Trickle down economics doesn’t work

The extreme right wing of the Tory party have gleefully welcomed Chancellor Kwasi Kwarteng’s mini-budget as a bold act of true conservative economics.

In truth the unfunded £ 45billion package of tax cuts are an unforgivable act of irresponsible financial hubris for the sake of rewarding a tiny minority of bankers and millionaires at the expense of everyone else.

That is why the pound plunged to a 37-year low against the dollar within hours.

Kwarteng has slashed tax but as Institute for Fiscal Studies director Paul Johnson points out, he has done so without even a semblance of an effort to make the public f inance numbers add up.

Instead the plan is to borrow hundreds of billions in a move that could make the repayment of government debts unsustainable and crash the economy.

Having spent much of the last decade pursuing an austerity policy to balance the books despite historically low borrowing rates, the Tories are now maxing out the national credit card as interest payments rocket.

The hope is that by funnelling money into the pockets of already wealthy corporations and high earners, the UK will become a more attractive place to do business.

It is the long debunked theory of trickle down economics which has failed time and again across the world to increase employment, consumer spending, and government revenues in the long term.

Meanwhile back in the real world, families continue to suffer through the worst cost of living crisis in living memory.

Millions will struggle to put food on the table and keep the heating on this winter in the face of soaring inflation.

At his party’s conference in Liverpool this week Labour leader Keir Starmer must explain this disgraceful injustice in language people understand, and set out a clear alternative.

The champagne will be flowing in the City of London thanks to the abolition of a cap on bonuses and £ 50,000 a year of tax cuts for millionaires – but little of it will trickle down to Leeds or Newcastle, never mind Scotland.

If Labour can’t do something about that, the future of the union will be in more peril than ever.