Being in government must be terrifying. After spending years campaigning from the opposition benches armed with playground insults for the Prime Minister, you’re suddenly thrust into a position where you actually have to start leading. This is the predicament Keir Starmer now finds himself in.
Talking to fellow travellers on the centre-right in the build up to the election, there was some cautious excitement about Starmer’s plan. After 14 years of failing to boost long-term economic growth rates, the Tories’ fate was sealed, and many were happy to let Labour have a crack at taking on our chronic issues.
Who could blame them? For a good while, a Starmer government seemed like a tolerable prospect. Where the Tories failed to, he promised planning reform to get homes built – dismantling a major barrier to our growth. He also purged his party of its lunatic fringe, taking on the Corbynite elements who made Labour unelectable for so long. On the NHS, his then shadow Health Secretary Wes Streeting was clear about his willingness to use private capacity to reduce waiting lists. He even castigated ‘middle-class lefties’ for putting ideology before patient care.
Exciting stuff. But now they’re in power, Labour aren’t being quite as bold as they promised. That’s because delivering on a radical package of reforms requires a genuinely changed party with changed instincts.
Getting the economy growing was a key feature of Labour’s electoral offering. ‘Growth, growth, growth’ remains the mantra offered by Starmer. Yet while the Government’s ambitions for planning reform are certainly welcome (although not perfect), they risk undermining their mission in a number of other areas.
Take energy policy, for example. As my colleague Dillon Smith wrote in CapX this week, if Britain wants to maintain a competitive edge in the global economy, there is no doubt that we will have to decarbonise. However, Labour’s instinctive statism isn’t going to make this easy. To get the cheap energy we need, the private sector has to be brought on board – investors need confidence that the state will allow markets to operate independently. By pushing ahead with plans such as the extra windfall tax on North Sea oil and gas, Labour are giving the opposite signal. This is without even mentioning the creation of the £8bn super quango that is GB Energy.
Fine. Labour might have surrendered to their baser instincts on energy, but surely they recognise the importance of public sector productivity in achieving growth? Not so fast. Despite all of Wes Streeting’s guff about reforming the NHS, the major health-related headline of Labour’s short time in government has been their offer of a 22% pay rise over two years for junior doctors. The train drivers have got their fair share too, receiving an inflation-busting 14% pay rise over three years backdated from 2022. Yet they still have the brass neck to go on strike!
All of this comes against a backdrop of historically stagnant public sector productivity. Figures from the ONS show that it is now marginally lower than it was in 1997. Yet with Labour’s recent handouts have come no obligations to boost outputs. This makes no sense and only adds to the impression that the Government is abandoning growth.
Whether it’s tampering with energy markets or genuflecting to trade unions, Labour have proven that when they are confronted by Britain’s problems, they still pull the same old levers. While I don’t doubt that the transition from opposition to government is a daunting one, for Labour to show their true colours so quickly has been a depressingly predictable spectacle.
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