Opinion: This is not the time to gamble

There is something of the end times about them, as if they know their time is short, and so they intend to make the most of it.

It’s clear now that the government has embarked on a radical ideologically driven experiment: they are hoping that tax cuts can pay for themselves through increased economic activity.

They are hoping that growth can offset rising debt.

I use the word “hope” advisedly. This experiment has been tried before; it did not work.

Britain tried it in 1972 when Edward Heath’s Chancellor of the Exchequer, Anthony Barber, launched a “dash for growth”. What happened was simple: whatever he gained by cutting taxes was lost in other ways. Inflation was a problem. In the end, the experiment ended in tears: the subsequent Labour government was compelled to get a bail out from the IMF.

We are constrained in a dash for growth via mere tax cuts: our markets are constricted by Brexit. A trade deal with the United States is not imminent. We have labour shortages and better infrastructure is required to enable a massive uptick in growth.

None of this will happen. We are likely to be in a situation where too much money chases too few goods: more inflation will ensue.

The general population doesn’t get a vote on this policy, but the markets do: the fall in the value of the pound and the rise in the cost of government borrowing tells you all you need to know. If our debt is more expensive, it is because it is seen as riskier: the more risk you take, the higher the rate of return you are due.

Our pound sinking in value has an impact: our fuel is priced in dollars. If the pound sinks, energy becomes more expensive, and it feeds through to the entire economy.

At the heart of it all lay a Prime Minister that was selected by a relatively tiny number, specifically members of the Conservative Party. We, the public, didn’t get a say.

We have no means to delay or stop it. New laws against protests make it more difficult to put together demonstrations. The government seems determined to press on with this experiment.

It may be the government is curbed by the markets to an extent; I suspect however that they will be compelled to find a way to show they are paying for their tax cuts. This may manifest in deep cuts to public spending, possibly both in terms of services or capital expenditure. In both cases, deprived areas will be hit the hardest. Some levelling up.

I believe a change of government is imminent. I believe the prospectus that Labour has put forward this week is credible and compelling. We should be in no doubt about the challenge that lay ahead however: thanks to the Conservatives’ gambles, our public finances are in a very bad state.

In this sense, Peterborough could be seen as the proverbial canary in the coal mine. It will take very difficult choices to put things right. However, Labour is ready to embrace the challenge.