The Tories’ Economic Incompetence

Newspapers On May
Newspaper’s almost unanimously support May’s manifesto policies, including her policies on the economy.

To watch the news today, in light of the forthcoming general election, it appears one consistent strain of thought runs through the minds of the British commentariat: the Conservative Party is the Party of economic responsibility. The consensus is generally that the Conservative’s austerity program, whilst unpleasant, was necessary in facilitating growth subsequent to New Labour’s ill-judged economic strategy of ‘tax-and-spend’ which drove this country to ‘economic armageddon’. This skewed view permeates almost all aspects of the Media, and – save a few outlets – very little critical attention has been given to issues surrounding pay, private debt and living standards for the popular classes, preferring instead to simply gloss over with a platitude about ‘strength and stability’.

It seems, therefore, that a certain amount of light is needed in order to counter such an erroneous argument. One must expose the Conservative’s economic record plagued by non-existent wage growth, missed targets and an over-arching class war which has seen huge swathes of money transferred from the popular classes to the elite under the guise of ‘austerity’. Indeed, one does not have to be a ‘loony lefty’ to understand this; all that’s required is a certain amount of objectivity.

Wage War

united-kingdom-wage-growth@2x
The average weekly earnings growth was significantly higher under Labour leadership

Indeed, wages seem an excellent place to start.  Wage repression seen under Tory leadership has been the worst in the developed world. Whilst most economies have experienced modest if slow wage growth since 2008, Britain lags behind, only beating Greece in the industrialised world in terms of an increase in pay. This has led the Institute for Fiscal Studies (IFS)  to slam the Conservative record on pay as ‘dreadful. Indeed, this “lost generation” has seen a reduction in pay of close to 10% since the crisis according to the OECD, a fall not seen in this country since the Victorian era. Wages are the bedrock of a consumer-based economy, and a stifling of aggregate demand is not only socially reprehensible but simply bad economics, resulting in a sharp increase in the acquisition of private debt, as many families fail to rely simply on their pay packet.

This seems to be the biggest indictment of Tory economic policy. When Theresa May talks of the ‘just getting by’s’, she’s referring to the very families who have seen a sharp reduction in their living standards. This is an attempt to reposition the Conservative Party as the Party of the working-class. The Sun shows this desire when writing that Theresa May will ‘target fatcats’. Whilst politically astute, this simply cannot hold up to critical analysis and has very little substantiation. Seven years of Tory wage repression has clearly proven this.

However, unlike Greece, Britain’s wage repression was not necessary. Take a look at the chart below published by the Financial Times (hardly a Marxist organisation). What it shows, quite peculiarly, is that the UK is the only country in the OECD which has seen modest economic growth despite a plummet in wages. This leads one to deduce that whilst the economic pie has increased in size, such an increase has not been felt by ordinary people. Instead this has gone to the bourgeois minority.

FT wage collapse UK

Despite the abysmal record on wages, the Conservative apologist would probably refer to ‘the necessary flexibility of the labour market’ and claim that wage packets are not a fair measurement of economic competency. In that case, it’s probably best to judge them on their own criteria, the debt.

Debt Accretion

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Debt in the UK as % of GDP. Source: Office for National Statistics

It appears a realignment has occurred in British politics; for years it was the right who vituperatively and perennially remonstrated and rallied against public debt. Their claim was that a public debt equalling 90% of GDP was cataclysmic for economic growth. Whatever one’s opinion is on public debt, whether or not you think it is manageable or unfeasible, that is the metric the Conservatives wish to be judged on. Counter-intuitively, despite years of ideological protest against the public debt, the Conservative record has, once again, proved poor, and in comparison to Labour’s history on UK debt, appalling. Indeed, as of 2016, the Conservative Party had added £555 billion to the national debt, despite making its reduction a hallmark of their 2015 election campaign.

When stood against Labour, this is a startlingly poor record. Every Labour government bar two has reduced public debt as a percentage of GDP (the two bucking this trend were McDonald in 1929 and Brown in 2008). Indeed, despite it sounding truly unbelievable, George Osborne increased the public debt by more than every Labour government ever has combined. This is hardly surprising, however, when considering that only three other governments have been marked by a higher acquisition in public debt, these being both World Wars and in 1823 under the Tory chancellor Nicholas Vansittart.

However, to give some leniency to the Tories, the Tories have conflated the debt and the deficit which are two separate issues. Irrespective of this, the Tory record on the deficit is not much better, vowing to erase it by 2015 and yet still struggling with it to this very day, the deficit is currently around £54 billion. The point here is to judge the Conservative Party’s economic record on their own terms. Their record on their own criteria of public debt management combined with deficit reduction has proved wholly unsatisfactory.

Business Blunders

This theme of economic incompetence in areas the Conservative’s have historically claimed as their area of expertise continues with regards to business. For years the Tory Party has been the ‘Party of business’, the Party accustomed to increasing the efficiency of corporate Britain. Yet it appears that this title is undeserving. With help from our friends at the FT, it seems starkly clear that UK productivity has hardly moved since the Conservatives won power in 2010. Indeed, this has been a recurring problem for the Tories, leading Ken Clarke to famously denounce his own Party’s failure to boost productivity. This may be the worst of the Conservative’s economic failures as there is simply no plan to alleviate it. Theresa May appears to have no solution to the poor rate of productivity apparent in the UK.

Welfare Wastage

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This tendency toward waste and inefficiency is also evident in Tory reforms over welfare, an area in 2010 where they were keen to reduce the ‘wasteful spending’ that Labour had implemented. However, Tory efforts at reform have proved catastrophic, not just socially, as an increase in child poverty has proved, but also financially. Perhaps the best example of this has been alterations to disability payments. The ideologically-driven utilisation of the private sector in the form of two firms now managing PIP payments has resulted in an overspend of £200 million.

Take the hallmark of Tory welfare reform, the Universal Credit, which was aimed at reducing waste and fraud in the benefits system. After seven delays it’s been announced the plan will still cost £16 billion, once again proving that the Tories do not run government in an economically sound fashion.

These welfare reforms have been dismally managed. Even if you are to ignore the social ills sprouting as a result of these failures – in terms of simple economic success, the Conservative’s have fallen short in a remarkable way.

Will The Media Tell Britain What It Needs To Hear?

Conservative Manifesto
The ‘economically sound’ manifesto. People need to stop taking Tory ‘economic competence’ at face value.

The central issue here is one of economic competence and journalistic honesty. Over the past seven years what has been exhibited has been a transfer of wealth from the poorest sections of our society to the wealthy classes. Without a responsible Media willing to question those in power this will persist. The clear focal point of this election is Brexit. This is indeed an enormous issue – nevertheless it does not justify a total media blackout on issues surrounding the economy and people’s living standards at large. The obvious reason Mrs May wants to deflect discussion to Brexit itself is plain and simple; if this election was focussed on wages and on economics, she and her Party would be exposed for what they are: economically inept.

 

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