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

Published

2 years 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

Crypto’s path to legitimacy runs through the CARF regulation

Published

7 hours ago

July 5, 2025

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

Published

13 hours ago

July 5, 2025

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Rachel Reeves hints at tax rises in autumn budget after welfare bill U-turn

Rachel Reeves has hinted that taxes are likely to be raised this autumn after a major U-turn on the government’s controversial welfare bill.

Sir Keir Starmer’s Universal Credit and Personal Independent Payment Bill passed through the House of Commons on Tuesday after multiple concessions and threats of a major rebellion.

MPs ended up voting for only one part of the plan: a cut to universal credit (UC) sickness benefits for new claimants from £97 a week to £50 from 2026/7.

Initially aimed at saving £5.5bn, it now leaves the government with an estimated £5.5bn black hole – close to breaching Ms Reeves’s fiscal rules set out last year.

In an interview with The Guardian, the chancellor did not rule out tax rises later in the year, saying there were “costs” to watering down the welfare bill.

“I’m not going to [rule out tax rises], because it would be irresponsible for a chancellor to do that,” Ms Reeves told the outlet.

“We took the decisions last year to draw a line under unfunded commitments and economic mismanagement.

“So we’ll never have to do something like that again. But there are costs to what happened.”

Meanwhile, The Times reported that, ahead of the Commons vote on the welfare bill, Ms Reeves told cabinet ministers the decision to offer concessions would mean taxes would have to be raised.

The outlet reported that the chancellor said the tax rises would be smaller than those announced in the 2024 budget, but that she is expected to have to raise tens of billions more.

It comes after Ms Reeves said she was “totally” up to continuing as chancellor after appearing tearful at Prime Minister’s Questions.

Criticising Sir Keir for the U-turns on benefit reform during PMQs, Conservative leader Kemi Badenoch said the chancellor looked “absolutely miserable”, and questioned whether she would remain in post until the next election.

Sir Keir did not explicitly say that she would, and Ms Badenoch interjected to say: “How awful for the chancellor that he couldn’t confirm that she would stay in place.”

In her first comments after the incident, Ms Reeves said she was having a “tough day” before adding: “People saw I was upset, but that was yesterday.

“Today’s a new day and I’m just cracking on with the job.”

Sir Keir also told Sky News’ political editor Beth Rigby on Thursday that he “didn’t appreciate” that Ms Reeves was crying in the Commons.

“In PMQs, it is bang, bang, bang,” he said. “That’s what it was yesterday.

“And therefore, I was probably the last to appreciate anything else going on in the chamber, and that’s just a straightforward human explanation, common sense explanation.”