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By johnredwood on January 22, 2026

No surprise that the inflation rate is up to 3.4%, 70% above target and above the rate Labour inherited in July 2024. No surprise the unemployment rate is up to 5.1%, 23% above the rate they inherited in 2024. This site has set out consistently how their two large tax rising budgets coupled to their wasteful and excessive spending was bound both to produce inflation and to slash jobs in an increasingly overtaxed private sector. Indeed, they made sure of that by making one of the biggest tax rises an actual tax on jobs through National Insurance.

The Official opposition and this site have pointed out the large climb in the number of people on benefits and said the benefit bill is out of control, along with good ideas on how to control it. Putting many more people on benefits for life with no work requirement, and cutting job opportunities so more are unemployed is a big part of the disaster of the public finances.

The latest figures also reveal another reasons why they have run out of money and are squeezing the private sector too hard. On the latest numbers public sector pay is up 7.9% compared to private sector pay up 3.6%. The Public sector pay growth rate is 120% more than the private sector pay growth rate. No wonder the cost of public services has gone up so much, and no wonder why the government needed to tax the losing private sector more in order to reward the public sector more.

I am all in favour of better paid public sector employees, but have always stressed this needs to come from measures to raise productivity and improve the quantity and quality of service they produce. This may need better training and investment to back them, but is fundamental to having an affordable public sector that is well paid. Instead we have seen larger increases in public sector pay than private, whilst the public sector has still not overall got back up to 2019 levels of productivity, let alone achieved another 7-14% productivity gain for the missing years. Meanwhile the private sector has boosted its productivity but been unable to afford better rises. More of this delivers low or no growth, means business flees to other countries and leaves the growing public sector imposing unacceptable strains on tax demands.