Iain Duncan Smith says UK needs to focus on 'growth'

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Sir Iain accused the current Chancellor of the Exchequer of dealing with the issues “right in front” of him while neglecting the longer-term problems facing the nation. He said the focus of the Government must be on “alleviating the problems of inflation” but only doing so in a manner that leads to economic growth, to combat the cost-of-living crisis. 

Speaking to Andrew Marr on LBC, Sir Iain said: “The biggest threat that faces us, and most economies now recognise this, is this 1970s stagflation problem that we hit before. And we must not make the mistakes we made then.

“The mistake that’s been made is that you will deal with the stuff you see right in front of you and not understand that it’s a direction of travel that you’re seeing, not an endpoint in itself.

“The direction of travel right now is heading towards high levels of inflation and absolute zero growth.

“The only way out of that is, at the moment, to focus on growth. All that we do must be focussed on alleviating the problems of inflation but leading us to growth.”

In a message of hope, the former party leader added: “If we keep growth going, we’ll get through this out the other end, and then we can start dealing with those areas which we need to do, which is getting back control of quite a lot of the areas of fiscal rectitude.”

“Stagflation” refers to a scenario where slow economic growth and high unemployment rates coincide with rising inflation.

While the pandemic has had a devastating effect on employment levels and economic growth, inflation rates have been exaggerated further by the impact on energy provisions caused by the war in Ukraine.

Sunak laid out a mini-budget last week to address the growing cost-of-living crisis, but Sir Iain is among many calling for renewed measures.

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Defending himself in front of the Treasury Committee last week, Sunak rejected claims that he was a tax-cutting Chancellor.

He was also criticised by Committee chairman Mel Stride for doing ‘very little’ to help the increased costs faced by those who were unemployed or on benefits.

In response, Sunak said: “What I’m trying to balance between is what is a responsible amount of borrowing … and within that constraint how best to target the support.

“One may say if they don’t like my choices they would be happy to borrow a lot more, that’s just not something I think is responsible or sensible.”

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The Chancellor added: “I think it has the risk of stoking inflationary pressure and I don’t think it’s the right long-term thing to do for the country.

“I think we need to be responsible with borrowing, I think we need to be getting debt down and borrowing under control.

“Then there’s a choice about where to target that support. I appreciate that people might have wanted to do more on welfare, less to cut tax to people in work.”  

But he said that had he raised benefits by the current rate of inflation, the Government would have had to borrow an additional £25billion in the period up to 2026-27.

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