The Conservative Party have been in power in the UK for over a decade. Their first election triumph, after many years in opposition at the hands of Tony Blair and Gordon Brown’s New Labour, was secured following the economic catastrophe of the Great Financial Crisis of 2008.
While the electorate did not give David Cameron a ringing endorsement, he had to form a coalition government with the Liberal Democrats, their victory was predicated on their ability to improve the nation’s finances.
Under the stewardship of George Osborne as chancellor, the coalition government proceeded to follow an “austerity” policy based on balancing the books.
While this policy seemed to be unpopular, at the next general election the Conservative Party won a majority and were able to form a government. This victory created the idea of the ‘shy Tory voter’, someone who, whilst uncomfortable sharing their support publicly, would vote Conservative when in the voter’s booth.
Two further elections followed, broadly held because of the Brexit fallout, and the Conservatives ended up securing a large majority in 2019.
Core to this continual electoral success has been the assumption that the Conservative Party can be trusted with the economy. An assumption that stands in stark contrast to the Labour Party that remains tarnished by the idea that the inevitable outcome of a Labour government is a financial crisis caused by rising inflation and reckless government spending.
Given this backdrop, one would assume that after being in power since their initial 2010 victory, the Conservative Party would have ensured that the nation’s finances are now in a strong position.
Sadly, this is not the case.
The Public Sector net borrowing amounted to 97.6% of gross domestic product in the UK in August 2021, the highest it has been since the early 1960s. Along with this increased borrowing, inflation has also risen significantly, currently standing at 5.1%, the highest level since September 2011. Complimenting these alarming statistics, taxation has also risen to the highest level since the 1950s.
While it is true that that the COVID-19 pandemic and the “lockdown” policies provide an explanation for this dire economic data, the decision to raise taxes and spend £37 billion on an ineffective track and trace system are decisions that the government must take responsibility for.
As it stands, the current media narrative is fixated on the various parties held by Conservative members and offices during their imposed festive lockdown in 2020, along with the developments of the Omicron variant. While these matters are certainly important in the short term, the longer-term threat facing the nation is an economic one.
Much of the economic policy since the financial crisis of 2008 has been predicated on lowering interest rates and printing money. These actions have managed to stave off the immediate economic impact of the financial crisis and more recently COVID-19. However, such an economic policy can only be sustained should inflation remain low.
Were inflation to consistently rise and remain high, it would be difficult for the Bank of England to keep rates low. They would then be forced to raise interest rates, an act that would hurt individuals and the government in equal measure, as the cost of borrowing would rise. Add a backdrop of low economic growth and there would be genuine concerns with regards to the strength of the economy.
Given this knowledge, you could be forgiven for wondering why the previously stated inflationary figure of 5.1% has not caused more consternation. One explanation is that economists have expected there to be a temporary rise in inflation given the economic impact of global lockdown policies.
It is perfectly reasonable to assume that a shutting down of the global economy would increase costs across the board as supply chains and production ground to a halt. However, the question of whether this will be a temporary or long-lasting cost should be concerning policymakers.
Unfortunately, Boris Johnson appears to be committed to policies that will appeal to voters in the short term, rather than making tough long-term decisions for the benefit of the future. Instead of speaking honestly about the extreme pressure facing the economy, and the need to control sovereign debt and public expenditure, it seems he is determined to continue with large infrastructure projects that have questionable economic benefits – such as HS2 and a centrally planned “Green Industrial Revolution”.
While these policies may be electorally popular, as highlighted by the Test and Trace project, the lack of profit incentive and competition associated with government projects is likely to result in these schemes being remembered for their large-scale costs rather than their long-term benefits.
There is an irony that the Conservative Party, having been elected to power in 2010 on a message of financial competence against an incumbent government that was viewed as having been financially profligate, could enter the next general election facing accusations that it has become the exact thing that it was initially elected to oppose.
If the Conservatives cannot be trusted to provide an electoral counterweight to the Labour Party’s belief that all of society’s problems can be solved by yet further government spending, this would be the real Tory scandal.