Rachel Reeves likes to pose as the Iron Chancellor. She drones on about her fiscal discipline and even slapped down Labour leadership challenger Andy Burnham for pushing “dangerous” ideas about relaxing fiscal rules. But behind the façade she’s unleashed a spending spree of historic proportions.
Britain’s debt is rocketing by the second and she’s marching us all into an abyss of higher taxes, slower growth, collapsing businesses and soaring unemployment, but refuses to stop. Here are 10 ways she’s lost control. As ever, ordinary Britons will pay.
1. Building a mountain of debt. Our national debt is now heading towards £3trillion, almost equal to our annual national output. It will continue to grow by £400million every single day Reeves stays in power.
The debt is equivalent to £40,000 for every man, woman and child in the country. That’s real money that our children and grandchildren will be shackled with.
2. Interest timebomb. This year we’ll borrow another £152billion, up £20.7billion on last year. Incrediblly, two thirds of that will go on servicing existing debts. This year’s interest bill will total £111billion, which already outstrips the budgets for police, defence or schools. Every household pays an average £3,900 in tax each year just to keep the creditors at bay.
3. Borrowing costs are rising. Bond market investors can see that Labour has no desire to tackle the debt and deficit, and charge us more interest than any major country in Europe. This is called the « moron premium » and makes servicing our debts even more expensive.
4. Relentless spending growth. Reeves has launched a relentless tax, borrow and spend spree. In last year’s Budget, she ramped up public spending by £70billion a year. By 2029-30, Labour’s total extra spend will top £650billion. Yet economic growth is crawling to a standstill, so there’s less tax to cover the bill. Reeves doesn’t care. The next Budget could hike taxes by another £30billion, squeezing growth again.
5. Taxes through the roof. Taxes as a share of national income are set to rise above 37% this year, the highest-ever. That’s well above the 33% norm since the 1980s. The Office for Budget Responsibility (OBR) predicts public spending will hit 44.4% of national income, and keep climbing. Rather than cutting spending, Reeves will plug the difference by taxing and borrowing even more.
6. Destroying jobs. Reeves’s move to hike employers’ national insurance and the minimum wage has hammered smaller businesses. At least 175,000 jobs have vanished as a result, with another 100,000 going by year end. The UK unemployment rate was 4.1% between May and July last year. Now it’s at 4.7%. An increase of that scale is a well-known sign that we’re heading for recession. This one is stamped Made by Labour.
7. Creating fake jobs. Youth unemployment has rocketed under Reeves, as employers collapse or stop hiring. Her response? To blow billions on “youth guarantees” and make-work schemes. By 2028, these could cost £1.2billion a year. But real jobs are created by the private sector, not civil servants. All this will do is drive government spending even higher.
8. Welfare state explosion. Today, more than 6.5million people claim out-of-work benefits. Under Labour, another 1,000 people are being signed off work every day, often for life. Worklessness can pay better. Some out-of-work households will soon be £2,500 a year better off than those in full-time jobs, the Centre for Social Justice says.
9. Public sector giveaways. Within weeks of Labour’s victory, Reeves agreed a £9.4billion pay rise for public sector unions. Inevitably, it wasn’t enough. The unions are coming back for more. State sector pensions remain three times more generous than in private firms. The official liability is £2.6trillion, and rising.
10. Fantasy investments. Reeves will pump £725billion in infrastructure and net-zero projects. She defends her binge as “investment” but much of it will be squandered, especially by Labour’s wasteful energy secretary Ed Miliband. He’s doing his best to bankrupt Britain too.
Britain is sinking under the weight of unaffordable spending, a fast-growing welfare state and punitive taxation. Someone else will have to clear up the mess, because Reeves refuses to do so.
