January 13, 2025 - 10:00am

After 14 years in government, there will be few Tories who are not experiencing at least some degree of schadenfreude at Labour’s troubles since winning July’s general election. Such feeling will be particularly acute considering that, as Leader of the Opposition, Keir Starmer appeared to genuinely believe that the only problem with Britain was that the Conservatives were running it.

Chief Secretary to the Treasury Darren Jones wrote this weekend that Labour — unlike the Conservatives — will “leave no stone unturned in rooting out public sector waste”. One imagines the thought may have crossed Conservative minds at some point.

That schadenfreude has been dispelled, however, now that Labour has disclosed where the axe will fall. The Government is reportedly planning major cuts to disability benefits to ease market concerns about its economic plans. Personal Independence Payments (PIP) are a key focus, with Labour considering stricter eligibility rules.

There are undoubtedly problems with the rate of spending in the Department of Work and Pensions. Monthly new claims for anxiety and depression have risen from 2,200 in 2019 to 5,300 in 2023, while the Motability scheme now accounts for more than 20% of all new car sales and is widely abused.

Rising interest rates have fuelled speculation that the resulting surge in Government spending on debt interest could lead to a breach of fiscal rules. This is expected to eliminate the entire £9.9 billion of “headroom” under Rachel Reeves’s “stability rule”, which mandates that all day-to-day spending must be covered by revenues.

In the face of this, tackling fraudulent disability claims may be important, but it is largely impotent in easing market anxiety. A near quarter-century stall in productivity growth, real wages, and GDP per capita, alongside record levels of public spending and tax, are rather more pressing issues.

As the economist Andrew Lilico has noted, “‘Fraud & waste’ as deficit control measures are the last resorts of the fiscal charlatan.” Aside from disability benefit cuts, Labour’s strategy boils down to relying on a quango, the Office for Value for Money, and asking regulators for ideas to deliver growth.

This government is now on course to discover — albeit far too slowly — that the problem with Britain’s economy didn’t stem from Tories in the Treasury, but from tinkering. With Sisphyean inexorability, total public spending in real terms has gradually increased since the end of the Second World War; it is now almost twice as high as it was in the Seventies. Yet after the stalling growth, this level of spending is totally unsustainable.

The only solution to Britain’s economic problems is to deliver phenomenal amounts of growth — or to reduce both the demand and supply of government. Starmer’s managerialism is a poor answer to a challenge of this scale and, as has already been demonstrated by his backing down on Civil Service reform in the face of mild criticism, he lacks the necessary vril to deliver such a programme. Perhaps the best we can hope for is that Reeves sticks to her spending rules, and kicks the can further along until a chainsaw-wielding reformer convinces the public the status quo must be cast afuera.