This article is taken from the November 2024 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

Keir Starmer’s government has something to be said in its favour: it will be in office for only one term. At this year’s general election the Labour Party may have secured 411 members of Parliament, but its vote share was an unconvincing 33.7 per cent.

The Conservatives’ support slumped from 43.6 per cent in 2019 to 23.7 per cent in 2024, and they have much ground to recover. But it is clear — only a few months into its existence — that the present Labour government is much worse, in almost every respect, than its predecessor.

This raises an alarming question: “What will the British economy be like in June 2029 when the Conservatives or a Conservative-dominated coalition takes over?” Two subsidiary questions are implied. Will taxes be higher (relative to gross domestic product) than today? And will the national debt (again relative to gross domestic product) also be higher than today?

For everyone with common sense and political antennae, the answer to the tax question was obvious before the general election and remains so now. Britain’s demographics, and the way our nation provides for health, pensions and benefits, will lead to a relentless enlargement of the state’s position in the economy.

The Conservative-led governments from 2010 to 2024 failed to tackle the challenges in these areas of public expenditure, and the more heart-on-its-sleeve Labour Party certainly will not do so in the next five years. Taxes will be a higher share of national output when the next general election is held. (That indeed is one reason Starmer’s Labour is a one-term proposition.)

Before the 2024 election, though, the debt question was open. The then Shadow Chancellor, Rachel Reeves, said much that was sensible about public debt, and — to give her credit where it is due — she said so persuasively and on many occasions.

Public debt was too big and had to be controlled. She seemed to endorse the principle allegedly guiding Jeremy Hunt in his two years as Chancellor from 2022 to 2024, that forward plans for spending and taxation should aim to have public debt falling relative to GDP towards the end of a government’s life.

All that is now in limbo, with much depending on Reeves’ first Budget on 30 October. She has been influenced by such luminaries as Gus O’Donnell, a former permanent secretary to the Treasury, and Andrew Haldane, a top Bank of England economist who became chief executive of the Royal Society of Arts in 2020.

They have both graced the pages of the Financial Times with advocacy of more public investment. In their view, something must be done to promote economic growth — and more public investment is that “something”. Reeves has let it be known that she has one priority, summed up in the phrase “invest, invest, invest”.

According to today’s elder statesman Lord O’Donnell, accounting conventions are unhelpful. He believes that they underestimate the positive effects of public investment on national wealth and its benefits for productivity.

Might one ask what has happened to the younger Gus O’Donnell who co-authored a 2002 book with Ed Balls entitled “Reforming Britain’s Economic and Financial Policy: Towards Greater Economic Stability”?

The book lauded a “sustainable investment rule”, which said that public investment must be constrained by a 30 per cent limit on the ratio of public debt to GDP.

Is it unfair to point out that the 30 per cent meant to be applicable over 20 years ago is a fraction of the current 100 per cent figure?

Reeves’ intentions have changed from before the election. The Budget is expected to plan for more borrowing, with public debt to rise faster than national output over the next few years. Realists — including the Conservative leadership candidates — must view this development with concern.

The right-wing fantasy in this area of public policy is that the unfunded tax cuts of Trussonomics are the way to encourage faster economic growth; the left-wing fantasy is that supposedly productivity-enhancing public investment is the means to prosperity. Investors in British government debt include cynics who have heard it all before.

Optimism on the public debt front has not been helped by announcements from Ed Miliband’s Department for Energy Security and Net Zero that £21.7 billion is to be spent on carbon capture and storage. The technology is far from proven, but — all being well — it may lower the carbon density of the atmosphere and take Britain closer to net zero.

But fine words butter no parsnips, and global salvationism at a cost of £21.7 billion will do nothing for working-class living standards, the stock of public sector capital or Labour’s vote share in 2029.

In short, the answer to the question “What will the British economy be like in June 2029 when the Conservatives or a Conservative-dominated coalition takes over?” is evident. The economy will be in a wretched mess. The ratios of tax, public debt and interest on that debt to GDP will be above those at present, and the demographic drivers of the ratio of public expenditure to GDP will still be adverse.