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UK heading for 'stagflation' following inflation increase, Tory minister claims
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May 21, 2025
Shadow Education Minister Neil O’Brien has said that the UK is heading for a period of “stagflation” following the greater than expected rise in inflation announced today. He told GB News: “The Government can say it's disappointing, but it's the Government's fault. They've inherited a situation where it was low and falling and on target, and got to one where there is this surprising increase in inflation. “The alarming thing is it's against the backdrop where the economy is stagnating, unemployment is going up, but we're heading into a kind of stagflation, where the cost of living is going up, but the economy is going down.”FULL STORY HERE.
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0:00
From page The Daily Telegraph today, Angela Rayner has been pushing the Chancellor, Rachel Reeves
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to increase taxes on savers and high earners. Well, it's a leaked memo that's been seen by The Telegraph, and the Deputy Prime Minister urges in it
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Rachel Reeves to reinstate the pension's lifetime allowance, increase taxes on dividends
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and freeze income tax thresholds ahead of the spring statement. And just to reiterate that other economic news this morning
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Inflation has soared 3.5%. That's up from 2.6% last month. And it's believed to have been caused by a rise in household bills
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The Chancellor, Rachel Reeves, has been speaking in the past few moments. The numbers today are clearly disappointing
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We want to see inflation coming down after the cost of living challenges
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that people have been through this last few years. Clearly, we're in a different place to where we were under the previous government where inflation got into double digits
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But we recognise the cost of living is still a challenge, which is why we increased the national living wage, giving a pay rise to three million people in April
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It's why we're rolling out free breakfast clubs at primary schools to help families with the cost of living
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And it's why we froze fuel duty in the budget last year
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Well, let's cross live to Westminster now and speak to the Shadow Education Minister
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Neil O'Brien. Good to see you this morning, Mr O'Brien. And can I get your reaction to
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those inflation figures out this morning, up to 3.5% from 2.6%? Well, the Chancellor admits that it's disappointing, but she has only herself to blame
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She inherited a situation in which inflation was bang on target and her tax increases and
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her record borrowing are leading inflationary pressures to make your cost of living higher
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And everything the government is doing, be it Ed Miliband's green schemes, be it the government
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signing up to the EU ETS through this EU surrender deal, is pushing up your cost of living. So the
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government can say it's disappointing, but it's the government's fault. I mean, they've inherited a situation where it was low and falling and on target and got to one where this is a surprising
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increasing inflation. It is against the backdrop where the economy is stagnating unemployment is going up and we are heading into a kind of stagflation where the cost of living is going up but the economy is going down I don know if you managed to see the front page of the Daily Telegraph this morning
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but it is that leaked memo from Angela Rayner to Rachel Reeves
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Her secret plan to tax savers going after those that pay the additional rate of income
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tax also targeting pensions and shares rather than cutting services. What do you make of what you've seen
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Well, I think it's very, very alarming. I mean, the chancellor has already increased
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taxes to a record high, a record share of the economy. And unbelievably, for a Labour
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government, a notionally social democratic government, they have done that by increasing
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taxes in a way that is targeted on low-income workers, those who are grafting, working hard
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for a living, not earning that much. They are taking the biggest hit from the chancellor's
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tax increases. And now their only plan, with this huge hole opening up in the final, the
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and everyone expecting there to be a big problem for the Chancellor this autumn
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they are now casting about for even more tax increases, which the UK economy needs that like a hole in the head
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I mean, we're already seeing the economy stagnating because of the tax increases that Rachel Reeves has pushed through already
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The answer is not even more tax increases. The time is now to start looking at some of the government's crazy way for spending
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which we should start by looking at this unbelievable Chagos surrender deal
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where we are handing over money to another country to have our own territory taken off of us
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I mean, absolutely incredible abuse of taxpayers. We should be looking at things like that
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before we start increasing taxes even more. So what would you do with the Chagos Islands
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We wouldn't be giving them away and we wouldn't be paying huge amounts of money to Mauritius
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for the privilege of giving away our own territory. But the negotiation started on the Tories
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For us in this deal. No, no, no. This is entirely a Labour deal
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We always talk to all these other countries, but we would never ever, ever in a million years have signed up to this
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You would never ever have got this through a Conservative majority parliament. And we are totally, totally against this deal
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So if they say, oh, you would have done this. No, we would have never done this in a million years. No one other than these guys would have signed up to this
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It's only Keir Starmer would pay another country to take our own territory off of us
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Only he could be so ridiculous. And it's the same in the other deals that he's done
