Shadow Chancellor Mel Stride RSA speech

Today, [Thursday 5^th June 2025] Shadow Chancellor of the Exchequer Mel Stride MP delivered a keynote speech at the RSA.  

Mel Stride MP said:

“Today my party is in a difficult place.

Many have lost trust in us and many are right to be angry.

For some Conservatives our predicament has understandably led to immediate pressures for quick answers - actions promptly to restore our fortunes.

But whilst we must strain every sinew to snap back to where we want to be we should also recognise that this will take time.

That is not to say that we should not be vigorous in the present – far from it.

We must always strive to run faster in holding the government to account, expressing our conservative values and yes where the timing is right come forward with policy…just as as we have been.

But the reasons people have lost trust in us, especially on the economy, are deep-seated and cannot be swept away with quick fixes.

The public want to know that their government will act responsibly.

And they want to know it will deliver a prosperous future for our economy and for them and their family.

On much of that the Conservative Party was seen to have failed.

So today I want to be crystal clear that I recognise those frustrations. Indeed I share them.

And my Party cannot begin to win back the public's trust until we have shown we understand their disappointment and their anger.

And show that we have changed.

The clearest example of that in the minds of many is what happened in the autumn of 2022.

For a few weeks, we put at risk the very stability which Conservatives had always said must be carefully protected.

The credibility of the UK's economic framework was undermined by spending billions on subsidising energy bills, and tax cuts, with no proper plan for how this would be paid for.

As a Conservative, of course I want taxes to be as low as possible. But that must be achieved responsibly through fiscal discipline.

Back then mistakes were recognised and stability restored within weeks, with the full backing of my party.

But the damage to our credibility is not so easily undone.

That will take time. And it also requires contrition.

So let me be clear: never again will the Conservative Party undermine fiscal credibility by making promises we cannot afford.

And as Kemi says: we will always start with a credible, fully funded plan.

But that moment was also in part born of exasperation with the failure of successive governments to put us on a path back to sustained growth and rising living standards.

There is an enduring frustration with stagnation.

The fact is for a large swathe of the population our economy simply has not been working for them for some considerable time. 

Incomes have stagnated. Many feel that the system only works for the benefit of others, for large corporations, or people from other countries, but not for them and their families. 

We must accept that for too long governments of both colours have failed to free us from this malaise.

For my party to find a path back to regaining trust, we must show that we are serious about listening to people and creating a better future underpinned by a credible plan.

If we do not, then we risk the same mistakes happening again.

Because Keir Starmer and Nigel Farage are not offering the stability and responsibility that is needed, nor do they have the answers to the tough, underlying issues which have been holding our economy back.

So I also want to challenge you all today - to take the time to consider economic arguments more deeply, and to do so with everything you hear from politicians of all parties.

Our modern digital world has many advantages, but in some ways it has ushered in the death of what we might call the Age of Thoughtfulness.

By which I mean the careful consideration of arguments in order to establish the truth.

In a world of 24 hour news on the go and social media, we don't stop to think things through like we used to.

Audiences are increasingly attracted to the fleeting sparkle of the novel, or shocking or celebrity or in some cases simply the fake.

And that risks allowing attractive but shallow arguments to take hold.

Populists in particular claim there are easy answers to our problems, telling voters what they want to hear without any credible plan for how they might deliver.

Take Reform. Their economic prescription is pure populism. It doubles down on the ‘magic money tree' we thought had been banished with Jeremy Corbyn.

They would plough ahead with huge additional welfare spending, as well as tax cuts, with no plan for how to pay for any of it.

We must be radical in our prospectus, but that must be grounded in the principles of stability and responsibility.

And as Kemi has said, and she will be saying more next week, politicians more generally have not been honest about the depth of the problems we face and what is needed to address them.

And it is this that has also driven disillusionment with an economy that for many has simply failed to deliver for far too long.

What I will argue today is that we must be guided by two overarching priorities.

First, ensuring economic stability as the prerequisite for protecting the nation's finances and keeping taxes low.

Responsible public finances, with control of spending and deep reforms to our public services and our welfare system to make them work better.

And second, completely rewiring our economy and the state to jump start economic growth.

Ripping up the thicket of regulation and barriers that is holding back British enterprise and initiative – not piling on additional burdens as this government is doing.

And weaning our economy off its over-reliance on the state.

Any one of these priorities alone won't be enough to deliver the stronger economy that the British people expect.

Forget any of them and our future is put at risk.

They will work all together, or not at all.

Economic stability must come first, above everything else.

We have seen too often the terrible consequences for our economy and our society when that lesson is forgotten.

In a world of high government debt and high interest burdens, our public finances face greater risks than at any time since the Global Financial Crisis.

Financial markets around the world are growing increasingly concerned about governments' borrowing plans, and are charging higher interest rates to lend to them, especially at the longer maturities that have for so long been a source of strength and stability for the UK public finances.

In the decade after 2010, Conservative led governments rescued our public finances and our reputation from the biggest budget deficit in the G20 – the worst public finances in our post war history – a clear and present danger to our economy.

