5 July 2021

Labour’s reheated ‘Buy British’ policy would leave us all worse off

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Fresh from a not particularly rousing victory in Batley and Spen, Labour are taking the fight to the Tories with a plan to “Buy British” in public sector procurement. Appearing on the Andrew Marr Show yesterday, Shadow Chancellor Rachel Reeves insisted her party’s plan “makes economic sense and common sense”. Well, one out of two ain’t bad.

Reeves is right on the latter point, in the sense that there is an intuitive appeal to this kind of economic nationalism. That’s why politicians of all stripes indulge in it so much. After all, if we buy British goods that means more British jobs and that’s got to be a good thing, hasn’t it?

Really, though, this is simply a rebranding of protectionism, which makes everyone worse off in the long run. There are several reasons for that. The first is simply that if public bodies can source goods or services more cheaply from abroad, they will save their taxpayers money – money which can then either be spent on public services or used to lower taxes. It’s not just about price though: there are some products and services which are simply made better by foreign firms – as we see every day with all manner of consumer products that we prefer to buy from abroad.

Just look at the ignominious history of firms like British Leyland to see what happens when we decided Made in Britain is a sensible criterion for our trade policy. Those great British failures of the past also show that insulating companies from competition also has deleterious long-term effects: there’s less incentive to innovate, provide better service and all the rest of it, and it’s the consumer/taxpayer who loses out.

British exporters also stand to lose out if our government adopts this kind of policy, as it encourages other countries to follow suit and prioritise their own producers, however shoddy their work or service – a lose-lose scenario for everyone except the select companies who get contracts they might not otherwise have expected to win.

There’s also an issue over definitions. Is a ‘British firm’ one that has an office in the UK, or does it have to have been founded in this country? How would we treat subsidiaries of large companies whose main headquarters is in another country? What if it’s a British firm whose workforce is primarily made up of itinerant migrant workers?

The politics of all this is even more dispiriting, especially if you’re a Labour supporter. After all, what does it say about the party that something as tired as this is seemingly their big economic idea? For one thing, it’s not even vaguely fresh or new. As The Sun‘s Harry Cole has pointed out, a similar ‘Made in Britain’ policy was trailed by Ed Miliband back in 2012, And while Reeves may insist otherwise, it also has powerful echoes of Gordon Brown’s notorious “British jobs for British workers” soundbite. But the real inspiration for this seems to be Joe Biden, whose ‘Buy American’ executive order was one of the first acts of his presidency.

As well as being unoriginal, this kind of rhetoric also comes off as pretty inauthentic, especially when the party leader was such an ardent Remainer. That may condemn Keir Starmer in some voters’ eyes, but a much bigger problem is that he often looks like someone who twists in the wind, changing tack based on what might be popular, rather than offering a coherent account of either himself or his party’s agenda.

I’m not convinced he’s getting the best PR advice either. Take the extremely rehearsed-looking pictures released over the weekend of Starmer celebrating England’s victory over Ukraine. There’s a real image-crafting issue if they can’t manage to make Starmer look genuinely enthusiastic about a sport he has followed his entire life (even attending the soul-destroying Euro 96 semi-final against Germany).

Ultimately, as my colleague Alys Denby noted recently, Starmer’s biggest problem isn’t so much that he’s seen as metropolitan or pro-European, but that people don’t have any idea what he stands for. Re-heating policies we’ve heard so often before, at a time when most of the public is fixated either on Covid or Football Coming Home, is very unlikely to change that.

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John Ashmore is Editor of CapX.