Tory rebels will regret wishing for a spell in opposition
As a former party chairman, former trade secretary and a Brexiteer, I have become increasingly alarmed at what some Conservative voices seem to be telling us. From a new dalliance with the EU to some frankly crazy views about cutting taxes at a time of high inflation and high borrowing, Tories need to pull together in the face of tough domestic and international circumstances or face the electoral consequences of division.
Only this weekend we had press briefings that “senior government figures” were considering a Swiss-style relationship with the EU. But any incorporation of EU law into UK law would be against the spirit of the referendum and would be widely opposed in Parliament. The desire to have a new trading relationship also sits oddly with the trading position post-brexit, which, for example, shows UK exports to the EU remain robust.
If this debate has been strange, the debate on the economy has been even stranger. A small but vocal minority still believe that it is possible to cut taxes at a time of high inflation and high borrowing. This, they advocate in the name of “Thatcherism” in a bizarre rewriting of history.
To protect the economy, businesses and jobs in the pandemic, the Government increased borrowing to £323billion in 2020-21. We were fortunate that the economic consolidation in the Cameron/osborne years gave us the leeway to do this. Some now characterise this as “socialist” levels of borrowing although they did not object to the furlough scheme at the time and wanted to increase borrowing further for unfunded tax cuts as recently as the mini-budget.
The advent of global inflation has also changed the situation considerably. Inflation has come about from post-pandemic supply pressures, arguably money supply that was set too loosely by central banks, but most particularly from Putin’s war against Ukraine. As a result of higher inflation, the UK will pay interest on its debt this year of around £120 billion. For context, the annual cost of NHS England is around £136 billion.
Inflation also eats away at the money government gives for public services. Generous increases to the NHS and schools’ budget will be almost completely eaten up by inflation for the coming year. Even with more targeted savings, the cost-of-living support being provided by the Government amounts to around £26billion in the next year. The uprating of benefits to take account of inflation has cost taxpayers another
£11 billion. So even higher taxes only enable us to tread water when inflation is rampant. There therefore needs to be a clear order of economic priorities: controlling inflation, balancing the public finances, and then cutting taxes to stimulate growth.
Those who talk about “a recession made in Downing Street” are not only economically illiterate but, in excusing Putin’s role in the creation of global inflation are, frankly, unpatriotic. To hear this nonsense peddled by Conservatives is even more unacceptable.
There are even some Conservatives who now say a period in opposition would “do us good”. As someone who served on the Tory front bench for every day of the 13 long years Tony Blair and Gordon Brown were in power, I would tell them that your worst day in government is still better than your best day in opposition. It is time for Conservatives to pull together, or they will find themselves in opposition once again. Then they will see what higher taxes really look like.