Mon, 28 November 2022

Newsletter sign-up

Subscribe now
The House Live All
Economy
To solve the housing crisis, plan ahead for materials supply Partner content
Economy
Economy
Economy
Cities unlimited: climate finance for a just and green transition Partner content
By WSP
Environment
Press releases

This is a recession made in Downing Street

This is a recession made in Downing Street

(Alamy)

3 min read

People in Bethnal Green and Bow, and across the United Kingdom, face a harsh winter. Rising rents, mortgages, food and fuel prices, plus stagnant or falling wages, add up to real misery for millions.

The Office for Budget Responsibility (OBR) reports that living standards will fall 7 per cent over the next two years. 

Ministers are keen to make us believe that this dire economic situation is the result of Covid and war in Ukraine. Yet ministers cannot explain why the UK is the only G7 country that is still poorer than before the pandemic. As the governor of the Bank of England told us at the Treasury Select Committee, the United States has grown by 4.2 per cent since the pandemic, the GDP of Eurozone countries is 2.1 per cent higher, and yet the UK economy is 0.7 per cent smaller than at the start of the pandemic.

Labour’s windfall tax has been pinched by ministers in part but botched in practice

Since the Conservatives came to power in 2010, the UK has grown by an average of 1.4 per cent compared to 2.1 per cent in the previous Labour years. The IMF forecasts that the UK will have the lowest growth of any advanced economy over the next two years. As fuel and supermarket prices soar, wages are still lower in real terms than when the Conservatives came to power in 2010, according to the Office for National Statistics (ONS).  

War, energy price hikes, and the impact of Covid affect every country – so why is Britain doing so much worse than the others? The answer lies in the choices made by ministers – not just the catastrophic mini-budget which crashed the economy – but more, the decisions made over the previous 12 years. This is a recession made in Downing Street, not Kyiv.

Decisions to cut public services, to stall on investment in renewable energy and insulation, and to raise taxes 24 times just in this Parliament have held us back. Brexit is costing us billions. The OBR says Brexit will have a long-term effect of cutting UK GDP by 4 per cent, making us all poorer. The Financial Times reported that we are losing £100bn in output every year, meaning a £40bn hole. 

Post-Brexit trade deals have been a failure, as the former trade minister George Eustice recently admitted in the House. The Chancellor has raised taxes to the highest levels since the Second World War, to the cold fury of his parliamentary colleagues. 

To make our way in the world after Brexit, Britain needs a bold new approach. We need to reform the tax system so every taxpayer and business pays their fair share – including the non-doms and equity fund managers whose eye-watering bonuses were left untroubled by the Chancellor’s statement. 

Labour’s windfall tax has been pinched by ministers in part but botched in practice, so billions lay unclaimed. We need a proper industrial strategy to unlock businesses’ potential, especially the small and medium enterprises and start-ups in fintech, fashion, music and gaming that proliferate in constituencies like mine. We must reform business rates which hold businesses back and hamper the recovery of our high streets. 

Most of all we need a green recovery plan to create new skills, jobs, apprenticeships, and start-ups as our contribution to tackling climate change. Britain could lead the world in post-carbon technology if we had a government committed to such a transformation. We need green growth. 

Instead, we have ministers slapping each other on the back as people across the country fear bills landing on the mat, face eye-wateringly high food costs, turn down the heating, and ask themselves: “are we better off after 12 years of the Conservatives?”  The answer is “no”. 

 

Rushanara Ali, Labour MP for Bethnal Green and Bow.

PoliticsHome Newsletters

Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.

Categories

Economy
Podcast
Engineering a Better World

The Engineering a Better World podcast series from The House magazine and the IET is back for series two! New host Jonn Elledge discusses with parliamentarians and industry experts how technology and engineering can provide policy solutions to our changing world.

NEW SERIES - Listen now