In just one year Rachel Reeves has destroyed Britain
But here’s the issue. Relief though it might be never to hear Britain’s “first female Chancellor” robotically trot out those catchphrases we’ve come to know and hate (“£22 billion black hole”, “14 years”, “fixing the foundations”), it’s unlikely that whoever replaces her will rescue Britain’s economic fortunes.
Labour can’t deliver the growth it promised last summer because, with very few exceptions, its members don’t understand where growth comes from. They won’t look at our soaring deficit, surging gilt yields, downgraded growth, worsening public services, the exodus of millionaires, and realise that there are no kind fairies at the bottom of the garden. They are incapable of making the direct link between the choices the Government has made and our worsening economic data.
Despite the rhetoric, almost all of Labour’s policies have had a negative impact on growth and productivity. You cannot, for instance, ban oil exploration and fracking without helping to drive up household and industrial energy bills. Ours, remember, are among the highest in the world and show no sign of falling, despite Ed Miliband’s incantations. Electricity prices have doubled in the UK since 2019. And you just cannot raise energy prices without energy-intensive businesses closing, or having to be propped up, as with British Steel.
You cannot abolish the non-dom tax regime and expect foreign investors and entrepreneurs to stick around – which is why Henley & Partners is predicting Britain will lose 16,500 millionaires this year, on top of the 10,800 last year. “Let them go!” cries the economically illiterate chorus of the useless, as though nine million economically inactive, six million public sector staff and 13 million state pensioners can be propped up by an ever-shrinking private sector.
Then there’s the VAT on private-school fees – a pointless revenue neutraliser rooted in etiolated class war. There was the decision to hike public sector pay without demanding productivity gains in return, with the unions already coming back for more, no doubt boosted by the enhanced powers that Angela Rayner’s Employment Rights Bill will gift them.
Labour is shovelling yet more money into the NHS without expecting reform, with the TaxPayers’ Alliance now warning that, on the current trajectory, our healthcare service could be equal to a quarter of the UK economy by the end of the century. Instead of reform, the disappointing Wes Streeting is trying to get supermarkets to police our diet. When I mentioned on a recent BBC panel that the NHS is almost 20 per cent less effective than it was pre-Covid, despite a £30 billion funding boost, a fellow panellist shirtily responded that this was “only in hospitals”. Sure.
And Labour has increased the minimum wage; superficially attractive, but likely to harm the people it intends to help, by hindering job creation. It has nationalised our railways and paused HS2, with no alternative plan. The Employment Rights Bill will deter hiring, raise business costs, flood tribunals, reduce productivity, and increase unemployment.
Streeting has insisted Labour was working with disability rights groups to “get [PIP] right”. But poachers make poor gamekeepers: we cannot have (often largely taxpayer-financed) pressure groups dictating government policy. That’s why we’re suffocating in red tape, with each regulation an obeisance to some virtue-signalling vested interest. It’s how we’ve allowed public spending to reach more than 40 per cent of our national income.
Evidence suggests a 10 percentage point increase in the tax or government spending burden is linked to around a 1 per cent fall in the growth rate in the long term. And yet it now looks inevitable that Labour will come after pension tax relief, or raid ISAs, or even impose a wealth tax.
In the space of a year, Labour has turned virtually every data point south. And yet, whichever poor goof is in the Treasury for the next four years, this may be as good as it’ll get.
This week The Telegraph is running a daily series on a Year of Labour, marking the anniversary of Starmer’s election win on July 4. Come back at noon tomorrow to read David Goodhart on Labour and their promises on small boats
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