Like a hornet in the ear, that £28bn is buzzed into every voter. Tory central office sends out daily attack press releases that say nothing else. (They have nothing else.) Over and over again at Wednesday’s prime minister’s questions, the fast-sinking Rishi Sunak grabbed at the threat of Labour over-borrowing and over-taxing to raise that £28bn as his non-answer to whatever Keir Starmer asked. £28bn, £28bn, £28bn … got that?
As you well know, that’s what Labour will spend on investment in green jobs, clean energy and insulation. So does that £28bn have a political sting? The pollsters I’ve spoken to see no sign of it. Voters are preoccupied with the economy on a ground-floor level, struggling with stagnant wages, price inflation, energy, rent and mortgage bills. That’s what Labour’s shadow chancellor, Rachel Reeves, knows as she drills down with that simple deadly question: do you feel better off than you were 14 years ago? That gets a resounding no, because no amount of tax cuts now will wipe out years of emptying wallets and handbags.
As Tories try to revive “double whammy” fears of a Labour tax-grab, Labour says that the Tories have raised taxes 25 times since the general election in 2019. Make that 26 this week, as the government told beleaguered local councils to put a full 5% on council tax bills (the most unjust tax of them all). Fourteen years ago, at a Tory party conference meeting, I overheard future Tory ministers chortling over their plan to “devolve the axe”, which they have done ever since.
YouGov reports that voters have recently become unconcerned about public borrowing: 45% would rather spend more on public services than pay down government debt, with only 16% frugally choosing debt reduction. So that £28bn doesn’t frighten them. Dizzying sums have become ordinary, when in just one month Sunak squandered £849m on “eat out to help out”. He also spent a colossal £78bn on the energy price cap, which would have been far better spent investing in homegrown sustainable energy and insulation, according to the LSE’s Nicholas Stern. “Britain is stuck in a rut of stagnating productivity and economic growth,” he wrote in the Financial Times, that “is mainly due to a lack of investment”. There’s no shortage of authorities backing Labour’s Keynesian plan to invest to grow, as business leaders urge Labour not to back away from this £28bn investment.
When the IMF steps in to warn chancellor Jeremy Hunt against Trussian tax cuts, the story is not Labour extravagance, but years of gross Tory economic mismanagement. Hunt’s recent talk of £20bn of “fiscal headroom”, which will be spent on pre-election tax bribes, underlines this. The tax cuts will be paid for by spending cuts next year – budget reductions that the Institute for Fiscal Studies calls “plain implausible”.
It was quite remarkable that Richard Hughes, the head of the Office for Budget Responsibility, last week exploded when giving evidence to the Lords economic affairs committee. This official scrutineer called Hunt’s public finance accounts “a work of fiction”, and added, “that is probably generous, given that someone has bothered to write a work of fiction, whereas the government have not even bothered to write down their departmental spending plans underpinning their plans for public services”.
Well, what else did we expect? How could the Conservatives dare define cuts deeper than ever into already skeletal services, barring so-called protected departments of health, education and defence. (“Protected”? NHS leaders warned in the BMJ of the “existential threat” to the service). This £20bn spending cut, says James Smith, research director at the Resolution Foundation, means an unthinkable 14% gouged from prisons, courts and everything else between 2022-23 and 2027-28. Yes, including local councils already cascading into bankruptcy. Cut more from children in care, public health and social care for old and frail people? More from potholes, parks, libraries, museums and sports grounds? They can’t be allowed to get away with not telling us.
So this is what I want to know: why is every Labour shadow minister stepping into a broadcast studio grilled, griddled and roasted on that £28bn investment plan, but hardly any government ministers are asked the far more important question about where their mighty £20bn spending axe will fall? Time for Labour to get on its boots and kick back: voters will be a lot more alarmed by secret Tory cuts than by Labour’s open public investment plan.
This is the wretched anniversary week for counting the forever damage done by this government’s Brexit lunacy. Be truly alarmed about the rapid post-Brexit slump in the City when even the Telegraph says: “Brexit became the prime suspect in the death of the stock market”. Companies fleeing London for listing in the US have frightened observers. Pre-Brexit, the London Stock Exchange listed 60 new companies a year, but just 23 companies listed there in 2023. The decision of big players such as Arm, Glencore, Tui and Flutter to quit London listing has dealt the City a blow.
It’s why Reeves, against deep Labour instincts, is letting bankers keep obscene bonuses: it sticks in my throat, and who knows if it will help keep finance that is based here? But those around her talk with alarm, as she did today at her business conference. “Financial services accounted for 12% of the UK’s economic output and providing £100bn in tax revenues last year alone. It employs one million people, two-thirds of them outside London,” Reeves said, explaining her aim “to maintain Britain’s global competitiveness, to reinvigorate Britain’s capital markets”. The bankers’ bonus decision is not about votes, as it won’t be popular: YouGov yesterday found two thirds want the bonus cap restored.
After the 2009 crash, we thought we had learned not to rely on the bubble-prone casino of finance. But nothing has happened in 14 downward-sliding years since to build up anything else, leaving government more dependent than ever on a failing City. This makes Labour’s £28bn all the more important as a bid to ignite better growth.
Now come new trade-deadening border checks, as the latest Ipsos poll finds a sizeable majority say Brexit has harmed just about everything: 70% say it’s had a negative effect on the economy. If Sunak’s chosen battleground for the election is economic competence, then “bring it on” should be Labour’s reply. And let’s hear every Tory in every studio asked exactly where their £20bn spending axe will fall.
Polly Toynbee is a Guardian columnist
