Telegraph: The real failures of 14 years of Conservative government

This article was first published in the Telegraph

Kemi Badenoch has said Labour need to learn the lessons of the mini-budget and are making even bigger mistakes. She is wrong. Labour is doing the opposite of the mini-budget, which is why the country is headed for disaster.

The mini-budget was the right approach at the right time that would have resulted in higher growth, lower debt and cheaper energy. The 45p income tax rate raises virtually no revenue; abolishing it would help retain talent. Corporation tax kept at 19 per cent would have attracted businesses. Fracking would have lowered British energy prices and saved manufacturing industry.

Contrary to what Kemi says, it’s not true that we had no plans to restrain spending. We wanted to link welfare increases to wages rather than prices, which would have saved £7bn in that year alone – far more than Labour’s botched reforms. However, many Conservative MPs would not support it and it was their lack of support that was one of the primary problems. A Javier Milei agenda was just not possible in 2022 when the Conservative Parliamentary Party even baulked at welfare savings.

We can see from the counterfactual of both Sunak/Hunt and Starmer/Reeves that instead of the “unfunded tax cuts” I was accused of, we have “unfunded tax rises”. Whether the abolition of non-dom status or the increase in capital gains tax, our astronomic tax burden has driven talent out of the country and killed growth. This economic doom loop is likely to lead to a financial collapse and an inability for the UK to fund its debt.

The mini-budget was precisely a chance to escape this doom loop. Yet, it was sabotaged by the Bank of England and the Treasury – which didn’t want to be challenged and wanted to cover up their failings – and Conservative MPs who either didn’t believe in supply-side economics or cravenly wanted preferment under a Sunak premiership.

The price of British debt is now consistently higher than it was in 2022, yet Reeves does not face the constant wall of noise that I did, nor the level of criticism from those who were allegedly on side.

The guns were trained on me but the real culprit was the Bank of England. It admitted in a paper released last year that two-thirds of the market movement in autumn 2022 was down to its failure to regulate the pensions market. One of its jobs is ensuring financial stability. Another is holding down inflation. It failed on both counts.

The criticism of my failing to secure a forecast from the Office of Budget Responsibility (OBR) is also hogwash. Rishi Sunak did not seek an OBR forecast for Covid spending nor did Rachel Reeves for her 2025 spending review – both of which cost far more than the mini-budget package.

The difference was that I was taking on the economic establishment rather than going along with it. The Bank of England blamed me in order to protect its position. It has huge entrenched power and a ready audience in the mainstream media. After the Blair government made it unaccountable, monetary policy is no longer in the hands of the elected government.

The situation was made even worse when George Osborne established the OBR, embedding a Left-wing approach to fiscal policy. The OBR has consistently underestimated public spending and overestimated the revenue from tax rises. Despite every Budget that has been scored by the OBR “hitting the debt target”, borrowing always comes in “higher than expected”.

If a new government wants serious economic change – emulating the policies of Milei and Trump – it will have to dismantle this apparatus first. Power must be returned to the executive to implement economic policy. The Bank of England Act 1998 should be repealed. The OBR should be abolished and new leadership appointed at the Treasury.

The Prime Minister – like the president of the United States – should be responsible for public spending with a similar structure to the US Office of Management and Budget.

It is disappointing that instead of serious thinking like this Kemi Badenoch is instead repeating spurious narratives. I suspect she is doing this to divert from the real failures of 14 years of Conservative government in which her supporters are particularly implicated.

It was a fatal mistake not to repeal Labour legislation like the Human Rights Act because the “modernisers” wanted to be the “heirs to Blair”. Huge damage was done to our liberties through draconian lockdowns and enforcement championed by Michael Gove and Dominic Cummings. The economy was wrecked with profligate Covid spending by Sunak. The huge increase in immigration has been a disaster.

In a recent speech Kemi said “From now on, we are going to be telling the British people the truth even when it is difficult to hear”. If she’s not willing to tell the truth to her own supporters, the Conservative Party is in serious trouble.