Andrew Griffith, the shadow business secretary, has delivered a scathing verdict on Labour’s economic stewardship, declaring that ordinary Britons are now footing the bill for a string of poor decisions made in Downing Street.
His assessment lands at a painful moment, for it comes on the very day that fresh figures expose, once again, the yawning gap between what Labour promised and what this government has actually delivered.
Just last month new Prime Minister Andy Burnham stood before the country also pledged to bring down the cost of living. Instead, prices are climbing, wages are stagnating, and families are being squeezed from every direction. The latest inflation figures, showing the Consumer Prices Index rising from 2.6 per cent in June to 2.9 per cent in July, confirm what households across the country already know in their bones: this Labour government has lost its grip on the economy.
A Government Overwhelmed by Events
Ministers will, of course, point to global pressures, and it is true that turbulence abroad, including the fallout from the conflict in Iran, has pushed up petrol and energy costs. But a competent government is judged not on the excuses it offers when things go wrong, but on the resilience it builds beforehand, and on that measure, Labour has failed badly.
The single largest driver of July’s inflation shock was gas prices, which posted their steepest rise in almost four years after Ofgem’s energy price cap jumped by more than 13 per cent. This is not some abstract statistic, it is money coming directly out of the pockets of pensioners, of working families, and of small businesses already stretched to breaking point.
Chancellor John Healey’s response, a claim that the British economy remains “resilient,” will ring hollow to anyone opening their latest energy bill. Warm words about VAT cuts on electricity and capped bus fares do little to disguise a government that is, by its own regulator’s admission, presiding over the sharpest gas price rise since the depths of the Ukraine-driven energy crisis.
Business Confidence Draining Away
It is not only households sounding the alarm. The British Chambers of Commerce has named inflation the number one concern among its members, with two in three companies citing it as a source of worry in the second quarter alone. Business leaders describe margins being crushed, investment stalling, and recruitment freezing, precisely the conditions in which growth withers rather than flourishes.
Meanwhile, the labour market, on which Labour’s entire economic pitch was built, is flashing warning signs of its own. Unemployment has stuck stubbornly at 4.9 per cent, and the number of people on company payrolls has fallen again. A government that cannot control prices while simultaneously watching jobs disappear has, by any reasonable standard, lost control of the economy it was elected to run.
Gimmicks Instead of Growth
Rather than confronting these structural problems, Labour has leaned on gestures. The Government’s so-called Great British Summer Savings Scheme, cutting VAT on trips to theme parks, theatres, and cinemas, was billed as a lifeline for hard-pressed families. The Office for National Statistics has now confirmed what critics suspected all along, that the scheme has had no meaningful effect on headline inflation. Independent economists at NIESR went further, stating plainly that they expect it to do almost nothing to dampen price pressures. It is, in short, a headline dressed up as a policy.
Worse to Come
Perhaps most damning is the verdict of independent economists, who warn that July’s figures mark not a peak but a starting point.
Forecasters at KPMG and the ICAEW both expect inflation to keep climbing through the autumn, with some warning it could top 3.5 per cent later this year if food prices, driven up by drought, and energy costs, driven up by instability in the Strait of Hormuz, continue to bite. The ICAEW has gone as far as to suggest the Bank of England may soon be forced into further interest rate rises, even as the jobs market continues to weaken beneath it, a genuinely difficult position for the Bank, and one entirely of the government’s making.
This is the legacy already taking shape under Andy Burnham: a cost-of-living promise broken, a business community losing confidence, a jobs market wobbling, and a Chancellor reaching for reassuring soundbites while the numbers tell a starkly different story. Voters were promised relief. What they are getting, instead, is a slow, steady erosion of their living standards, and a government that seems unable, or unwilling, to change course.