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I mean with the India deal you now have a tax break for Indian workers increasing immigration to this country With the EU deal you have by connecting to their EU ETS which is a form of tax you already see energy costs going up in this country as a result of those deals
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And whenever the guy goes into any kind of overseas negotiation, it's always about his image and him having a deal
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no matter what the cost to people in this country is. And you can see that with what's happening to the economy
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and now what's happening to inflation as well. Neil, you talk about costs there, and I mean
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Most of us wouldn't care less about the Czechos Islands if there was no consequence to spending and handing over that money
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But you look at policies. For instance, I want to talk about education
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The Labour government, they promised more teachers. They promised more teachers pay
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We all think very good things. Why is that not working out? What's the problem
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Well, the problem is the tax increases again. So Labour promised that they would fully fund the increase in the national insurance tax on state schools, but they broke that promise
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And some schools have been left up to 35 percent short. And then they promised to fund the teachers pay deal and they broke that promise, too
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And that is why across the country right now, schools are unbelievably making good teachers redundant
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And according to the Institute for Fiscal Studies, they have created with these measures an 800 million pound gap
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and that translates into about 13,000 teachers losing their jobs unless something is done
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Now, under the last government, we increased the number of teachers in England by 27,000
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And now, in this week and next, schools across the country, and some of them are going public about this
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are sacking good teachers because of the hole that's been created by Labour breaking their promises
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particularly by breaking their promise that they would fully fund the tax increase on state schools
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and they haven't done it. They said they would do it, and they have not done it, and now good teachers are getting the sack
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Is there extra pressure coming on state schools because of the VAT imposition on private schools, for instance
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Well, it's happening in a very particular way. In some areas, you see more competition for the best schools
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and so more people are not getting the choice of school that they wanted. But there's a particular problem about special needs
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because a lot of parents who have children with special needs don't go away and get what used to be called a statement which is now
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called an ECHP because they are happy that in the independent sector
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their children can get the help that they need But when they are forced to move into the state sector they will go and get an ECHP they will go and get that additional resources for children with special needs And the system is already heavily loaded by an explosive growth in the numbers of children with special needs
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And so that will cause real pressure for councils in areas where significant numbers of children
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move. And we're now seeing three or four times as many children moving from the independent sector
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to the state sector as the government predicted. It's very early days, very early days in this
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process, but the numbers are coming in a lot higher than the government expected and that could become a real problem. What could be a real problem
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for you is this damning new poll out this week, this YouGov poll, I am sure
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you have seen it. Reform on 29%, Labour second at 22%, Lib Dems in at third
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you in at fourth at 16%. You have not polled this badly since just before you
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ditched your leader Theresa May. So does Kemi Badenok need to be replaced
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I mean, even the Prime Minister said on Monday that it's reform who are his main rivals for power now
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The Conservatives are no longer the main opposition. Well, he would say that he's trying to stir the pot
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Obviously, there are 121 of us. There's a handful of reform MPs
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We've obviously got to raise our game. We've got to do better. But the truth is that Starmer's government is running this country into the ground
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You've got 30% more people coming across the channel after his promise to smash the gangs
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actually the gangs are smashing him. You have the economy slumping, Rachel Reeves casting
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around for even more tax increases. You have the junior doctors once again threatening to
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go on strike and you have across the country schools sacking good teachers, something that
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people who voted Labour would have been stunned to discover was going to happen less than a
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year after they came into government because of their tax increases. So I think that over time
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the damage that the Islamic government is doing will become more and more apparent and more and
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people will clock this as a problem and realistically the alternative is going to be us rather than
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some other party and we are much larger. I have been through this situation before, you always
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hear these moments, I mean indeed at one point Keir Starmer was said to be on his way out and
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then he's ended up being Prime Minister. So yes, someone of course has to do better but we've got
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to get across the message that the Starmer government is a disaster and only realistically
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we can provide an alternative to that disastrous government and end the mass immigration, end the economic stagnation, and end the problems in our public services
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Shadow Education Minister Nido Brandt, thanks for your time
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