“Extra funding for the NHS, with 50,000 more nurses… millions more invested every week in science, schools, apprenticeships and infrastructure.” Those were the headline promises in the 2019 Tory manifesto.
Today they read like a sick joke. Having trashed the public finances, the Conservatives look set to impose another round of austerity. If, as reported, there is a £40bn “black hole” in government accounts, then big public spending cuts are on the way.
That’s why we need a general election now. The mismatch between the promises of 2019 and the reality of today – post-Covid, and amid an energy war with Russia – mean there is just no mandate for austerity.
Nobody voted for this. Nor did they vote for Liz Truss’s small-state, tax-cutting, libertarian project that crashed and burned within 45 days. And as Jeremy Hunt will find out, once he gets down to the details, a second round of austerity may not even command a majority in the Commons.
The last round of austerity left Britain with around 335,000 excess deaths over eight years. And as a study published this month by public health experts in Glasgow found, the effects were cumulative, spiking suddenly in 2015 as the relentless pressure on hospitals, care homes, policing and homelessness kicked in. The research found “deeply worrying changes to mortality trends in the UK – particularly among more socioeconomically deprived populations” as a result of spending cuts.
If we get a second round of this, council services will start to fail. Nine out of ten schools are already slated to go bust because of inflationary pressures. The British Medical Association this month warned that the NHS faces “catastrophic failure”.
Any government wanting to inflict a repeat of this on Britain’s frayed and fragile communities should go to the polls and make their case.
Because it is not necessary. The supposed “£40bn black hole” in the budget only exists because of fiscal rules introduced by Rishi Sunak in January this year. His Charter for Budget Responsibility requires government debt to start falling within three years, meaning the deficit has to be eradicated over the same time-scale. It also caps infrastructure spending at 3 per cent of GDP – a product of Sunak’s obsession with “intergenerational fairness”, which requires investment in green energy to be paid for through taxation, not borrowing.
Labour is under pressure to rein in its planned £28bn a year spend on the green transition. It should resist that pressure and go to the polls on a plan for investment-led growth.
For certain, the shadow chancellor Rachel Reeves faces the task of stabilising the markets when Labour takes office. That can be done by setting strict principles, but as research by the economists Rob Jump and Jo Michell shows, deficit reduction over six years, instead of three, does not materially affect the trajectory of the debt-to-GDP ratio.
What scared the markets was the absence of a long-term economic model post Brexit. Labour alone among the major parties has one.
Reality is coming at the opposition parties fast. I doubt the government of, most likely, Sunak will survive beyond spring 2023, so the time for clarity on fiscal principles is now. The next election has to be about investment-led growth vs austerity. If there are enough Tory MPs with principles, it could be called on the day Hunt’s austerity budget gets voted down.