Labour is locking Britain into a high-tax, low-growth doom loop
Tax, borrowing, the cost of borrowing, unemployment and inflation are all going up, while growth is going down. Yet in the face of this, Labour’s instinct is to tax more, spend more and centralise more, says Simon Clarke
When in a big hole, muddle the figures so nobody can understand them. That’s what Paul Johnson of the Institute for Fiscal Studies accused Rachel Reeves of doing at the Spending Review last week: “The Chancellor’s speech was full of numbers, few of them useful.”
But while Labour ministers insist their approach will deliver stability, growth and investment in public services, all the signs point to a dispiriting truth: they risk locking Britain into a low-growth, high-tax future.
And while the Chancellor attempted to blind us with science, one number did stand out: £200bn. That’s how much more the UK will now borrow over the course of this parliament compared to the last Conservative Budget in 2024 – and we will pay £80bn more in debt interest as a result.
A doom loop is now well underway. Tax, borrowing, the cost of borrowing, unemployment and inflation are all going up, while growth is going down.
In the face of this, Labour’s instinct is to tax more, spend more and centralise more. Ministers talk about “mission-driven government”, but their real mission appears to be managerialism without reform. By contrast, Conservatives should be putting forward a programme of renewal grounded in three urgent imperatives: economic dynamism, state reform and national resilience.
Labour is failing to deliver growth
First, Labour is failing to deliver on growth. Britain’s economic potential is not lost – but it is being squandered. We need a pro-growth agenda rooted in entrepreneurship, innovation and private investment. That means serious tax reform to reward work and enterprise. It means backing the small businesses and scale-ups that drive job creation and exports. And it means reversing course on Ed Miliband’s rush to net zero, which will drive up the job-destroying cost of domestic and industrial energy.
Second, we need to make the state work better – not just grow bigger.
Labour talks a lot about spending, but next to nothing about reform. Our public services are underperforming, and voters know it. We need to modernise delivery, digitise services and introduce real accountability into systems that have too often rewarded failure.
The NHS, for example, cannot be sustained in its current form without serious reform, yet Labour is content to avoid the hard decisions. Wes Streeting gleefully celebrated settling the junior doctors strike within days of Labour coming to power by handing medics an eye-watering 22.3 per cent increase in pay, but with no commitment to reform. Now, as sure as night follows day, junior doctors are coming back for more – and the NHS Confederation warned the extra £29bn awarded last week will largely be absorbed by pay pressures.
Third, national resilience must be treated as a strategic priority – not an afterthought.
From energy security to defence capability, the past few years have revealed how fragile some of our critical systems really are. The world is getting more dangerous, and Britain needs to be prepared. That means investing in resilience, in supply chains, in cyber defence and in critical infrastructure.
From energy security to defence capability, the past few years have revealed how fragile some of our critical systems really are. The world is getting more dangerous, and Britain needs to be prepared
Yet Labour’s approach has been to delay decisions on energy investment, fail to fund commitments on defence and ignore the strategic nature of food and fuel security.
Reform won’t step up – their economics is a lethal fusion of Labour’s big spending instincts with Trumpian mega tax cuts – so as Conservatives, we must now set out a genuine alternative, applying our foundational principles, responsibility, enterprise and security, to the challenges of the modern world.
That is what Onward has been working on since I took over its leadership: a serious policy programme that supports growth, reforms the state and rebuilds national resilience. It is a vision that speaks to both opportunity and obligation: to the promise of a better Britain and the duty of government to deliver it.
Simon Clarke is the Director of Onward, the centre-right thinktank