JEREMY HUNT’S latest Budget continued themes of all his previous fiscal interventions. He takes from the poor to give to the rich and takes from working people to give to big business. But austerity has been imposed for so long that it has brought the economy to a virtual standstill, and the impact on living standards will get worse.

This then is the key domestic challenge for an incoming Labour government. Unfortunately, all the signs are that the current Labour leadership is completely wedded to austerity. Forcing sick people to work is not a recipe for higher living standards.

To leave no doubt, the shadow chief secretary even took to the airwaves to proclaim the party’s full adoption of the austerity policy. If the party persists with this line in office, it will have disastrous political and economic consequences.

One of the most striking features of the latest Budget was how unremarkable it was. The main flagship policy of cutting 2p off the rate of National Insurance had been leaked in advance, depriving it of any surprise value. But it is also an insubstantial policy for a party that is now up to 27 percentage points behind in the opinion polls.

It is a Tory “core vote” strategy. So there is even more reason for Labour not to mimic it.

As many commentators have pointed out, the cut to NI is not a progressive measure as the main beneficiaries are those earning £50,000 a year or more. The other main cut was a reduction in the rate of capital gains tax, which naturally only benefits the asset-rich.

This is quite in line with Hunt’s own previous Budgets and Autumn Statements. Last year, billions of pounds of planned cuts in public services were put in place to fund these pre-election bribes, as well as completely pointless and wasteful tax giveaways to businesses for investment. The Office for Budget Responsibility (OBR) says this £11 billion handout has had no impact on business investment at all. It is therefore simply a costly handout.

It is also fully in line with all the economic policies imposed on ordinary people since 2010 when austerity began. Because austerity is not simply cuts. It is a transfer of incomes and wealth from poor to rich and from workers to businesses. This is what Hunt has done in his Budgets and Autumn Statements since coming to office. It is these cuts to public spending which are paying for the Tory handouts to those who need it least.

But it is not simply the case that the austerity policy is lacking in any decency or morality. It is also the same economic policy which has brought us to an economic crisis. Average living standards will not recover their 2008 levels until 2028, based on the OBR’s own projections.

It is the austerity policy itself which has led directly to economic stagnation, lower living standards and declining public services. It goes hand in hand with widening inequality and increased profiteering.

The question is posed, why would anyone assume that the outcome would be any different this time? Fourteen years of austerity, with varying levels of intensity, have all led to highly damaging outcomes for the bulk of the population. There is no reason to assume that this time will be any different.

On the contrary, the weakened state of personal and public-sector finances means that the impact of austerity is likely to be felt even more keenly than previously. Financial reserves to soften the blow have been used up.

Yet one of the most significant aspects of the Budget is how much the Labour leadership agreed with it. This is despite how regressive it is. This reached a point of embarrassment in the immediate aftermath of Hunt’s Budget. A variety of Labour speakers on TV and radio were challenged about what their substantial differences were with the Tory economic policy. Apart from obfuscation and silence, the real answer was that there are no differences.

This was put most starkly by Darren Jones, Labour’s shadow secretary to the Treasury. He told breakfast TV viewers that Labour now had to support austerity because the Tories, “have spent all the money and maxed out the country’s credit card.”

This is economically illiterate. Governments can borrow for investment in the economy. Investment, by definition, has an economic return. The key to economic success is ensuring the optimisation of investment whose returns are greater than the cost of borrowing. Currently, it is possible for the British government to borrow for 30 years at a rate not much more than 1 per cent above inflation.

That is an incredibly undemanding yardstick for economic and financial success. Even Hunt accepts investment in IT in the NHS will yield savings hugely greater than that. But the Tories have an ideological commitment to opposing public-sector investment. They believe that, if highly profitable investments are to be made, they should be reserved for the private sector.

It now seems as if Labour shares this ideology. Labour leaders also argued that they could not make any tax changes that the Tories were not making. This meant offering cover to the Tory cut to National Insurance, and pretending that the beneficiaries were “ordinary working people.”

As many independent commentators point out, tax changes over the last two years mean that the millions of low-paid people on £19,000 a year or less are actually worse off. Yet Labour’s leadership can find no reason to disagree with these plans, let alone pledge to alter them.

There are even worse consequences to come with this slavish devotion to failed Tory economic ideas. Once Labour has adopted both overall Tory borrowing plans and ruled out any variation of Tory tax policies, there is an unavoidable imperative that means the party must also follow Tory spending plans. This means implementing further deep cuts in public spending.

The OBR assessment is that public spending as a proportion of GDP will fall by 2 per cent of GDP from now and over the lifetime of the next parliament.

This does not sound like a great deal. But public services are already under-resourced. We have an ageing and growing population. Public services spending ought to be rising even to stand still, let alone to meet the improvement that is necessary.

Deep planned cuts in public spending are storing up a world of trouble, both economically and politically for the next Labour government. Working people and the poor will suffer. Do not be surprised if they fight back.

Diane Abbott is the MP for Hackney North and Stoke Newington.