The Rundown Podcast: IFS Boss Helen Miller On Labour's Economic Record

4 min read5 hr

This week is the sixth and final episode in our series over Parliament’s summer recess, speaking to experts and looking at how Labour has performed in its first year in office in some of the big policy areas, and the biggest has been saved until last: the economy.

Fixing the country’s finances was Labour's big priority when Keir Starmer came into office last year, promising to kickstart economic growth after a decade of stagnation and austerity, followed by post-pandemic inflation and the chaotic fallout from the Liz Truss ‘mini-Budget’.

But after announcing there was a so-called £22bn ‘black hole’ in the country’s finances once she arrived in the Treasury, Rachel Reeves announced £40bn of tax increases in her first Budget as Chancellor, and despite saying it would be a one off, this year’s sluggish growth figures, combined with high borrowing costs, mean she finds herself in a similarly difficult position as she heads towards her second Budget this Autumn.

Joining host Alain Tolhurst to discuss how well the government has managed the economy after being handed an undoubtedly difficult inheritance, and whether it will chart a path towards economic growth this parliament, is Helen Miller, the new director of the Institute for Fiscal Studies think tank.

She began with her assessment on how well Labour has done so far: “It's a mixed bag, honestly.

“You can point to some things they've done that you can say this is good news. The one that everyone points to is the planning reforms. That is genuinely a move in the right direction.”

Miller also highlighted a big increase in planned investment spending, but added: “On the other side of the ledger, things like the employer National Insurance increase are going to be a drag.

“A passing grade. It's not a complete fail. But overshadowing everything they've done, [is that] they went into the last election basically not wanting to talk about the big challenges.”

In the run-up to last year's general election, the IFS was highly critical of both Labour and the Conservatives for a “conspiracy of silence” over just how problematic the country’s finances were. Now in office, Starmer’s government has “really very tightly constrained their space for movement before they've really got out the starting blocks”, said Miller.

“Failing to have that conversation nationally has meant that people weren't on the same page about the scale of the challenges,” she told the podcast.

A regular criticism of the government has been failing to set out a coherent vision for what it wants to achieve, something the IFS director highlights as being key to any economic plans.

"You need a vision, not one where you say to people, ‘we need economic growth’, because that's too abstract, but where you talk about what would a better economy look like?” she said.

“What would growth mean? It would mean not just higher living standards and making it easier to get into the housing ladder, for example, but more social mobility, more sense that we are going to be better off than our parents.

“There's a whole bunch of things that you could talk about that people could get excited about once you start with it. Then you can say, 'but to do that, here's what we have to do, and there are going to be some losers along the way, but remember, we're all winners, we’re doing this for a good reason'.

"Too often, we start at the other end of the spectrum. We start with we're doing this, and you can see the losers.”

Miller said part of the fevered speculation about what might be in the upcoming Budget is that people “don't have a clear sense of direction” from the Treasury, calling on the Chancellor to set out her “vision” for the next few years when she delivers her statement.

“Give a sense of where you're going, and tell people where it is, because businesses and people in general hate uncertainty, they hate instability, and we've got a bad system, we shouldn't just stick with it,” she said.

“Tell people where you want to go, tell them how you're going to get there, tell them that if we had to come back in the future, this is where we might go.

"That can help people feel more confident in their investment decisions and their life decisions, and I think that you get a return from that certainty.”

The Rundown is presented by Alain Tolhurst, and is produced by Nick Hilton and edited by Ewan Cameron for Podot