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“Under Labour we are living beyond our means,”

says the Tory Shadow Chancellor — as if 2010-24 never happened.

Mel Stride wants you to believe Labour is crashing the British economy.

He paints a picture of ballooning debt, soaring borrowing costs, and “vicious cycles” — all supposedly caused by Rachel Reeves’ refusal to swallow Tory austerity doctrine.

He’s called the UK’s debt “a third government department,” condemned debt servicing costs of over £100 billion a year, and warned of an “investor crisis” unless Labour clamps down.

But let’s be clear: this narrative is economic fiction and political gaslighting.

In reality, the debt burden we face today is not some sudden Labour indulgence.

It’s the legacy of 14 years of Conservative economic mismanagement, compounded by ideological austerity, pandemic bungling, and a spectacular crash-out from the EU.

The Conservative Party built the debt mountain — and now they’re blaming Labour for being buried under it.

Where are we really?

Let’s start with the facts.

• Public sector net debt is now 96.3 per cent of GDP — barely changed from when Labour took office in July 2024.

• But in June 2025, debt interest payments hit £16.4 billion — £8.4 billion higher than a year earlier. That is due to higher interest rates, not worse debt.

• The Office for Budget Responsibility projects annual debt servicing costs of £111.2 billion this year — more than the entire education budget.

• Bond yields remain elevated at 4.5 per cent, with the UK facing the third-highest borrowing costs in the developed world.

So Stride’s not lying when he says the numbers are bad.

But what he’s not telling you is why.

Who really ran up the debt?

In 2010, when the Conservatives took power, the UK’s public debt stood at around 64 per cent of GDP. After 14 years of Tory rule — and five Conservative Chancellors — that figure at at more than 97 per cent.

That’s not Labour’s doing. That’s a Conservative record.

Some of it is due to the hangover from the Global Financial Crash. Some of it is due to George Osborne’s austerity.

Much of the debt increase happened under Rishi Sunak and Boris Johnson.

During COVID, the government borrowed more than £400 billion, much of it squandered on dodgy contracts, fraud-ridden schemes like PPE procurement, and loans that were never recovered.

The pandemic required spending — but gross mismanagement made the debt far worse than it needed to be.

Oh, and Liz Truss’s bond market disaster torched the UK’s fiscal credibility overnight.

The Office for Budget Responsibility (OBR) confirmed that the Tories added more debt in 14 years than every Labour government in history combined.

So when Mel Stride accuses Labour of building a “debt mountain,” he’s standing on the summit of the debt mountain his own party built.

Put another way: Stride helped set the house on fire – now he’s blaming Labour for the smoke.

What is Labour actually doing?

Contrary to Stride’s alarmism, Labour has not unleashed a spending spree. In fact, Rachel Reeves has adopted strict fiscal conservatism, committing to:

• Reducing debt as a share of GDP over five years

• Fully funding any new spending plans with tax revenue

• Sticking to Tory spending limits

Far from pushing the economy into crisis, Reeves’ approach is timid to the point of being economically constraining — a continuation of austerity in all but name.

So when Mel Stride talks about Labour spending “half a trillion pounds more” than the Tories planned, what he’s really saying is: Labour won’t continue the deep Tory cuts to public services, investment, and welfare.

Put another way: he’s angry Labour won’t follow through with more austerity.

Let’s talk economic theory

Stride’s speech is drenched in 1980s debt orthodoxy. But we’re not in the 1980s — and that thinking is why Britain is in crisis now.

Modern Monetary Theory (MMT)

• MMT says a country like the UK, which issues its own currency, can never run out of money.

• Debt is not inherently dangerous — inflation is the real constraint.

• Government can spend first, then tax or borrow later — the opposite of household economics.

• Interest payments? A policy choice. The Bank of England could return bond interest to the Treasury.

So when Stride says we’re “spending £130 billion just to service debt,” MMT asks:

Why is the government paying bondholders instead of spending directly into the economy?

Keynesianism

• Keynesians agree debt isn’t the issue — they say growth is.

• You reduce the debt burden by expanding the economy’s productive capacity.

• If you invest smartly — in housing, the NHS, green jobs — you boost GDP and reduce debt-to-GDP organically.

Neoliberalism and Fiscal Rules

Stride’s own rules — which Labour initially mimicked — say that debt must always fall, regardless of economic conditions.

But even the OBR warns this approach is unrealistic:

• An ageing population, climate change, and global shocks mean future borrowing will be necessary.

• A July 2025 Fiscal Risks Report projects debt could hit 270 per cent of GDP by 2070 under current policies.

So the “fiscal responsibility” Stride talks about is a fantasy.

The real danger: underinvestment

Stride says Labour plans to spend £500 billion more than the Tories would have.

Good.

Tory plans involved:

• Cuts to local councils (most of which are now functionally bankrupt)

• A crumbling NHS

• Starved infrastructure

• And energy profiteers running riot while households went cold

If Labour’s not borrowing to fix that, they’re not governing — they’re managing decline.

Global context: are we really an outlier?

Stride claims investors are losing faith in Britain. That’s not the full story.

• The UK is paying more to borrow than France, Germany, Japan — even Italy and Greece.

• But that’s the Liz Truss premium — markets still remember her kamikaze budget.

• The Bank of England has hiked and cut rates cautiously, fearing persistent inflation — pushing up servicing costs.

But it’s not Labour spooking the markets.

It’s 14 years of Tory chaos — Brexit, instability, and bad macro policy.

Could public ownership help?

The UK spends tens of billions a year subsidising privatised monopolies in energy, rail, water, and housing.

A strategic return to public control would mean:

• Profits reinvested, not extracted

• Reduced price volatility

• Long-term cost savings to the Treasury

Even centrist economists now recognise that privatisation has become a taxpayer cash cow for corporate shareholders.

Want to cut the deficit without hitting the public?

Reclaim public wealth.

The political stakes

Stride isn’t just warning about debt.

He’s laying the groundwork to:

• Attack Labour as economically incompetent

• Justify future austerity and spending cuts

• Scare the public into rejecting transformative policies

But here’s the trap:

If Labour accepts this framing, it locks the country into managed decline.

You can’t build 1.5 million homes, rebuild the NHS, decarbonise the economy, and tackle inequality on Tory terms.

It’s time to break the frame.

Don’t blame the clean-up crew for inheriting the wreckage

Mel Stride says we’re drowning in debt.
The truth is: we’re drowning in a narrative.

The Tories wrecked the economy. Labour inherited the wreckage.
B
ut Stride wants to blame the clean-up crew for the crash.

And if Rachel Reeves doesn’t reject this logic, she won’t save the country — she’ll slowly manage its collapse.

Debt is not the problem. Austerity is.

Fiscal rules are not solutions. They’re straightjackets.

We don’t need to fear what happens if we invest. We need to fear what happens if we don’t.

This is the moment to change course — or the UK will spend another decade sinking while the elites tell us it’s “fiscal responsibility.”

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