Small Change
James Butler
On the cover he is frowning, sleeves rolled up: let’s get to work. The Labour manifesto is studded with 33 photos of the leader looking suitably granitic. It is littered with approving pullquotes from former Tory voters, soldiers, policemen; a thoroughly establishment imprimatur. It is a reminder that the Labour leader has been fortunate in his enemies: Sunak is conspicuous by his absence from the Conservative equivalent. The Tory document strings together improbable promises funded by implausible savings. Labour’s at least looks like a real programme, though it is in places evasive, unclear or underpowered. Starmer promised ‘no surprises’ between its covers: it is a conservative document, cleared of any potential traps on the way to Downing Street. Its cover promises, simply, ‘change’, but raises the question: how much?
‘Spending money, like eating people, is wrong’: so Burke Trend, cabinet secretary under Wilson and Heath, described the Treasury mindset. When Rachel Reeves becomes chancellor she may find this default setting congenial. The 2024 Labour manifesto is a curiosity: as a document produced by the opposition, it can be more honest about the scale of the country’s problems than the government’s manifesto can. It contains flashes of real urgency. And yet its actual spending commitments are comparatively anaemic, and its answers beset by vagueness. It omits any consideration of the cuts to unprotected public services baked in by the last budget.
The ‘iron clad’ fiscal rules that Reeves frequently invokes look more like a cage for the next government. But she cites such complaints, which usually come from the left, as evidence of the ‘changed party’ that she and Starmer now run. Positioning themselves to the right of the Institute for Fiscal Studies, which called Labour’s public service spending promises ‘tiny, going on trivial’, might be thought an overcompensation.
Launching the manifesto, Starmer repeated that ‘wealth creation is our number one priority.’ Labour is ‘pro-business and pro-worker’. The first of its five missions – ‘ambitious, measurable, long-term objectives’ that it intends to put at the heart of government – is to deliver the highest sustained economic growth in the G7. Top of its six ‘first steps for change’ (a different set of measures) is to ‘deliver economic stability with tough spending rules’. Jazzily presented missions, packages of steps: it sounds like the boilerplate inflicted on a failing company by unimaginative junior associates at McKinsey.
Two contradictory visions of Britain jostle in the manifesto: one acknowledges the great catastrophe of the past fourteen years and the wrecking of the social state; the other suggests things are fundamentally sound and simply require competent rather than chaotic management. If the party accepted its own diagnosis of the country’s problems, it would take it as a mandate for drastic, expansive, emergency measures.
Starmer’s most implacable critics declare there is no real difference between him and Sunak. A lot of the Labour manifesto could be accepted by a One Nation Tory – though such beasts are as rare as a thylacine in the current party. Patriotic earnestness wafts across the pages. Yet a key difference remains that Labour, even in its most cautious vein, is much less troubled about really using the state. Many of the measures – such as the expansion of nursery school places, or the expansion and equalisation of employment rights – will make concrete differences to people’s lives. Some, such as planning reform, are low-hanging fruit.
Both parties show a touching faith in HMRC to find between five and six billion in dodged taxes. Many Conservatives object to introducing VAT on private school fees because they believe, with varying degrees of concealment, they should be able to buy social advantage for their children and entrench advantage between generations. It will raise only a modest sum, and is better thought of as an issue of social justice than economic transformation.
Labour’s two central policies are linked, as part of its ‘green prosperity plan’: Great British Energy, a publicly owned clean energy generation company, and a National Wealth Fund to underwrite green industrial transformation. Both will get some of their initial funding from an extended windfall tax on oil and gas companies (the manifesto is vague on reforming the ludicrous energy pricing system). This is the only area in which Labour intends to borrow significantly, though at a small fraction of the £28 billion it once floated. Relief that these policies have survived at all gives way to dismay at their diminished form. They have lofty goals – to make Britain a ‘clean energy superpower’ – yet are strikingly undercapitalised. The claim is that public funds will derisk and multiply private investment, but it’s difficult to see both vehicles hitting their ambitious targets with such modest commitments.
Labour loyalists defend the mismatch between ambition and funding by arguing that any greater commitment would leave Starmer politically exposed – the Tory campaign has been ferocious on tax figures – and hinting that better things may come in government. Yet failure to deliver through underfunding is also a political risk in the longer term, not only for a future Labour administration, but for the wide social consent needed to undertake green transformation. There is another strange disjuncture between the urgency of the climate crisis – the ‘greatest long-term global challenge that we face’ – and the measures actually proposed.
