Quote of the day 30th July 2024

 "It is the oldest sleight of hand in the political playbook. Deny until the cows come home while seeking election that you plan to raise taxes then, duly elected on a 'no-tax-rises' platform, you hold up your hands in horror.

'We've seen the books!' you exclaim. 'It's much worse than we thought.'

Cue a slew of big tax rises."

"Labour embarked on this phoney process the moment they took power on July 5. From Keir Starmer down – orchestrated by his Chancellor, Rachel Reeves – leading Labour politicians grabbed every opportunity to deride their 'dire Tory economic inheritance'.

Ministers lined up to aver it was 'catastrophic', even a 'deliberate cover-up'.

Chancellor Rachel Reeves told the House of Commons she'd discovered a £22billion black hole in the public accounts that had previously escaped her attention

Reeves resorted to ridiculous hyperbole, claiming Labour had inherited the 'worst set of [economic] circumstances since World War II'. We were being softened up for big tax increases. Yesterday was a major milestone in this elaborate ruse.

A predictably stern Reeves, brimming with faux outrage, told the House of Commons she'd discovered a £22 billion black hole in the public accounts that had previously escaped her attention.

It's not clear why she missed it. Nobody else did."

"During the election campaign the Institute for Fiscal Studies warned that future fiscal sums did not add up. It even put the shortfall at around £20 billion (not far off Reeves' new estimate), which would require either taking an axe to spending or major tax rises.

Reeves has discovered it's a bit worse than the IFS predicted thanks to what's known as 'kitchen-sinking' — you add everything that's gone wrong to what might go wrong and wrap it up in one huge, worst-case package (in other words, you throw the kitchen sink at it).

Neither Labour nor the Tories wanted to talk about fiscal shortfalls during the campaign. I tried multiple times on my radio show and was always knocked back by both sides with banalities.

Labour batted away all such inquiries with the weasel words that big tax rises were 'not in our manifesto' and we have 'no plans for tax rises'. As if governments only did what was in their manifesto — and when politicians resort to 'no plans' it means they're going to do it, they're just not telling us."

"The IFS spoke of a 'conspiracy of silence'. It was not a lone voice. The International Monetary Fund weighed in on the precarious state of the public finances. The Office for Budget Responsibility had previously warned that some future funding projections were bordering on fictional."

"Reeves wants the OBR to play an even bigger role in fiscal policy. Maybe it would be enough if she just read its forecasts.

The Reeves Ruse is all the more blatant because during the election she'd admitted that the existence of the OBR, the official forecaster, meant 'we've not seen the books' was no longer a legitimate political tactic. 'We've got the OBR now,' declared the then-Shadow Chancellor. 'You don't need to win an election to find out about the public finances.'"

"Such honesty then has not dissuaded her now from having the brass neck to be at the heart of an elaborate cover-up to hide the fact Labour intended to increase taxes all along. Some of us warned about this during the campaign. Nobody was much interested.

Reeves did not announce any tax rises yesterday. These will come in her first Budget on October 30. So brace yourselves for rises in capital gains and inheritance taxes plus major cuts in pension tax relief. So much for Labour's promise to be a government for savers and investors.

But together with numerous smaller tax rises they will more than fill the £22 billion black hole the Chancellor has suddenly discovered, leaving billions more to pay for what Labour exists to do: spend."

"Nobody should be surprised by this. Back in early June, as the election campaign was just getting under way, the Guardian, quoting Labour sources, reported Reeves was already considering a dozen or so new revenue-raising wheezes to form part of a 'major package of measures' to be unveiled this autumn.

It said she was concocting a 'doctor's mandate': the public finances would be portrayed as so bad they needed major surgery

Reeves will need every extra penny.

Even as she berated the Tories for leaving the cupboard bare, she somehow managed to conjure up billions to cave into the junior doctors with a 22 per cent pay rise over two years and an immediate 5.5 per cent pay rise for 1.3 million NHS staff."

"Pay rises of this magnitude are not included in current fiscal projections. They are 'unfunded' in the jargon. Ruthless Reeves will pay for some of it by ending winter fuel payments for 10 million pensioners and making social care more expensive.

So old folk on modest pensions will help appease Labour's union paymasters and finance generous pay rises for junior doctors."

"Far from Labour being a breath of fresh air, it's just the same old same old. Labour's commitment to growth has stumbled at the first hurdle."

"This is a missed opportunity. Far from being the basket case Reeves likes to depict, the UK economy is actually in quite decent shape. A wise Chancellor would build on the strengths she's inherited rather than denigrate her inheritance for base political purpose. Does she not realise potential overseas investors are listening?

It hardly boosts confidence in the UK economy to claim it's in the worst shape for almost 80 years, especially since it's obviously untrue, as a quick comparison with what the Tory-Lib Dem Coalition inherited 14 years ago from Labour easily illustrates.

The unemployment rate in 2010 was 7.8 per cent; today it is 4.4 per cent. The budget deficit was 10.3 per cent of GDP; it will be 4.2 per cent this year. The economy was in deep recession in 2010; it is now recovering from a mild recession, growing faster than the Eurozone and most other G7 countries.

Inflation back then was almost double the 2 per cent it is now. Reeves claims the national debt is the highest since 1951. That is untrue. As a share of GDP, it is also lower than the national debt of Japan, America, Italy, France and Canada."

"Labour talked a lot about integrity, plain dealing and public service in its bid for power. But it soon sounds hollow when you start government with a lie.

Britain has a recovering economy, political stability and strong government. Such assets are in short supply across the rest of Europe. Labour needs to grow up and start exploiting these advantages with the serious business of government.

It needs to end its childish obsession with electioneering, as if July 4 never happened — or risk sowing the seeds of its own destruction while missing a huge opportunity to improve the wellbeing of our nation."

(Andrew Neil, article in the Daily Mail.)