Rachel Reeves was livid, and more than performatively so.
Everyone expected Labour’s chancellor, after a few weeks in power, to announce that she had now looked at the books and found them worse than expected. But the fact that we all saw this coming doesn’t mean what the previous incumbents did to the country is any less shocking.
The Black Hole of Conservatism is very deep and very empty. The shortfall for between things the Tories promised to do and the money to do them was, said Reeves on Monday, a massive £22bn.
“The worst economic inheritance since the second world war,” she called it, claiming that this had been the subject of a cover-up by the last government – something immediately and angrily denied by her predecessor, Jeremy Hunt, and then apparently confirmed by the Office for Budget Reponsibility, which said it had been unaware of increased spending pressures for 2024-25 until the last week. It has now launched a review into the “adequacy” of what Hunt’s Treasury told it before the last budget.
Yet that black hole is only the start. There is also the money that has been wasted by incompetence, idiocy and ideological fantasy. And its total is even more staggering. How about we do some quick maths to see how much the Tories have squandered?
HS2, the high-speed rail link that was supposed to connect London with Birmingham, Manchester and points north, has so far cost £30bn. For that, we will end up with a rail line that does not reach the centre of London, a new station in Birmingham with four “ghost” platforms and trains running much slower, with fewer seats, between Birmingham and Manchester.
In other words, the £30bn has created a rail line that is worse than the one it was designed to replace, which can’t alleviate congestion on the roads and which doesn’t level up any part of the country. The cost of shutting down the existing works on the now-cancelled sections of HS2 will be £100m – and then there are the hundreds of millions lost on compulsory land purchases.
Reeves knows she will either have to find billions more to fix this mess or the nation will have to put up with a worse train line than it had before the Tories wasted £30bn. Given that she is already having to slash infrastructure spending to balance the books, I can guess which one we are getting.
As a metaphor for 14 wasted years of expensive failure, it is hard to beat. If only that was the only costly disaster.
Since Brexit is the elephant in the room, let us go there next. It has cost the UK economy at least 4% of its total wealth, or GDP. That is about £140bn, and means the British government has lost about £32bn a year in tax revenue.
On top of that, we have all the extra expenses of Brexit – border controls, strain on the civil service, red tape, vets’ checks, the lot. Red tape alone is thought to be at least £7bn a year. Shall we say £40bn a year as an estimated cost of the Tories’ appalling decisions?
Then there is the PPE scandal. In the middle of a global pandemic, the UK government handed billions in contracts for protective equipment to friends, instead of companies waiting to fill the orders immediately. Much of the equipment supplied by these cronies was useless, had to be stored at great expense and then destroyed, while the profiteering was staggering.
A realistic total may never be known, but earlier this year the Department of Health and Social Care itself had to admit it wasted £10bn of the £13.6bn it spent on protective gear for frontline medical staff.
Then, of course, there was the Covid-19 support that disappeared into business bank accounts. The Department for Business calculates that it “lost” £17bn in the shape of loans to help businesses survive Covid lockdowns, but “only” £4.9bn of that was to fraud. The rest simply vanished.
Fraud or not, the previous government seems to have handed out £17bn in loans it couldn’t recover. Reeves is promising to appoint a Covid corruption tsar, and believes they should be able to recoup £2.6bn. But until I see the cash being handed back, I will stick to the total of £17bn.
Then there is the ludicrous Rwanda scheme. It cost £700m, and a total of four people volunteered to go – that’s £175m per person.
Add to that the money spent on hotel rooms, camps and unsafe barges to house them, and a few quid to paint over murals of cartoon characters so that terrified children wouldn’t feel welcome. The Home Office says all that cost £4bn in 2023, double the previous year’s total and six times higher than in 2018.
Liz Truss’s premiership was so short-lived, with almost all of her policies reversed quickly, that it is very difficult to put a price on her incompetent fantasy economics. But the Resolution Foundation tried, and came up with a total of £30bn. I am not sure that is fair, but the calculation that higher interest rates alone added £10bn to the cost of borrowing seems sensible, and so I will use that.
Of course, there are plenty of other things we could add to the list, such as the cost of firing 20,000 police officers and then hiring 20,000, the economic disaster of austerity, the excessive use of jets and helicopters, and Truss’s lifetime office allowance – a reward for 45 days of chaos.
We can assume that the chancellor is finding out every day about even more disastrous and expensive policies that civil servants refused to sign off. But the total cost of those big-ticket items that we already know about is a grand total of around £112bn, of which £55bn will recur annually – and with no end in sight.
It is a huge number that deserves context. The new government is under intense pressure to end the two-child limit on benefits. But it says it cannot yet find the £3bn a year that would lift 300,000 children out of poverty.
The price of allowing a third of a million children to eat properly is just 3% of what the Conservatives wasted. It is another Tory scandal – but perhaps not the final one.
