This will be the first in a series of fortnightly columns from me, and I want to begin by thanking Paul Goodman for his commitment to diversity and inclusion. Bald blokes with beards are scandalously under-represented in public life – possibly it’s our association with biker gangs and pro-wrestling – so I’m delighted to have this platform, and I hope that other members of my tribe will be inspired to follow in my footsteps.
Despite the glorious weather, this summer has reminded us that some things never change. Once again music journalists are complaining that Glastonbury has gone “too commercial”; once again the England football team is less than the sum of its parts; and once again the Labour Party is in denial on the economy.
Last week we had heard that the British economy is now bigger than at any time since the start of the Great Recession. This came alongside an IMF forecast that we will grow faster than any major developed economy this year – twice the speed of the US. That same Friday, RBS announced its highest first-half profits since the bailout, citing improved economic conditions.
So what was the reaction from Labour? An admission that Ed Balls had been wrong to say that austerity would “choke off growth”. An apology for Ed Miliband’s prediction that a million jobs would be lost under this Government? Perhaps even an acknowledgement of Labour’s role in wrecking the economy in the first place?
Pull the other one.
Instead we heard that the recovery “should have happened three years ago”.
This is one of the great myths of the British left, peddled across the pond by economists like Paul Krugman, who called austerity “fundamentally mad” and predicted a Japanese-style lost decade for Britain.
It’s not hard to rebut. If tight fiscal policy choked off the recovery in 2010, why is growth coming through now, when there have been no net changes to tax and spend? Each budget of this Parliament has been “fiscally neutral” in Treasury jargon, the pace of austerity hasn’t slackened.
It’s almost as though there were some other big event, something external to the British economy, which had an impact on growth in 2011-12.
Even when Labour can bring themselves to agree, through gritted teeth, that Britain is recovering, we’re told that it’s the wrong kind of recovery. Ed Miliband recently claimed that 80 per cent of new jobs were being created in London: a dodgy number that’s not only untrue but also earned him an official rebuke from the chair of the UK Statistics Authority.
In fact four-fifths of new jobs have been created outside of London, and it’s the North East of England which is creating jobs fastest.
With 2 million new private sector jobs since 2010, it’s not often appreciated just how unusual our jobs-rich recovery is. Of course it has come at a cost: by choosing not to cut jobs, employers have had to keep wage growth under restraint – one of the reasons why our tax cuts are so important – but in the long run it will serve us well.
Mass unemployment can permanently scar an economy long after the return to growth. Once you’re out of work you’re more likely to become de-skilled, which makes it harder to break back in, even when firms are hiring again. This has led the Bank of England’s Chief Economist Andrew Haldane to describe this recession as “sharper but sweeter” than previous slumps.
We need to give credit where credit’s due for the state of our jobs market. Unlike the left, Conservatives are humble about the power of government. We know that businesses create jobs, not politicians. Yet we should also be proud of our role in helping those businesses build the recovery.
By taking early action on the deficit we’ve held interest rates down, giving our shattered banking system a chance to recapitalise. By cutting tax and reforming employment law we’ve given firms the confidence to hire. And our long-term supply-side policies – such as boosting apprenticeships and welfare reform – are laying the foundations for future prosperity.
But we know there’s still much more to do. Our economic problems built over many years and turning things around is not the work of just one Parliament.
The latest Labour line is that complacent Tories are saying the economy is fixed. No Conservative would make such a claim.
The economy won’t be fixed until we’ve dealt with Labour’s legacy: a record peacetime deficit, stifling red tape from an unreformed Europe, and the only major economy where today’s school leavers were less literate and numerate than their grandparents.
What’s really complacent is Labour’s own policy prescription which, when you cut through all the guff about “pre-distribution”, boils down to more tax. They’ve already said they will not be “going ahead with the Government’s corporation tax cut”, and have refused to rule out an NI increase. Harriet Harman revealed the party’s true colours – a deep shade of red – when she said that middle income earners should “pay more”. And just last week came an announcement that Labour want to push up ticket prices by taxing football.
They really can’t help themselves.
Ed Miliband dearly wants the next election to be about businesses versus people, or rather the People. But businesses are made up of people, working together to better their lives. It’s private sector teamwork which has driven the recovery, yet Labour would punish it with higher tax. We can’t let that happen.