Tover the past 10 days he has told us everything we need to know about this Conservative government. First, they have wrecked the economy by delivering unwarranted, unnecessary tax cuts to those at the top, while undermining the very institutions that make the UK a safe place to invest. Now they are doubling down on their failed approach.
This crisis began when the chancellor, Kwasi Kwarteng, stood up and presented his mini-budget. Markets reacted immediately, with the pound falling 3.6% against the dollar, while five-year bond yields rose 50 basis points. The unrest continued, forcing the Bank of England to take the unprecedented step of injecting £65 billion into the economy to stem the collapse of pension funds – just days after announcing the winding down of quantitative easing.
While the Bank of England’s actions have stabilized the markets, this government’s decisions will result in higher inflation, higher interest rates and higher borrowing costs for the taxpayer, leaving us all worse off.
Mortgage loans are withdrawn. Pension pots are depleted. Food and fuel go even higher. Hardly what I call responsible business management. Now they want to claim that this is a “global” problem. But it couldn’t be further from the truth: this is a crisis made in Downing Street. And all for what? Back to the failed idea of trickle-down economics, where you make the rich even richer and hope that some of it somehow trickles down to everyone else.
But there is another problem. As a former Bank of England economist, I know how important our institutions are to providing the stability and confidence a strong and secure economy needs.
The Tories have undermined the Bank of England, sacked Tom Scholar, the respected Permanent Secretary to the Treasury, and refused to publish the Office for Budget Responsibility (OBR) forecasts that should always accompany a financial event of this magnitude. No wonder the markets have lost faith in them.
The prime minister likes to show that she is strong – that she is making the tough decisions that are right for this country.
If Liz Truss really strong, she would know that the right thing to do would be to admit she was wrong and take immediate action to reassure markets, businesses and families that she has a plan to get the public finances under control. She is not strong, she is weak.
But what do we get? More noise and confusion.
When the Prime Minister and Chancellor met the OBR on Friday, there was a glimmer of hope that they would realize their mistake and begin to put things right. Instead, we were told that although the OBR’s forecasts were handed over to the Treasury this Friday, they would not be published for the next six weeks.
This refusal to release a report that could have brought clarity to the markets and reassured the British people is wrong and damaging. I have therefore written to the Chancellor asking him to publish the full OBR forecast on 7 October. Failure to do so leaves the government with something to hide, further undermining confidence in the UK as a safe place to invest.
The scale of the chaos in power has shown it once and for all Work is the party of fiscal responsibility and social justice. We will not waver in our commitment to ensure that our economy is on stable and secure ground, and that every pound of taxpayers’ money is treated with respect.
This is the only way to create the basis for a stronger and safer economy that can fund our public services – public services that are already on their knees because of the decisions of Tory governments.
That’s why, as Labour’s shadow chancellor, I set out the fiscal rules for the next Labor government to make sure we have a clear path to sustainable finances. That’s why we’re with Keir Starmer laid out an ambitious plan it will help grow our economy by making it greener and fairer, while creating good and secure jobs in all parts of the country.
This strategy includes our Green Prosperity Plan to help Britain become a world leader in areas of the future such as green hydrogen, floating offshore wind and electric car batteries. And that means scrapping and replacing the outdated business rates system to help high streets and small businesses thrive. A very different approach to the discredited leak we have from the Tories.
It is clear that this is a government that can no longer be trusted. The Prime Minister needs to stop prioritizing saving face over saving people’s homes, convene Parliament and reverse this disastrous kamikaze budget immediately.