Going into the pandemic, we had completely eliminated the current budget deficit and the debt to GDP ratio had begun to fall.

It's only because of that bold action to repair the public finances that we were able to act with such speed and confidence when the COVID pandemic threatened our economy and the Russian invasion of Ukraine threatened our energy security.

The mini Budget of September 2022 undermined those stable foundations we had built, and we will never allow that to happen again.

Sadly, while the Conservatives have recommitted to fiscal responsibility and economic stability, the other parties are abandoning them.

By fiddling the figures and – alone amongst the OECD countries – changing her definition of the national debt, Rachel Reeves has presented to the world a forecast with our standard debt to GDP ratio continuing to rise over the whole period.

She has the gall to claim she has brought stability and balanced the books, when the OBR themselves have said she would be breaking the fiscal rules which were followed by her predecessor.

By borrowing hundreds of billions more than the plans she inherited, and pushing up the rates we pay on that borrowing, Rachel Reeves has added nearly £80bn to our expected debt interest bill over the course of this parliament.

At the Spending Review next week we can expect her to trumpet all of the additional projects and programmes she is funding – without mentioning the fact it is all being paid for from borrowing.

And that is before we consider the impacts of other recent moves.

Take welfare as just one example.

The Labour Party are u-turning on their own welfare savings without any way to plug the hole that leaves in our public finances.

Meanwhile, Reform are pledging to abolish the two child cap in our welfare system that saves billions in welfare payments every year.

Of all the other OECD countries, only France, Belgium and the US have a similar projection for rising debt, and the UK doesn't have the leeway currently given to the US with the dollar as the world's reserve currency.

That's just too big a risk to take with our economy.

No wonder the OECD warned this week that the Chancellor has left far too little headroom against her fiscal rules, and the IMF warned against any loosening of fiscal policy.

Reform would go even further, pledging tens of billions in unfunded tax cuts and spending commitments. They're not even trying to make their sums add up, while hoping that frustrated voters won't notice.

Both are peddling a prospectus which will only leave us with higher debts and undermine confidence in our ability to repay them.

They are both a clear and present threat to our economy.

Only Kemi Badenoch and the Conservatives have spoken up for taxpayers and the public finances, defending the two-child cap and pushing Labour to be bolder on welfare reform.

We must demonstrate that we will be responsible.

But we must also show we are not still committed to the same old approaches which left our economy languishing in the economic slow lane.

That means building a plan for a radical rewiring of our economy.

Now, re-wirings have been achieved before. On at least 2 occasions since 1945. The first was the post war Attlee government. The second the Thatcher reforms of the 80s.

The Thatcher revolution is instructive for today's challenges.

The 1970s saw stagflation, rising unemployment, recessions and the Winter of Discontent.

In response the 1980s saw a free market revolution driven by privatisation – deregulation – lower and reformed taxes – a fostering of the entrepreneurial spirit and a smaller state.

Crucially, as the economic model shifted, far more people were able to feel that the new order was benefiting them directly. An era often referred to as ‘popular capitalism' was born, and in the decades that followed we gradually caught up with our European peers.

Then crisis hit.

The Global Financial Crisis of 2008 is an inflection point representing the pivot between higher and lower productivity growth and so the start of a sustained downwards path to economic weakness.

Before 2008 trend growth in GDP per capita was around 2 percent.

According to the Institute for Fiscal Studies, if that had continued today we would have been producing around £47,000 of output per person.

Instead, its reached just £37,000. A full £10,000 per head lower than where the pre 2008 trend would have taken us.

And what does all this mean for people's lives?

Well, in real terms the average British worker is no better off now than they were in 2008. Average living standards in our country are around those of the poorest US state, Mississippi.

Some estimates suggest that average incomes in Poland will exceed those in the UK by 2035.

Since the music stopped in 2008 we have become relatively poorer.

And Governments, including Conservative governments, have not broken that cycle.

And our failure to address productivity and growth means that we carry greater risks as a country and a lower likelihood of meeting a variety of critical challenges.

In a world which is increasingly less secure and in which the support of the US cannot be taken for granted, we will need higher defence spending.

Domestically, we have an ageing population, increasing pressure on health, social care and pensions.

There is the challenge of intergenerational fairness with younger age groups doubting they will ever be as well off as their parents.

Amongst many young people there is a profound sense of dislocation from what our country has to offer.

And certainly when it comes to the Conservative Party, young voters have simply stopped listening to us.

The average age of a Conservative voter at the last election was 63.

Addressing these challenges will need new approaches in a number of policy areas but nothing will be resolved without a higher growth economy.

We can no longer afford the ‘managerial incrementalism' of the past. We now need to be truly radical.

But we also need to be honest about there being no quick fixes. Honest about the fact that the challenges that are holding us back are very significant.

Take energy, for example.

Overall UK electricity supply has declined since the mid-2000s, and prices have risen.

We have halved the electricity we generate through nuclear power – surely one of the greatest strategic errors our governments have made over recent generations.

