Sir Keir Starmer’s speech on Thursday reflects a Labour party that remains hesitant in action largely because it is divided in mind. With an election perhaps two years away, the party does not want to create hostages to fortune. But Labour’s leader also seems caught between scaring some voters and inspiring others with a transformative programme. Sir Keir wants to appear neither rash nor radical. But without clear conviction as to its own purpose, his party lacks the dynamic that only conviction can provide.
For Michael Jacobs, a former adviser to the last Labour prime minister, Gordon Brown, Sir Keir’s leftwing agenda is hiding in plain sight and is far bolder than his critics suggest. It is true that in some areas, particularly on the issue of workplace rights, Labour’s policies are descended from the manifestos of 2017 and 2019.
In his speech, the remain-voting Sir Keir dressed up in Brexit colours. Britain, he rightly said, is the most centralised country in the western world. The government’s devolution deals give the illusion of local autonomy while tightening Whitehall’s grip on regional policy. Sir Keir suggests plotting a new path for taking back control, recognising that Brexit was as much a revolt against Westminster as against Brussels. Such a dispersion of power would be welcomed.
However, Labour has so far offered no decisive break with the current philosophy of Rishi Sunak’s government. While Sir Keir would not say if he would match Tory spending limits by the time of the next election, his line that Labour will not open the “big government chequebook” suggests a worrying acceptance that deep spending reductions are to come. Already, trade unions are seeking an assurance that Labour would not return to austerity.
Such a move would be bad for Britain. The catastrophe the country faces is not waiting down the road, nor has it disappeared into the past. Rather, it is being lived through by millions of hard-pressed voters who cannot see their GP, or catch a train, or get the police to investigate a crime. Sir Keir’s answer is to claim that he will deliver economic growth and use the proceeds to reshape the public realm, in partnership with business.
This is a mistake, signalling an incrementalist approach rather than a metamorphic one. Since Keynesian thinking was displaced in the 1970s, firms have been allowed to protect profit margins by depressing the rewards to labour. This has been encouraged through lax monetary policy, a lack of regulatory oversight and fiscal austerity. Post-Covid workers, fed up with poor pay, dropped out. A cost of living crisis has precipitated industrial unrest on a scale not seen for decades.
As social conditions worsen, the threat to democracy has become palpable. Whoever wins the next election is almost certain to have to spend more to keep the health service, schools, police and the courts afloat, while meeting the costs of net zero and an ageing society. Yet Mr Sunak has scheduled budget cuts of roughly £50bn by March 2024. The failure of post-Thatcherite economic orthodoxy compels Labour to expand its political imagination. Contrary to conventional wisdom, macroeconomic policy has a decisive role to play in maintaining growth and employment. At the centre of this should be reinserting the state into management of the economy, and reducing inequality. If Sir Keir discards such notions, then the country may unfortunately turn back to the Tories to provide their own answers.
