The spending review in a nutshell: Britain is toast and Labour's scared witless of Nigel Farage - Kwasi Kwarteng

The Spending Review has revealed what we already know: there is no money.

Reeves and her Treasury gang know that their cherished plan to reduce welfare spending has been ripped to shreds by the pressure of angry Labour backbenchers and a Prime Minister, scared witless by Nigel Farage.

While they always blame the Conservatives, much of the spending has been exacerbated by Labour’s decisions in government.

Remember the sweetheart deal with the unions, announced barely seven weeks after the general election?

The train drivers got a handy 15 per cent uplift over the three years, far outstripping inflation. The result? Within 48 hours, Aslef announced a fresh round of strikes.

One point three million NHS workers and 500,000 teachers got 5.5 per cent, way above the inflation rate of 2.5 per cent. The largesse didn’t stop there. Junior doctors got 22 per cent over two years.

People say these workers deserve it, and there is a case that they do. But it begs the question: how is all this going to be paid for?

Labour’s answer was strange. They taxed businesses and farmers. We would expect a party of student Marxists to do exactly that. Capitalists, otherwise known as employers, are the big bad wolf of Marxist theory.

Business owners, the evil capitalists according to our Marxist friends, can be taxed to any amount you want, without harming the cherished “workers” of the Marxist’s imagination.

What these student activists don’t realise is that taxing business owners harms the public, the very “workers” the government is trying to protect.

When business owners are taxed, they don’t simply take the hit lying down. They put their prices up and keep wages down to pay for the additional tax they must pay.

Consequently, workers pay more for goods when they go shopping. They also get less money in the form of lower pay increases and, sometimes, lower wages.

The very bizarre feature of Labour’s policy was to remove the winter fuel payment. That seemed like madness at the time it was announced. Labour’s brand, cultivated over decades, was that they cared for the sick and elderly.

It saved £10billion, but removing the winter fuel payment destroyed Labour’s brand. The government has looked more unsteady since then.

With Farage challenging Labour, growth being potentially downgraded this autumn, and with Labour MPs not wishing to reduce welfare spending, tax rises are almost inevitable.

Oh yes, I forgot the increase in defence spending pledged by the PM.

It seems after a year of Labour that the government has no clue about how to grow the economy. Higher taxes, higher immigration and flatlining economic growth would appear to be the order of the day. And we have another four years of this.

No wonder so many wealthy creators are leaving, making the calculation that staying in Britain isn’t worth the candle.
Labour will end up where they usually do after a stint in government.

As Mrs Thatcher used to say, “in the end, socialists run out of other people’s money”. We are learning that lesson once again. Let’s hope the young learn from this bitter lesson.