The UK now has the highest industrial electricity prices of any member of the International Energy Agency – 50 percent higher than France or Germany, and an astonishing four times higher than the US or Canada.

This is not just a problem for heavy industry. It also affects our ability to build the large, energy-hungry data centres essential for modern artificial intelligence.

So we must develop a plan that can move us to having amongst the most secure and competitive energy in the world.

Or take our housing and planning system.

As noted in the excellent Foundations paper last year by Bowman, Hughes and Southwood, France has a similar population to the UK but seven million more homes.

Not only is our consistent failure to build the homes we need leading to sky-high prices and rents – it is also restraining productive cities like Cambridge.

And while we typically focus on whether governments are hitting their housing targets, we rarely scrutinise whether those targets are adequate.

The 300,000 per year target, so embedded in our housing discourse, was based on analysis which assumed a net migration level of 170,000 per year– whereas recently that figure has been nudging towards a million. So the story on housing is as much about bringing down net migration as it is about increasing supply – and we must do both.

And it is not just housing but infrastructure, with projects often running behind schedule and over budget.

To simply get from the point of proposal to the start of construction, Hinkley Point C took ten years.

The travails of HS2 are perhaps the most well documented recent example of a major project oscillating between the exorbitant and the completely impossible – including the infamous bat tunnel at a cost £120 million.

Perhaps it would have been better to have booked the bats into Claridges and tucked them up in their little ‘bat beds' with their ‘bat butlers' to look after them and to have saved over a hundred million quid in the process? Well you get the idea!

And whilst we were ‘going batty' the Chinese built a superfast railway link between Beijing and Shanghai in just 3 years.

So our plan must rewire planning including infrastructure.

On regulation more broadly, we have seen mission creep by regulators and an explosion of red tape. Take financial services.

The ratio of regulators to financial services workers increased from 1:11,000 in 1980 to 1:300 in 2011 to 1:75 today.

And for all Labour's rhetoric they are piling on more regulations and red tape, including through their Employment Rights Bill.

So our plan must show that there are better trade offs to be had around regulation, risk and return.

And then there is the tax burden which continues to rise, moving much higher than the US and other dynamic economies like Singapore.

A lower tax economy can mean better returns on investment, better work incentives, and can lower the long-term cost of capital.

We need to look at every one of our taxes and reliefs and ask whether they could be doing more to lean into growth.

And we need to reform our financial services and pensions and savings space so that people secure a decent income on retirement and investment is more available for scale ups and for infrastructure.

So we are setting up policy commissions on both ‘Taxation' and on ‘Finance and the City' which will look in great depth at precisely these issues.

Now having served as Secretary of State for Work and Pensions I have seen up close our broken and hugely costly welfare system.

One in 10 working age people now claim a health-related benefit.

Total expenditure on benefits for people with health conditions and disabilities is forecast to be 60 percent higher in real terms by the end of the decade than it was before the pandemic – an increase of £40 billion.

Reform is hard but the prize can be huge. Just one single reform alone during my time at DWP, that of the Work Capability Assessment, saw the OBR reduce their estimate of welfare spending across the forecast by £5 billion. So we will work on further fair and principled reforms to control welfare spending.

And we have a bloated state.

The civil service has grown by a third since 2016.

So we will generate a plan to slash bureaucracy. Our version may not see me brandishing a chainsaw but our ambition will be vast.

And productivity in the public sector in particular is far too low. In the case of the Health Service it has gone backwards since the pandemic. 

So we will do the hard thinking around the reform of public services. Challenging the lazy assumption that getting more out requires putting ever more cash in.

So what approach should we take to finding answers?

In short, taking our time to set out a clear analysis of the challenges and why existing approaches are failing.

To understand the questions that matter. To listen hard.

To find the answers that work in line with our Conservative principles, much as for example the party was able to achieve in the 1970s with the Stepping Stones work of John Hoskyns and others.

And to reach out in this endeavour to the best of our thinkers, businesses, workers, academics, think tanks, charities and many others.

But let me finally say something else that matters. That no matter what the challenges we should always recognise that we are a great country with huge underlying strengths

In advanced manufacturing, innovation and technology, some of the best universities, our world-class services sector, the City of London, the English language, the rule of law and much else.

And to those who say we are simply destined ever for the slow lane. That our time has been and gone. That the future lies elsewhere.

To them I say there is a better future. And it is worth fighting for.

That this is the country of Shakespeare, Nelson, Newton, Turing, Wolf, Nightingale, Austen, Lennon, Crick, punk rock, the jet engine, the internet, graphene and the splitting of the atom. That we will always have within ourselves what it takes to succeed. To build a country that is alive and whole.

That is what sustains me as a Conservative.

And when other parties are descending into a race to the bottom on economic credibility and responsibility, the Conservative Party is needed now perhaps more than ever.

But to win that fight we will need thoughtfulness. We will need to take our time if we are to forge a credible plan that delivers for the people of our country.

Over the next 4 years my party will do just that.”