence spending, fund our public services and give our kids a decent future. As Rachel Reeves said, “We are in a changing world”, and she’s right. The narratives and contexts of 2016 are radically different to today.

Lastly, let me make clear that though I’ve been critical of the government, I really want it to succeed. Not least because I fear what comes next, politically, if it doesn’t. Poverty and inequality make our society weaker. They leave our people prey to the narratives of division and intolerance. Rachel Reeves’ fiscal rules are about sustaining the UK’s international financial credibility, which was so compromised by Liz Truss. But Labour must make people feel better off too, because it’s that which will restore faith in British democracy and protect it against the forces of autocracy, which are on the march from the Capitol to the Kremlin, via Clacton. It’s time for Labour to make the change they promised happen, before it’s too late.

Image Credits: UK Parliament / Maria Unger https://parliament.assetbank-server.com/assetbank-parliament/images/assetbox/b26cd8f5-538e-4409-b033-f1f02aea6821/assetbox.html Creative Commons Attribution 3.0 Unported https://creativecommons.org/licenses/by/3.0/deed.en.