The Conservative party has been disastrous for the economy, and we are £100bn poorer because of it

The economic cost of the government’s austerity agenda has now been laid bare, destroying any remaining hope the Conservatives had of claiming to be the party of economic competence.

Massive budget cuts over the last eight years at exactly the time when stimulus was needed have left the country £100bn worse off than it would otherwise have been, according to analysis by the New Economics Foundation.

The astonishing bill for austerity equates to £3,600 of lost wealth this year for every UK household, specifically because of the government’s regressive policies.

That’s before you factor in the £100bn or more thought to have been wiped off economic growth by the prospect of Brexit.

Massive cuts in the name of keeping taxes low and balancing the budget have meant less investment in police, schools, hospitals and roads; less money for companies and contractors that provide services to government; less for families reliant on benefits and, it turns out, less for just about everyone else.

Actively investing public money to promote growth could have been even more beneficial than a neutral approach. With interest rates close to record lows, it would also have been incredibly cheap for the government to borrow the necessary cash.

Yet the self-styled party of business has done next to nothing. Where it has stepped in, it has done so incredibly poorly.

One of its most notable attempts to intervene in the economy – Help to Buy – has effectively handed subsidies to relatively wealthy prospective homeowners from general taxation. This is exactly the wrong form of wealth redistribution.

The scheme has mostly served to pump up already inflated house prices at a time when mortgages are cheaper than ever.

Housebuilders have seen profits soar while their shareholders have enjoyed billions in dividends. The biggest beneficiary of the government’s selective largesse has been Jeff Fairburn, the former boss of Persimmon.

Helped by a state subsidy for buyers of new-builds, Fairburn pocketed a £75m bonus for his valuable work putting up the often sub-standard identikit homes for which his firm has gained a reputation.

But more alarmingly for a government that sells itself as the friend of entrepreneurs, turbo-charging the housing market has sucked investment away from sectors that actually innovate and invest.

Content to cash in on a house price bubble, banks have had little incentive to lend to companies. A period of ultra-low interest rates might have been expected to prompt businesses to borrow money and go on a spending splurge that would ultimately help the economy.

In fact, while total mortgage lending is now more than £1.4 trillion and growing at a steady rate, lending to small and medium-sized businesses has remained pretty much flat for more than four years at around £165bn.

This means less money to invest in training, development, research and growth. It is little wonder therefore that growth in productivity – the amount of goods and services created for each hour of work – has remained pitifully low, and has now even gone into reverse.

Brexit has exacerbated the problem as firms hold off on investing, waiting in vain for some clarity from Theresa May about what lies ahead.

Meanwhile, stagnant wages combined with easy access to cheap credit have led to consumers propping up the economy with unsecured debt to fund their spending.

In his Spring Statement this month, Philip Hammond will no doubt point to rising average pay and high levels of employment as proof that his policies are working.

But, when adjusted for rising prices, average earnings are still lower than they were before the financial crisis.

Most of the jobs created have been in low-paid, low productivity sectors where it has been cheaper for firms to hire easily expendable staff than invest in technology, training or other improvements in efficiency.

To say, as successive chancellors and prime ministers have done, that the country needs to “balance the books” might sound superficially appealing but it is economically illiterate.

The government’s budget is not the same as a household budget. Withdrawing billions from the economy while implementing savage cuts to benefits and doing nothing to lift productivity has hurt economic growth every year since 2010, according to the NEF.

While the worst of the damage was done between 2010 and 2012 and putting an exact figure on the cost of austerity will always be a contentious issue, what is clear is that the effects are still being felt now.

There are two obvious interpretations of the government’s actions. The first is that it knows all this but has proceeded anyway; that it truly is the “nasty party”; that ministers simply do not care about the soaring child poverty, homelessness and use of food banks that has come with austerity.

But we must also accommodate perhaps the more likely second interpretation: that the government simply does not know what it is doing.

So wedded is the Conservative party to its low-tax, small-state, free-market prescription that it has become blind to the huge economic and social damage it is causing.

We quite naturally focus on the individual human tragedies that stem from such regressive policies. But we should also look at the broader picture that these new figures paint.

In the name of an inflexible, outdated ideology, Tory-led governments have for almost nine consecutive years made aus significantly poorer, on average, than we would have been if they had essentially done nothing.