Sarah Ingham: As Reeves tanks the economy, the Conservatives need urgently to rebuild their credibility

Dr Sarah Ingham is the author of The Military Covenant: its impact on civil-military relations in Britain.

 Is the Chancellor’s “the world has changed” going to be the new “£22 billion black hole”? The Trump administration looks set to join the previous Conservative governments in being blamed for the financial troubles that have befallen Britain since Rachel Reeves was given the keys to No 11 Downing Street.

Instead of solutions, Labour has offered soundbites. Rather than an honest and honourable admission that much of Britain’s current financial woes stem largely from the decision to lockdown society for almost two years – a decision about which many Cabinet members were surely briefed on Privy Council terms and with which they agreed – the government has consistently chosen the opposite.

Invoking a changing world is another attempt by Labour to absolve itself of all responsibility for the downturn it has engineered. It can join that black hole and Sir Keir Starmer’s other robotic mantras of mendacity, “crashed the economy” and “14 years of chaos.” (During an interview with TalkTV’s Mike Graham, Kemi Badenoch mentioned in passing her office plays “Starmer bingo”).

Those so-called years of chaos gave us probably the most successful Olympic and Paralympic Games ever, gay marriage and, in the vote on EU membership, the biggest democratic vote in Britain’s history. Many didn’t like the result, but that’s democracy. Many didn’t like the result on 4 July but, unlike Sir Keir who supported a second referendum, have no problem in giving loser’s consent.

But suddenly even Labour MPs seem to be noticing things are hardly going to plan. Where’s the growth? Instead, there is widespread dismay about channelling the foreign aid budget to defence, along with “balancing the books on the back of sick and disabled people”.

The current self-inflicted downturn is before the full horror of Reeves’ Halloween Budget is realised, not least the Employers’ National Insurance increase (the jobs’ tax) and the tax on family businesses and family farms.

In addition, there is an imminent threat of US tariffs on faltering UK trade and businesses being hit by the Employment Rights bill. On Monday Lord Moynihan, author of Return to Growth branded the bill as “300 pages of really bad law”.

He was speaking at a briefing given by the Growth Commission think tank. Shanker Singham, the Chairman, warned: “Difficult to fire; difficult to hire”. In the context of the briefing’s wider discussion about the Laffer curve, Smoot-Hawley, the Carbon Border Adjustment Mechanism, and other economic wonk-speak, a way forward for the Conservative Opposition is highlighted by this brilliantly pithy summary of the bill.

In November an Ipsos poll found the economy was the most important issue facing Britain (NB climate change was joint tenth). That will have only increased with Wednesday’s abject Spring Statement confirming that taxes are set to rise to record levels, welfare is to be cut, growth is projected to be down but inflation up. Instead of “fixing the foundations” – as the Chancellor nasally intones – Labour is burning down the house.

Badenoch seems to be getting little cut-through at Prime Minister’s Questions; “Starmer bingo” should have been challenged months ago. Clearly the Prime Minister’s office has taken to heart the old mantra: “Repeat a lie often enough and it becomes the truth”.

Far from crashing the economy, a post-Covid recovery was underway thanks to the economic nous of Rishi Sunak and Jeremy Hunt.  In January the gilt yield, or cost of government borrowing, surpassed levels hit after the October 2022 mini-budget.

On Wednesday, Mel Stride reminded the Government that the Office for Budget Responsibility refused to back the “confected” £22 billion black hole claim. He accused Labour of talking down the economy and crashing business confidence, along with it the nascent recovery.

The Growth Commission offers some solutions to Britain’s dire economic plight, not least cutting corporation tax and repealing the Climate Change Act, along with abandoning the Employment Rights Bill. It also warns that if the capital flight provoked by Labour continues, “the annual loss would build up to about £18-23 billion”.

The class warriors rejoicing in the flight of the minted should consider that when the financial pie shrinks, society’s poorest and most vulnerable feel the most pain. “Don’t let the door hit you on the way out!” suddenly doesn’t sound so clever, does it?

Labour’s attack on private education is echoed in its ideological antipathy towards business. The Employment Rights bill reflects the belief that Britain’s firms are run by hard-faced, exploitative capitalists, keen to grind the faces of the poor into the dirt. They have yet to learn that business, particularly SMEs, are the engine of national growth.

Wednesday’s emergency budget was an admission of failure by a government,  and an out-of-her-depth Chancellor, who all believe that growth is like Tinkerbell: all they must do is clap their hands, makes a wish, and it will appear.

Earlier this week, ConservativeHome’s Editor rightly reminded us that, in politics, what counts is still “the economy, stupid.” With economics being a major weakness of Reform, the Conservatives must re-establish voters’ trust that they are safe stewards of the country’s money.

But it is only when the past is put in proper context, particularly the financial challenges connected to the Covid response, that voters will listen to ideas about the future. It’s the messaging about the economy, stupid.