HomeBussinessThe end is in sight for Keir Starmer’s honeymoon period

The end is in sight for Keir Starmer’s honeymoon period

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Labour says its hugely controversial plan to add 20pc VAT to school fees will raise around £1.7bn. This is a policy which, for all the glee of the party’s hard-Left, will seriously disrupt the education of potentially tens of thousands of pupils, to say nothing of the lives of hard-working parents striving and struggling to send their children to an independent school.

Ministers say the money raised by making the UK pretty much the only country in the developed world to charge VAT on education is “vital – as it will pay for 6,500 new teachers”, but that amounts to a mere 1pc rise in state school teacher numbers.

The public finances just deteriorated by an amount approaching twice what will be raised by this spiteful policy – and barely anyone noticed or commented. Starmer is a lucky general indeed.

The state of the public finances isn’t Labour’s fault, of course – the party has only just entered government. But the tightness of the state’s balance sheet will seriously complicate the ability of Starmer’s administration to fulfil its manifesto commitments. That is one reason Labour’s post-election honeymoon – now in full swing – will be quite short.

Despite headline inflation being down at 2pc, the cost of living crisis is far from over. Food and energy prices remain some 30pc and 60pc higher respectively than they were prior to the pandemic – with necessities accounting for a much higher share of the spending of lower-income households.

Consumer confidence is low, with new data showing retail sales down 1.2pc in June, far more than expected. The official fine print shows that sales of goods remain 1.3pc lower than prior to the pandemic, even though consumers are spending around 20pc more to obtain those goods – such has been the impact of inflation.

And despite having hit the Bank of England’s target, inflation is proving to be extremely stubborn – the precise opposite of “transitory”, the word of choice among our policymaking establishment, as they airily dismissed those of us who repeatedly warned of a post-pandemic inflation surge.

Core inflation – stripping out food, energy and other volatile factors – remained at 3.5pc in June, the same as the previous month. Service sector inflation is also still far too high – up at 5.7pc, again having stayed the same as in May.

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