British Finance Minister Philip Hammond defended capitalism as the only route to prosperity yesterday in an attempt to counter the Opposition Labour Party’s increasingly popular vision for a more centrally-controlled economy.
In a speech to the ruling Conservative Party, Mr Hammond warned that what he termed Labour leader Jeremy Corbyn’s ‘Marxist’ aims would return Britain to the troubled days of the 1970s when it was the weakest major economy in Europe.
Prime Minister Theresa May is grappling with a deep split within her party over Brexit and serious doubts about her leadership after her botched bet on a June snap election lost her party its majority in parliament.
Mr Hammond, who was sidelined by Ms May during the election campaign, used his keynote speech to warn that Labour would catapult Britain, the world’s fifth largest economy, towards the kind of “socialist fantasy” seen in Cuba, Venezuela or Zimbabwe.
“We saw Labour in the raw, exposed for what it has sadly become: a party taken hostage by a clique of hard-left extremist infiltrators, people who despise Britain’s values and talk down our country,” Mr Hammond told Conservative Party activists.
At Labour’s own party conference last week, Mr Corbyn set out plans for a much more active role for the state in a mixed British economy, including renationalisation of key infrastructure, higher government spending and more taxation and control of the banking sector. With opinion polls showing Labour gaining support, Mr Hammond aims to convince voters that Mr Corbyn would make them poorer.
Labour’s leaders, he said, “openly proclaim their ambition to demolish our successful modern market economy and replace it with a back-to-the-future socialist fantasy with hundreds of billions of extra debt for the next generation to pay”.
His words echo those of Ms May, who last week issued her own defence of capitalism – a sign of growing concern about the threat Labour poses to the pro-business orthodoxy that has underpinned British economic policy since Margaret Thatcher’s reforms in the 1980s.
“Our economy is not broken: it is fundamentally strong,” Mr Hammond said.
However, seven years of painful spending cuts by the Conservatives have tested the patience of the British public.
Despite casting the Labour Party as Cuban-style Marxists, Ms May’s government has sought to win over voters with moves to tackle high levels of student debt and limits on pay for public sector workers.
“We must never deny or dismiss the underlying concerns that the election articulated: we must listen to them and we must respond,” Mr Hammond said, adding that the government should offer “pragmatic solutions” to improve ordinary people’s lives.
But with Brexit on the horizon, a slowing economy and the Bank of England hinting that interest rates could rise, Ms May’s government has little room for fiscal manoeuvre.
The British Chambers of Commerce has warned that public rifts within the cabinet are undermining business confidence. Divisions over Europe helped sink the Conservative premierships of Thatcher, John Major and David Cameron.
Last month, rating agency Moody’s downgraded Britain’s credit rating, saying government plans to reduce its debt load had been knocked off course and that Brexit would weigh on the economy.
In his speech, Mr Hammond pledged £400m of additional road and rail spending but Labour said the plans did not go far enough.
“Hammond just wants to continue with the seven years of Tory economic failure,” Labour’s finance policy chief John McDonnell said.