Rowena Mason Phillip Inman
‘We’ll have to wait till we are really confident, but the last two years is a picture of stagnation’ Paul Johnson Economist
Jeremy Hunt has been accused of exaggerating the Conservatives’ economic record and presenting a “dodgy dossier” on Labour’s spending plans, as he moved to put low tax at the heart of his party’s offer at the next election.
The chancellor gave a speech in central London pitching the Conservatives as having helped the UK recover from economic troubles more quickly than expected. He also signalled a further cut to national insurance in the autumn, having already reduced the tax from 12p in the pound to 8p.
“If we can afford to go further, responsibly, to reduce the double tax on work this autumn, that is what I will do,” he said, arguing the economy has already “turned a corner”.
In contrast, he painted Labour as a party of high tax, and released a dossier claiming it had £38bn of unfunded policies, from spending on more GP appointments to extra mental health support teams.
The costings were carried out by civil servants at the request of the government, but based on interpretation of Labour’s policies provided by Tory special advisers.
Darren Jones, Labour’s shadow business secretary, described the document as a “desperate and cheap political stunt with a flawed dodgy dossier to distract from the Tories’ record in government”.
“But if the Tories want to play that game, we’re happy to play it because we are confident our plans are fully funded and costed,” he said.
Labour said there were at least 11 major flaws in the Conservatives’ claims about their spending on policies and pointed out that the Tories have stated they want to abolish national insurance, which would cost £46bn, without saying how they would pay for that.
Jill Rutter, a senior fellow at the Institute for Government and a former Treasury civil servant, said such costings from Whitehall should be “taken with a very large pinch of salt” as they are commissioned by government ministers and rely on their political advisers’ assumptions.
Economists also questioned Hunt’s claims that the Conservatives had managed the economy well over the past 14 years.
In his speech in Westminster, Hunt acknowledged families had been “battered by the global shocks” of a pandemic and energy crisis caused by the war in Ukraine but argued the Conservatives had sheltered people’s finances.
But he also insisted the economy was doing well, with inflation down to 3% and the country emerging from a shallow recession with a “soft landing”.
Dario Perkins, a former Treasury official who now heads global research at the economics consultancy TS Lombard, said Hunt’s claim that Conservative policies had benefited the UK economy was “bizarre”.
He said: “We have had the worst decade of productivity growth since the industrial revolution and shockingly low levels of public and business investment. And this has led to an enormous squeeze on living standards.”
Carys Roberts, executive director at the IPPR thinktank, also questioned Hunt’s interpretation, saying: “The economic story of the last 14 years has been one of turbulence.
“Without a doubt the financial crisis, the pandemic and the war in Ukraine have put external pressures on the UK economy. However, the UK has experienced meagre productivity growth, stagnant incomes and deepening regional inequalities, and these have deeper roots than the recent pressures.”
Paul Johnson, director at the Institute for Fiscal Studies, said it was certainly the case that “real earnings are rising at the moment but our expectation is that household incomes will be no higher at the end of this year than they were at 2019, which is pretty remarkable”.
He added: “What we have had is a long period of stagnation and if you look over a year or 18 months, we are still in a period of stagnation.
“The first quarter’s numbers, we will have to wait until they are repeated two or three times before we are really confident that things are turning round. But if you look at the last two years, it is basically a picture of stagnation.”
In his speech, Hunt also hit out at Labour for claiming that the Tories’ ambition to get rid of national insurance would lead to the end of the state pension in its current form.
The chancellor said it was “fake news” and that pensioners should trust the Conservatives to cut taxes. However, pensioners’ income is not lowered by cuts to national insurance as it is a tax on earnings from employment.
Fonte: The Guardian