Diane Abbott MP: This Tory economic mess will not heal itself

We must resolve the slump in living standards by reversing Tory policies.

Rishi Sunak at the House of Commons despatch box at PMQs

Ministers want to pour cold water on the latest dire International Monetary Fund (IMF) economic forecasts for the British economy. Jeremy Hunt argues that the IMF are not always right. True. But he offers no explanation for why the forecasts might be wrong on this occasion, or why the British part of their overall forecasts might be the only ones to be too gloomy.

In any event, we know too that the Office for Budget Responsibility (OBR) has already written to Jeremy Hunt to tell him it has downgraded its expectations for productivity growth, and therefore for GDP as well. So, not only is a gloomy outlook the institutional consensus, the lower forecasts will also materially affect Hunt’s room for manoeuvre when it comes to the Budget.

But we should be clear that this is not a set of unfortunate circumstances. This is the product of a failed policy that stretches back to at least 2010 and which has much older antecedents than that. It is one part spurious claims and bombast, one part devastating attacks on living standard of the majority.

So, while Hunt talks about growth as he did in a recent speech, there is so little substance to it that he was literally reduced to calling for greater optimism. Yet at the same time, the government has directly provoked the greatest strike wave seen in this country for decades and is doing its utmost to prevent any settlements.

We can easily dismiss claims that the government is focused on growth as it does not have a single policy to achieve its aims.  Instead, it has a myriad of policies, including new legislation aimed at reducing the real take home pay of tens of millions of workers.

This is the real content of their economic policy. It is a concerted effort to drive down wages to boost employers’ returns and dividends to shareholders, which are already running at record highs. Many of the disputes are in the public sector, but it is clear that the government has been directly intervening in post and rail disputes to prevent their resolution.

A government which has wasted £18 billion on PPE, £37 billion on a failed test & trace system and does not know whether it is wasting tens of billions more on HS2 is not much concerned with the debt or the deficit in public finances.  It is not screwing public sector workers to the wall as a matter of fiscal prudence, but it is hoping that, as by far the largest employer in the economy it can help to push all real wages lower.

The task then for Labour is twofold. First, we must resolve the slump in living standards by reversing Tory policies. This means windfall taxes on energy companies, banks and other profiteers to lower bills and boost real incomes for ordinary people.

But there is also a pressing need to restore public services and to grow the green economy. Both of these will require direct investment, and wider investment to boost general economic growth. We will need to cut back on vast business subsidies to achieve this and borrow to invest our way out of the crisis. We cannot afford to follow the Tories down this disastrous cul de sac.

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