Keir Starmer’s economic plan risks him looking more like a David Cameron tribute act than an heir to Blair

Published

1 year ago

December 4, 2023

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For years we’ve all been hearing from Sir Keir Starmer about how our public services are on their knees and things need to change.

Now what we are hearing is that an incoming Labour government isn’t going to be able to do much to fix it – in the short term at least.

In a speech today Sir Keir Starmer stressed the fiscal situation an incoming Labour government will inherit from the Conservatives is worse than what was served up to the David Cameron government in the austerity years.

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“Compared with 2010, now debt is much higher, interest rates are much higher, growth is stagnant, Britain’s standing diminished,” Sir Keir told his audience at the Resolution Foundation event. “Public services on their knees, inflationary pressure, serious. Taxes higher than any time since the war.”

Laying it on thick when it came to the economic outlook, it was sort of inevitable that he dodged the question when I asked him if he could at least commit to not cutting public service spending further after the next election. And all of it left me asking myself the question: Vote Labour, get Tory austerity?

That’s because the nod to Margaret Thatcher over the weekend, coupled with his warnings over the economy, made the Labour leader, who was once thought to be the heir of Jeremy Corbyn or perhaps Tony Blair, now looking distinctly like a David Cameron/George Osborne tribute act.

If his reference to the vision of Thatcher provoked a backlash from Labour supporters, his refusal to at least commit to investing in public services – beyond the modest sums Labour have found for the NHS and schools, by closing the non-dom tax status and charging VAT on private schools – is likely to leave many in despair.

Talk to those around the Labour leader and they say the comparison isn’t fair. Starmer, they argue, isn’t making a political argument to “shrink the state” and “hollow out public services” as George Osborne did in 2010, but rather Starmer and his shadow chancellor Rachel Reeves are acting out of “economic necessity”.

“There’s been no growth and debt has gone up,” says one key Labour figure. “Spending levels of the past are not possible. Labour used to talk about how to cut up the pie in a fairer way, but there are no pies left and the oven is broken. Growing the economy is top priority.”

For those who see public services on their knees, the failure of commitment to investment will perhaps come as a blow. Labour countenance that, with the highest tax burden in 70 years, taxing more is not the solution. Instead, Starmer and his allies hope that investment into the UK economy will be “swift” and within the first term Labour will be able to begin investing again in public services.

If it all sounds gloomy, it’s because it is. While the last Labour team under Corbyn promised billions of public spending, this team, with the COVID debt pile in its rearview mirror, are promising us not much at all beyond having more defined “missions” and being prepared to reform the planning system or the NHS.

When you are already 20-plus points ahead in the polls, you perhaps don’t need to make many promises, particularly when the Conservatives are already hammering Labour on its one big-ticket spending item – borrowing up to £28bn a year by the end of this parliament to invest in green infrastructure, which they claim will only serve to push up tax and debt.

Labour insiders tell me that Starmer and Reeves will set out their plans for public spending after the budget when we are closer to an election. But if the Labour leader decides to mimic what Brown and Blair did in 1997 and stick to Conservative spending plans, prepare for further public spending cuts. The jury’s still out on whether Starmer will really do that – but he’s certainly rolling the pitch for that option.

Politics

Wolf Capital co-founder pleads guilty to $9.4M Ponzi, promised 547% returns

Published

13 hours ago

January 11, 2025

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Wolf Capital co-founder pleads guilty to .4M Ponzi, promised 547% returns

According to the US Department of Justice, Wolf Capital’s co-founder has pleaded guilty to wire fraud conspiracy for luring 2,800 crypto investors into a Ponzi scheme.

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Rachel Reeves lands in China amid pressure to cancel trip over market turmoil

Published

15 hours ago

January 11, 2025

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Rachel Reeves lands in China amid pressure to cancel trip over market turmoil

Making Britain better off will be “at the forefront of the chancellor’s mind” during her visit to China, the Treasury has said amid controversy over the trip.

Rachel Reeves flew out on Friday after ignoring calls from opposition parties to cancel the long-planned venture because of market turmoil at home.

The past week has seen a drop in the pound and an increase in government borrowing costs, which has fuelled speculation of more spending cuts or tax rises.

The Tories have accused the chancellor of having “fled to China” rather than explain how she will fix the UK’s flatlining economy, while the Liberal Democrats say she should stay in Britain and announce a “plan B” to address market volatility.

However, Ms Reeves has rejected calls to cancel the visit, writing in The Times on Friday night that choosing not to engage with China is “no choice at all”.

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The chancellor will be accompanied by Bank of England governor Andrew Bailey and other senior executives.

She will meet with her counterpart, Vice Premier He Lifeng, in Beijing on Saturday to discuss financial services, trade and investment.

She will also “raise difficult issues”, including Chinese firms supporting Russia’s invasion of Ukraine and concerns over constraints on rights and freedoms in Hong Kong, the Treasury said.

But it did not mention whether Ms Reeves would raise the treatment of the Uyghur community, which Downing Street said Foreign Secretary David Lammy would do during his visit last year.

On Friday, Culture Secretary Lisa Nandy defended the trip, telling Sky News that the climbing cost of government borrowing was a “global trend” that had affected many countries, “most notably the United States”.

“We are still on track to be the fastest growing economy, according to the OECD [Organisation for Economic Co-operation and Development] in Europe,” she told Anna Jones on Sky News Breakfast.

“China is the second-largest economy, and what China does has the biggest impact on people from Stockton to Sunderland, right across the UK, and it’s absolutely essential that we have a relationship with them.”

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However, former prime minister Boris Johnson said Ms Reeves had “been rumbled” and said she should “make her way to HR and collect her P45 – or stay in China”.

While in the country’s capital, Ms Reeves will also visit British bike brand Brompton’s flagship store, which relies heavily on exports to China, before heading to Shanghai for talks with representatives across British and Chinese businesses.

It is the first UK-China Economic and Financial Dialogue (EFD) since 2019, building on the Labour government’s plan for a “pragmatic” policy with the world’s second-largest economy.

Sir Keir Starmer was the first British prime minister to meet with China’s President Xi Jinping in six years at the G20 summit in Brazil last autumn.

Relations between the UK and China have become strained over the last decade as the Conservative government spoke out against human rights abuses and concerns grew over national security risks.

Navigating this has proved tricky given China is the UK’s fourth largest single trading partner, with a trade relationship worth almost £113bn and exports to China supporting over 455,000 jobs in the UK in 2020, according to the government.

During the Tories’ 14 years in office, the approach varied dramatically from the “golden era” under David Cameron to hawkish aggression under Liz Truss, while Rishi Sunak vowed to be “robust” but resisted pressure from his own party to brand China a threat.

The Treasury said a stable relationship with China would support economic growth and that “making working people across Britain secure and better off is at the forefront of the chancellor’s mind”.

Ahead of her visit, Ms Reeves said: “By finding common ground on trade and investment, while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”