The new Deputy Prime Minister recently gave a speech at the Adam Smith Institute. The Labour Party has read the transcript of his speech and found it filled with claims which are blatantly untrue or misleading, inconsistent and hypocritical, and other indications of the economic priorities of the government which leave the Labour Party concerned about the direction which the coinflip coalition of chaos intends to take our economy down.

The fact that EruditeFellow decided that the Adam Smith Institute is an appropriate place at which to deliver a speech about the economic priorities of the government should in itself be deeply worrying: the Adam Smith Institute is a neoliberal, pro-free market economic institute which has been described as being the driving force behind Thatcher’s privatisation policies and behind John Major’s privatisation of the railways. While at the time of writing I do not know what exact economic policies the coinflip coalition of chaos intends to pursue (Meta: this article was written before the release of the Queen’s Speech), the new Deputy Prime Minister choosing to visit the Adam Smith Institute does imply that this term we should look forward to concerning policies of neoliberalism, privatisation, austerity and a championing of the free market.

The first claim EruditeFellow made which I would like to examine is that “it is simply impossible to work with a party which built up a deficit of a hundred billion pounds and believes the way forward is to tax poor people and spend even more. Attempting to solve this issue by spending your way out of it is akin to trying to lift a bucket of water up by the handle whilst you yourself are standing in it. One could take us through ten more reckless rounds of damaging the economy, fortified by even greater deficits and the Opposition still would not learn.”

The Equality Budget, however, clearly shows a path out of the deficit at an extremely fast pace: while the Equality Budget does project a 100 billion pound deficit in the 2022-23 financial year, the next year the deficit would drop significantly to only 30 billion and by the financial year 2025-26 the Equality Budget projects a surplus. Now let’s compare this to what the Conservatives have achieved in government. The March 2020 budget drafted by the then Conservative-led government led to a £14.56 billion deficit in the financial year 2020-21, with this actually rising to £14.65 billion in the financial year 2024-25! Meanwhile in the same financial year the Equality Budget projects a deficit of only 7 billion pounds. Looking at this data, it is clear which party is able to manage deficits well and which isn’t: the Labour Party is able to institute an economic plan to rapidly cut a large deficit and form a government surplus whereas the last budget drafted by the Conservatives was unable to turn a scant £15 billion deficit into a surplus over 5 years!

If instead of the deficit you wish to examine the government debt, then the story still isn’t positive for the Conservatives. The debt of the Rose Government in 2026 would be £1,996.81 billion, while the projected debt under the last Tory budget in the same year would be £1,938.13. The debt under the tory budget is smaller by £59 billion, but this is not a sign of recklessness as I will explain in the next paragraph. In addition, in 2027, the Rose Government budget is projected to create a greater surplus and will lead to lower debt in the long term. I believe that it is also interesting that, given the Conservatives’ significant opposition to Rose’s deficit spending, their last budget would have ended up with nearly the exact same national debt in 2027 as the last Rose budget, which further proves that in power the Conservatives aren’t actually very skilled at eliminating deficits.

I would also like to address the concern about the size of the 100 billion pound deficit in the Equality Budget. The deficit is not big because the second Rose government chose to spend recklessly - the truth is quite the opposite. The size of the deficit is due to the government making numerous investments into the UK, such as into publicly-owned and upgraded railways, into ending the failed privatisation of broadband to deliver a better broadband system in today’s digital age, into tackling the climate crisis, into eradicating poverty and economic inequalities, and more. These policies will all pay for themselves in the long run and will strengthen the UK economy by providing a more reliable transport system, a more connected nation, a greener economy, and a more equal economy where more people can afford to purchase goods and services.

EruditeFellow also claimed that his party “managed to come out stronger than ever and keep on moving forwards”. While his comment is technically not one related to the economy, it is still one which doesn’t appear to have any bits of truth in it. At the general election last month, the Tories had their worst ever election result since the 2021 February general election, with the voters kicking the party into 4th place, behind Solidarity, the Labour Party and Coalition. In addition, the party is also under significant internal turmoil: there have been reports of party members on the right of the party being excluded from the cabinet by the party leadership, allegations of the Tory elite forming a new “Bullingdon Club”, in a recent deputy leader election, model-hjt was 1 vote away from winning and was expelled from the party only a day later, and more - the subject of this article is however not the internal conflict within the Conservatives so this article shall not analyse this issue further; plus other great press pieces have already analysed this issue attentively.

EruditeFellow also claimed “Our party’s economic record during our previous years in power has been utterly exemplary, this is a trend I would like to see continued by this coalition government” and promised that “This Government will cut taxes”. These comments I believe should be especially concerning for the workers of Britain about what lies ahead. The government has committed to cut both the deficit and taxes, which means that in order to cut the deficit, the government will be forced to cut spending and return to the austerity economics of the Cameron-Clegg coalition, which is perhaps what EruditeFellow was referring to when he talked about his “party’s economic record during our previous years”. Will this mean cuts to our NHS which will decimate its ability to care for its patients? Will this mean cuts to our schools which will decimate young people’s education? Will this mean cuts to infrastructure projects such as HS2, HS3, East-West Rail etc which are designed to boost public transportation across the UK, especially in areas where the provision of public transport is currently lacking? Will this mean cuts to our fight against the climate crisis which the Intergovernmental Panel on Climate Change recently warned is causing irreversible changes to our planet and that we have only the rest of this decade to act to prevent catastrophic changes to our climate? Whatever cuts the coinflip coalition has planned, you can rest assured the Labour Party will be steadfastly opposed to them and will instead spend the coming parliamentary term advocating for investments into our public transport infrastructure, into our education system, into tackling the climate crisis, and more instead of devastating spending cuts.