Yet the immediate problem, which must loom large for Reeves, is the cuts. The Resolution Foundation, among many others, has pointed out that the current government has left its successor with £18 billion of cuts to find in unprotected departments, most of which are already running on empty. When challenged on this, Starmer talks about the need for growth, or highlights modest commitments to ringfenced areas, such as an extra billion for the NHS (the repair backlog for crumbling hospitals currently stands at £11.6 billion). He swears there will be no return to austerity. But failing to deal with this question begins to look like a deliberate lie of omission, or public policy in ostrich mode.
It was a very different opposition leader who insisted in 1979 that Britain’s true economic problem was that ‘the cake is too small’: growth is the only answer. Unlike Peter Mandelson, say, Starmer is not a Thatcherite, but he exhibits a different Labour vice: imagining that the party can unite in itself all fractions of British society. He enjoys Blair’s weirdly messianic claim that Labour is ‘the political wing of the British people’. The problem, however – especially acute for a government which takes the climate crisis seriously – is that politics deals with conflicts over limited resources in which there must be objective winners and losers. It is difficult to sublate these conflicts through declarations of patriotism or ‘mission’. An appeal to unity can mask the simple reproduction of the status quo. The real ‘tough choices’ involve facing down the people who have won – fabulously, continuously, orgiastically, for decade after decade – and forcing them to accept that they now must lose.
GDP figures are alluring because they’re easily grasped and growth is a bright, strong, positive idea. Only an idiot would abandon the concept in an election campaign. Yet tying politics so closely to GDP growth may also be unwise. The ghost of Harold Wilson would tell Starmer that it can paint an easy target on your back. As long as GDP has existed as a statistical measure, critics have argued that it conceals issues of inequality and distribution and overemphasises output. (The economistic cast of political argument, in which all possible measures are justified by their effects on the economy – taken to be identical with headline national product – is one result of this.) There are also good reasons to believe that historic growth rates achieved in predominantly industrial economies are much harder to achieve in advanced, deindustrialised, service-led economies. Occasionally Labour, especially in its much diluted ‘new deal for working people’, mentions the need for good jobs, as a sop to the trade unions: whether it can take the question of truly good jobs – or a good life – as seriously as it deserves is still unclear.
Sunak meanwhile is in a death spiral. It is now just plausible, though still unlikely, that the Conservatives will not even manage to form the opposition in the next parliament. Yet the extirpation of British conservatism would be a mixed and temporary blessing: monsters wait in the wings. For now, this makes some of the measures in the Liberal Democrat manifesto – especially arguments for a wealth tax and the last redoubt of anti-Brexit sentiment – more significant. Both are issues the Starmer campaign has sedulously worked to avoid.
Reversals are always possible in politics, although it would be a spectacular, almost unimaginable outcome for Labour not to form the next government with a commanding majority. Some commentators have suggested that the party may stage a ‘discovery’, soon after entering office, that the country is in a very bad way indeed, even worse than previously thought, allowing the chancellor in her autumn statement to seek an emergency mandate from parliament for major intervention into the economy. This wishful theory is a balm for anxious Labour campaigners. Little in Reeves’s character, or her Treasury team, suggests it. Nor would such a move be likely to restore the trust that Starmer has so forcefully declared missing and vandalised in British politics. It is hardly cheering that the brightest prospect in this election is the hope that we are being lied to.
Comments
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14 June 2024
at
2:14pm
L Mullen
says:
This piece was good, but I have to say the political level of the first election podcast was depressingly low. No real accounting for the mix of marginalisation & institutional cooption that followed 2019 & the last European elections, too little interrogation of the strength of political forces arrayed against climate action, far too much forlorn & unserious hoping for hope. To end on excitement for the Lib Dems & Ed Davey…that really was bleak.
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15 June 2024
at
12:16pm
Camus
says:
Watching the campaign from a safe distance , I have been impressed by Starmer's consistency as Sunak stumbles from error to error in his desperate attempts to display a positive approach to the conservative record while claiming that his plan is working, culminating in the ludicrous idea that the reintroduction of national service will make Britain safer.
