‘Labour must be radical fixing Tory crises – or risk sharing blame for them’

Labour is on a mission – or five missions to be precise, with leader Keir Starmer due to set out his latest mission on energy in a speech today. Loosely drawing on the work of economist Mariana Mazzucatto, and after several policy framework relaunches, Labour appears to have decided to base their manifesto on: higher growth, clean energy, improving the NHS, reducing crime and education reform. These are all fairly typical areas for a major political party to address, but the scale of the devastation wrought on the UK by the Tory government, further exacerbated by Covid and the invasion of Ukraine, means that providing functional public services and targeted investment amounts to a significant moment of national renewal.

Labour’s senior figures are framing the need for a Labour government in just these terms, even in local election campaigns. Keir Starmer speaks of a “national emergency” on energy; Lisa Nandy bluntly wrote: “Britain is in crisis. Families all across our country are facing falling wages, soaring energy bills, rising prices and crumbling public services.”

Labour’s industrial strategy, which includes four more missions, calls for “a national focus. A national effort. One that has been sorely lacking”. The pitch is clear: the UK faces a series of profound crises and Labour is ready to address them with sounder management of the state and the economy.

Labour’s analysis of the crises facing the UK are broadly correct

Labour is not an outlier in this framing of the present moment. The term ‘polycrisis’ is circulating around elite policy circles faster than the trays of canapes round Chatham House. China, the EU and the USA have all launched major investment programmes in which various green technologies (some more questionable than others) are prioritised in a ‘green subsidy race‘. This race serves to address different crises: reducing greenhouse gas emissions, boosting growth after the pandemic, geopolitical realignment and reducing inflation.

In contrast, the Tories seem to think a reinvigorated, green capitalism will happen my magic. The Tories are nostalgic for the ‘glory days’ of Margaret Thatcher’s ascendency, as emphasised by the short-lived Truss government, and they remain wedded to an ideology of neoliberal austerity that is out of kilter with the direction of travel in other wealthier countries.

As the rest of the world slowly abandons the ideas that the market is just waiting to spring up and save us, the Tories remain stubbornly resistant to significant state investment in just about anything. To give one example, the UK’s ‘flagship’ national levelling up fund is around half of what Spain (with EU funds) is investing in microchip manufacture alone – at the same time that microchip companies are stating that they will leave the UK due to lack of subsidy. 

Ed Miliband has identified that the UK is losing out in the “global race” for green jobs and industries as the Tories persist with their austerity mindset and their focus on financial service as the only important part of the economy. And Labour’s basic analysis is broadly correct: public services are a mess, the economy has been starved of investment, wages are stagnating and the government is spending most of their time legislating for racist border policies and draconian crackdowns.

If huge sections of the mainstream British press were not in such a cosy relationship with the governing party, this analysis would be so common-sense as to be undeniable by politicians – which is perhaps why titles from other nations often set out the wreckage of our society through austerity and the upwards redistribution of wealth so clearly. 

But Labour’s solutions fail to meet the scale of the challenge

The problem with Labour’s pitch, however, is that their analysis of the profound depths of the UK’s crisis does not follow through into their proposed actions. Miliband proposes a new public energy company, Great British Energy, but as far as we can tell it could be capitalised with around a fifth of what Sweden’s Vattenfall has in assets. Nandy has recently set out the depths of the housing crisis, but her solutions to it seem to involve planning deregulation and state-backed mortgages – which is basically the disastrous housing policy of the last decade (though with some more encouraging proposals on local authority land acquisition).

Looming over all proposals, is the scythe of ‘fiscal discipline‘, with shadow ministers regularly ruling out inflation-matching pay rises for public sector workers, as well as ruling out one progressive tax rise after another. One aide recently disclosed that the arbitrary fiscal rules will be prioritised over even the green investment needed to meet climate change targets.

It is not clear whether this caution is an electoral calculation or simply the politics the leadership believes in, but either way, there is still a significant gap between the crises Labour identifies and the scale of their response. The problems the UK faces are more than simply ‘mismanagement’. The UK’s problems are rooted in a deep and misguided belief that the private sector will deliver every service more effectively and replace ‘political’ judgments (neoliberalism) and the dominance of a narrow set of interests over politics, which often operates through backdoor lobbying and think tanks.

Labour must be bolder – or be held responsible for further decline

In previous moments of profound crisis, like in 1945, Labour came to power promising a ‘New Jerusalem’, a wholesale programme of national renewal with not just significant public investment but a restructuring of the state and politics. The present Labour offer is timid in the face of its own analysis, with the party increasingly turning to a race to the bottom on migration and re-heating the same old failed law and order policies as it rolls back from challenging privatisation and fiscal conservatism and undertaking serious political reform, such as proportional representation.

There are signs, with the £28bn annual green investment, that Labour will put the UK in line with the ‘global subsidy race’. But the damage done by austerity (and note the Shadow Chancellor said in 2012 Labour was ready to “complete the job of deficit reduction”), privatisation (particularly of housing and energy) means significant structural changes are needed to address the crises Labour identify. If not, they risk throwing good money after bad systems of governance.

Labour has a historic opportunity for a moment of national renewal, with new generations desperate for wholesale change and a Tory party living in a parallel universe to most of the working age population. Labour’s actions in government will have to meet the scale of the challenge or they will be held culpable for continuing decline and stagnation.

A lack of courage now, in the name of narrow electoral calculation, hardly inspires confidence that any ‘mission’ can be achieved.