EruditeFellow also claimed that the Rose Budgets have seen a net decrease in incomes for the poor in the United Kingdom, and that the new taxation system to pay for UBI discourages people from working. This is utterly untrue. Both Rose budgets have seen a net increase in the wages of the vast majority of inhabitants of the United Kingdom. The first did so through a decrease in the bottom rate of income tax, increasing the personal allowance and the withdrawal rate of Negative Income Tax. The second budget, by shifting to a system of UBI, saw the incentive to work strengthened by ending the effective tax one paid over their NIT payments as their income from work increased, Rose increased the minimum wage to £11.40, meaning millions of Britons saw a large real increase in wages.

Someone working a minimum wage job would see their income change as follows:

Phoenix: £19 110/year

Rose I: £20 450/year

Rose II: £27 580/year

I'm sure the poor will feel rather restricted with £8000 extra to spend each year!

The final part of EruditeFellow’s speech I would like to examine is when he said “In ensuring fair competition, we will look into reforming the way business rates work, with the aim of protecting British High Streets from out of town multinationals” and “This Government believes passionately in the free market, but it believes just as passionately in free trade.”

This is a very good example of the Conservatives’ inconsistent economic message: if you believe that British High Streets are in need of protection from multinational companies, then you have very clearly recognised that free trade has negative consequences on the British High Street and thus are not a full-fledged proponent of free trade. However, in the same breath, EruditeFellow also managed to claim that he is a passionate believer in free trade despite his earlier comments implying that it is not such a great thing. Which is it, then: is EruditeFellow a believer in free trade or is he not?

I would also like to use this article to address the claim the Conservatives and Coalition have made about the Equality Budget’s basic income system that it encourages people to live off the income paid to them by the state instead of getting a job.

This claim at its heart is one of human behaviour so I think it would be appropriate to dive into some human psychology first to investigate this claim.

A group of psychologists conducted a series of psychological experiments with funding from Federatie Nederlandse Vakbeweging to investigate the effect which an unconditional income system, a conditional benefits system and no benefits has on workers.

The experiment was designed such that under the no benefits system, workers received no benefit payments from the system; under the conditional benefits system workers were paid a sum of money per month but this payment was withdrawn as soon as they got a job; and in

in the unconditional income system, they kept on receiving this payment.

The researchers found that the conditional benefits system, which is the system the UK used to allocate benefits before the advent of NIT/UBI-based systems, actually discouraged work. By taking on employment, the workers lost their benefits payment, which is a phenomenon known as the benefits trap and demotivated workers from seeking work as a future with a job but no benefits is more risky and uncertain than one with benefit payments and no job - many workers simply didn’t want to take the risk of losing their benefit payments.

With the unconditional income system, however, no effect was discovered by the researchers which suggested that workers were demotivated from work. Instead, what the researchers did find was that workers were more ambitious at finding a job they enjoy as the unconditional income payments provided financial security to workers which gave them the opportunity to find a job they would enjoy rather than settling for one which pays well but may not be enjoyable. As a result of this, workers were better matched to employers, which is beneficial to businesses and the economy.

This experiment showed that psychologically, UBI does not in any way discourage work. However, this was an experiment - is it possible that the results of the experiment do not match with what occurs in real life as the researchers were not able to account for some real life factors?

It turns out, in fact, that the results of the experiment are spot on: multiple jurisdictions have run trials of unconditional income systems, which came to the exact same conclusions as the psychological experiment.

For example, between 2019 and 2021 the city of Stockton trialled a basic income system in which $500 dollars was paid to all workers with incomes below the median income each month. Researchers found that this $500 dollar payment allowed people who worked part-time jobs or were unemployed to travel to job interviews for better paying full time jobs: initially 28% of people on the basic income trial had full time jobs but only one year later, this had risen to 40%. Meanwhile among a group which didn’t receive the basic income, this rate increased from 32% to only 37% - a 5% increase versus the 12% increase among those who received the basic income. Among those who received the basic income, the proportion paying off debt also jumped by 10% from 52% to 62%.

The data is clear: basic incomes do not encourage a culture of dependability and do not remove the incentive to work. Instead what they do is that they provide an important safety net which allows people to take time out of work to attend education, to interview for a better job, to look after children, and other reasons, none of which can be construed as people not wishing to work and wanting to live off their UBI payments.

The final claim that I would like to examine is the claim by NeatSaucer, who was the Tories’ Shadow Chancellor pre-election and is now the Financial Secretary to the Treasury in the Coinflip Coalition, claimed that the Equality Budget “underfunded councils”.

This is not true in the slightest: while it is true that the Equality Budget cut central government expenditure on local government, the Rose government also gave local councils complete autonomy over their taxation and spending, which was not granted by previous governments. If one considers that local councils received around £70 billion in revenue before, the Tory government’s Housing, Communities and Local Government expenditure was not sufficient to cover their expenditure and the other duties of the department, while the Rose Government gave sufficient autonomy to local councils to set their own rates, and allowed for Westminster to fund HCLG properly.

This article took a deep dive into recent comments by the Deputy Prime Minister and recent comments about Rose II’s economic policies made by members of the Coinflip Coalition. These comments show very clearly economic incompetency, an unability to understand budgets, and an inability to understand some basic economic facts among senior members of the Coinflip Coalition and its Treasury team. Under the Labour Party during the Phoenix and Rose governments, the nation’s economy was in competent hands yet it is clear that it won’t be under the Coinflip Coalition: why should we trust a coalition formed of people who are unable to understand how budgets work to write one?

With thanks to u/NGSpy and u/Inadorable for their contributions to this article