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16 June 2024
at
2:43pm
XopherO
says:
@
Camus
'Starmer understands...' I don't think Starve-'em Starmer understands that at all. He has rejected any real connection to the single market/customs union - free movement is a no no. Sure, he knows the current agreement is up for mandatory renewal/renegotiation next year, but expect the EU to play hard ball, giving nothing without a big quid pro quo, and nothing close to what we had. Read Barnier's (a long time French politician of the centre-right) assessment of UK Conservative negotiators in his diary - there is clearly a risk that we come away with even less, like the Australia/NZ deal! Anyway the Union is already open to tariff-free trade with the UK, which is better than some countries. It is odd to try to persuade a diminishing number of 'leaver' voters when polling shows a clear majority would now vote remain - but I suppose Starve-em knows the UK could not/never meet the requirements for membership demanded, which would include the Euro. And the signs are that most if not all EU countries think 'good riddance' anyway. We will have to wait 10 to 20 years to even begin to negotiate a return, which itself will take years.
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15 June 2024
at
2:33pm
John Plunk
says:
In reality, the fate of a Starmer government will be decided entirely by factors over which he and his minions have no control.
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15 June 2024
at
8:36pm
Robin
says:
The big question has to be regarding growth - how?
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17 June 2024
at
6:12pm
staberinde
says:
We sorely need spending.
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17 June 2024
at
8:35pm
RegPresley
says:
"If the party accepted its own diagnosis of the country’s problems, it would take it as a mandate for drastic, expansive, emergency measures."
Read moreStarmer understands that the only way for economic recovery will be to come to an agreement with the EU which opens the Union to trade with the UK.
The emergence of Farage claiming that he is now the opposition leader reveals the intellectual poverty of the right. He likes Trump and he wanted Brexit.
Maybe he'll be lucky. (He's been incredibly lucky so far.) Maybe his coming into office will coincide with a period of tranquility in the world economy (we're about due one). Maybe Vlad and whatever consortium of interests it is that actually runs US military policy will decide that the brinkmanship in Ukraine has gone far enough. Maybe the opposition will remain divided between dead-end Tories and whatever Farage calls his next pop-up party.
Or maybe we'll have three weeks of certainty and stability, then someone invades someone, and Starmer et al. are left flapping around uselessly the way all politicians now do when faced with a problem they can't solve by tweeting about it.
Labour won't reverse Britain's long-term economic decline; no government in more than a century has managed to do much about that, except sometimes to speed it up. But with careful messaging, maybe they will be able to persuade some of us, for a while, to feel that our concerns are being listened to; and that's what matters, isn't it?
It seems structurally impossible in the short or medium term, it will take a generation of reinvestment, and perhaps returning to an EU relationship like that we once had and will never again be on the table.
But to spend, we must either borrow or tax. And we have borrowed a great, great deal to cope with the Great Financial Crisis and Covid. After 14 years of "frugal conservatism" the national debt increased from £1tn to £2.7tn. Hence: fiscal rules.
The tax burden is now higher than at any time since WWII. Inflation has meant we all pay far more for much less, whether we are buying food or employing council staff. So if taxes are to increase, who is to bear the burden? The ultra-wealthy who are best able to avoid taxation? Milliband's "squeezed middle?" Or ordinary working people? We are hunting mythical beasts here.
And let's realise that so much of the wealth extracted from, say, privatised utilities and PPE contracts has disappeared overseas. It's not coming back. Macquarrie aren't going to pay a dollar to clean up our shitty rivers.
The only wiggle room is equalising the capital gains rate with income taxes. That might deliver a few billions. Reforming Council Tax, inheritance tax (etc.) will tinker at the margins, and will likely need to be revenue-neutral to be palatable.
All the parties' manifestos are attempting to reconcile the reality that Britain is not only "a car racing downhill without brakes" with the reality that electorates are unwilling to accept that growth and productivity will take a long, long time to repair.
We suffer from broken legs, and nothing we can will make them heal any faster. But there are plenty of "faith healers" around. Let's avoid being another one, eh?
Here, as elsewhere in the article, is the commentariat's dream. Neither the Resolution Foundation nor the IFS is running for office and they can be absolutely correct in their analysis of the fiscal and economic challenges while at the same time being absolutely wrong with the implication that either, or any, party has to be more 'honest' with their policy offers. The IFS say the same thing before every election - their commentary in the 2017 campaign was almost word for word what they are saying now - but it makes no difference because the parties are not trying to please the IFS; they are trying to get elected. They, and the public, know that these gross costings in the tens of billions are pretty meaningless in any sort of strict bookkeeping sense. They can be revised up or down for all sorts of domestic reasons - GDP is affected by the weather, or the Euros - not to mention large exogenous shocks. They are a way of calibrating a political stance and in the case of Starmer's Labour it is far more important that that stance is perceived as as non-profligate than that is seen as drastic and expansive. Brexit, the pandemic, Liz Truss and the war in Ukraine were/are drastic and expansive.