Rising cost of Labour

Ahead of Sir Keir Starmer’s meeting with Saudi crown prince Mohammed bin Salman, the Prime Minister’s spokesman stated that “promoting growth” was Sir Keir’s “number one priority”.

Business leaders reading these words can be forgiven for harbouring doubts. One of Sir Keir’s first acts in office was to hand Rachel Reeves the keys to the Treasury, resulting in a Budget that imposed £40 billion in tax rises on an economy that had only recently emerged from a technical recession at the end of 2023.

Combined with a rise in the minimum wage, the result of this cash grab has been the sharpest fall in hiring in four years. To put it another way, the Reeves-Starmer axis has managed to do more damage to the employment prospects of the British public than anything since the pandemic, or prior to that, the 2008 crash, and the September 11 attacks on the World Trade Center.

Of particular concern will be the composition of the change, with the fall driven by permanent roles in the private sector. It is a point worth repeating that it is the private sector, and not state employment, that is the primary driver of prosperity and growth, and that this fall should be weighted particularly highly.

That this economic damage was inflicted partly to fund significant pay rises for Labour’s public sector voters, employed in a sector where productivity as measured by the Office for National Statistics is still lagging behind the levels seen in 1997, only rubs salt in the wound.

Far from relentlessly seeking growth, the Prime Minister’s policies seem likely to maintain the “managed decline” he condemned earlier this week.