As Chancellor Rachel Reeves spoke at the Labour Party conference in Liverpool this afternoon, a heckler interrupted to protest against arms sales to Israel. The incident seems to have captured the attention of the press and allowed Reeves to respond that Labour has changed from a “party of protest” into a “party of working people”. The Chancellor will no doubt be pleased that the media can now focus on internal Corbynite versus Starmerite party politics rather than on the substance of what she said earlier today. That’s because her speech was utterly incoherent.

Reeves stated that there would be “no return to austerity”, referring to the relatively light-touch austerity the Cameron government presided over when it was elected in 2010. This is, to put it charitably, hard to believe. Just before the speech began, it was announced that a debate on the controversial cuts to winter fuel subsidies which are being called for by unions will be pushed back from today to Wednesday. This update was met with boos from an audience which knows full well that Keir Starmer’s government is pursuing the most aggressive austerity programme Britain has seen since the Fifties.

While Reeves was speaking, part of the Labour Party’s own base went into rebellion as the Royal College of Nursing announced that it would reject the Government’s offer of a 5.5% pay rise. Two-thirds of its membership voted against the offer and — with 145,000 members casting a ballot — the union saw its highest turnout for a vote in history. Once again, Reeves can call the policy that her government is pursuing whatever she wants, but voters still know austerity when they see it.

The Chancellor also claimed that she wanted to “make Britain a place to invest” but Labour has been murmuring about increasing capital gains taxes for weeks. Recent reports suggest that the party may even try to impose an “exit tax” on those who want to take their wealth out of the reach of the Government. When investors look to invest in a country, they are always deeply concerned about having their capital gains taxed or locked into that country.

Reeves’s speech today contained a lot of empty rhetoric. There was a great deal of talk about “tough choices” and very little window-dressing. No wonder: the recent report by the Office of Budget Responsibility shows that the austerity which Labour is imposing on the country is no temporary measure. Rather, it is part of a 50-year plan of managed economic decline for Britain. There is no viable way to hide this plan from the public, who will see it hit their pocketbooks. No “messaging” can overcome hard economic reality here.

When the Labour Party in Ireland imposed austerity on the country as part of the Labour-Fine Gael coalition government in 2011, it collapsed at the next election and has never recovered since. It seems highly likely that Reeves and Starmer are leading the British Labour Party — at least in its current form — to the same fate.

---

Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics

philippilk

---