So far, the public have largely been unimpressed by the Government’s efforts. According to Ipsos, 67 per cent think the economy will get worse over the next year, while only 13 per cent believe it will improve, a net economic optimism rating of minus 54. That is well down on minus 10 last July. Voters are now more pessimistic than at any time since the Liz Truss fiscal event in autumn 2022.
Now, yesterday’s Spring Statement from Chancellor, Rachel Reeves, and the accompanying forecast from the Office for Budget Responsibility (OBR) has underlined just how formidable a challenge Labour has in achieving the growth that might win them a second term.
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Reeves has undermined the moral case for welfare cuts
Read MoreTrue, the OBR anticipates things will improve thereafter, and that by the time of the next election, the economy will still have grown as much as previously anticipated. But, at an average of just 1.8 per cent a year, the anticipated growth of the economy over the next few years is well below the near 3 per cent figure New Labour delivered before the financial crash – and is no better than the Conservatives’ record between 2010 and 2019.
These plans are central to Labour’s growth strategy. Nevertheless, while the OBR believes they will do some good, they reckon their delivery will, by 2029, increase the economy by just 0.2 per cent. Labour’s planning reforms, costless though they are to the Government, are, this side of the next election at least, unlikely to prove the magic bullet ministers have sometimes implied.
Reeves was keen to trumpet that this meant the average household would be £500 a year better off by 2029. However, the rate of increase tails off in the second half of Parliament. Consequently, many “working people” might still be left wondering whether Labour really have delivered sufficient growth to deserve a second term.
In the short term, however, the Government faces a more immediate political challenge. Reeves’s primary task on Wednesday was to deal with the adverse impact of the economy’s stuttering performance on the Government’s finances.
Spending money on welfare is far from being the most popular form of government spending. New figures from the latest British Social Attitudes survey show that just 2 per cent regard spending more on social security as a priority.
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However, people with disabilities (and their carers) are widely regarded as among more worthy recipients. Even before the Chancellor got to her feet and extended the cuts first announced last week, More in Common found that as many as 44 per cent feel they are “too harsh”, including 42 per cent of those who backed Labour last July.
The Government’s own estimate of the impact of the welfare cuts, also released yesterday, could well reinforce these perceptions. Although some will gain, those who lose out – nearly all of them in families where someone is disabled – lose a lot. Just over three million households will be worse off by an average of £1,720. Those no longer eligible for the personal independence payment benefit lose as much as £4,500. A quarter of a million will be plunged into relative poverty.
John Curtice is professor of politics, University of Strathclyde, and senior fellow, National Centre for Social Research and The UK in a Changing Europe
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