A minister was fact-checked by a leading economist on BBC Question Time last night after he tried to take responsibility for the recent fall in inflation.
The award-winning Joseph Stiglitz needed just four words to take apart Bim Afolami, the economic secretary to the Treasury: “You didn’t do it.”
The key moment arose when the minister began blaming the UK’s financial woes on the combined effect of the Covid pandemic and Russia’s invasion of Ukraine.
He said: “I think that made things very very challenging. Inflation went up globally.
“Now, we’ve worked very hard, in partnership with the Bank of England – it’s not all down to the central banks, but they have a key role to play – interest rates did go up and have gone up.”
“Affecting the cost of living,” Stiglitz interjected.
“Of course,” Afolami continued: “We’ve brought inflation down from 11.1% to 3.4, 3.2%.”
The economist cut in again: “You didn’t do it, the market did it.”
The audience broke out into a round of applause at that.
Afolami tried to speak over the clapping, saying: “No, no, no. What I started by saying was that we worked in partnership with the Bank of England, it’s not entirely one actor.”
The government does set the target rate for inflation (currently 2%).
However, it’s up to the independent Bank of England to use the interest rate – which decides the cost of borrowing money – to influence how people spend and therefore control inflation.
When inflation was at a 40-year high in October 2022, triggering the cost of living crisis, the government blamed external factors.
The Bank of England then forecast that its actions would mean the rate would fall by the end of 2023 – and Rishi Sunak pledged he would halve inflation by the end of the year.
Inflation did indeed halve before 2023 was out, but it’s not due to the government.
Afolami also tried to explain to Stiglitz, winner of the Nobel memorial prize in Economic Sciences, about how difficult it is to keep inflation down.
The minister said: “One of the things that makes it harder for inflation to stay down over time is if you increase your debt burden and we have a plan to make sure that if debt will be falling by the end of the fire-year forecast period.”
“It will be rising up at that point,” Question Time host Fiona Bruce pointed out.
Afolami said he was talking about the end of the five-year period it will be decreasing.
He added that the Tories have cut National Insurance contributions by a third so “ordinary people can take home more of their own money”.
He did not mention that fiscal drag – when tax thresholds do not rise in line with inflation and rising wages – actually negates any benefits the National Insurance cut offered.
Bruce said: “As you know, the tax burden is the highest it has been in 70 years but I’m sure you are familiar with that.”