If you want to understand Keir Starmer’s approach to government – and why his new administration already seems to be struggling – there was an important clue in his conference speech this week.
In what must have struck his speechwriter as a dazzling rhetorical trick, the Prime Minister attempted to hijack the Brexit slogan ‘Take back control’. Starmer blasted the Conservatives for being committed to an ‘uncontrolled market’, and contrasted that to his vision for a more powerful state, saying: ‘if you want a country with more control… that is a Labour argument’. Shortly afterwards, of course, he confused sausages with hostages – an apt illustration that control is harder than it looks, even over your own vocal cords.
Rachel Reeves sounded a variation on the same theme in her conference speech as well, stating: ‘government cannot just get out of the way and leave markets to their own devices.’ Yet before the end of the week it emerged that her effort to squeeze billions out of Britain’s non-doms looks set to lose money and will have to be rethought. Letting government take charge turns out to be unexpectedly challenging after all.
Starmer’s Labour have been clear in their belief that strong direction from the state is the key to restoring British prosperity and escaping our national malaise. They’ve read Mariana Mazzucato, they can see big problems that need fixing and they’re alarmingly confident of their own brilliance. Give them the levers of power and prepare for national renewal – what could go wrong? Well, there is certainly promise on some areas like planning reform, but there are three big problems.
First, the bitter reality is that the levers don’t work. As Andrew Haldenby wrote for CapX this week, there have been dozens of plans since 1990 for NHS reform. Thanks to our flawed system, recognising how things could work better isn’t enough: the hard part is delivery. Robert Shrimsley echoed this point in the FT, noting that Reeves’ crackdown on the civil service using outside consultants is not going to help a lack of in-house expertise. Reality is already catching up with the controllers: witness the disastrous implementation of the early release of prisoners, which included 37 inmates who were released by mistake, one of whom promptly reoffended.
The second point is that while government struggles to deliver, markets really do work. No doubt Britain’s state capacity needs to be improved, but one of the best paths to improved outcomes is to turn to the private capacity of our market economy, where productivity went up 27% between 1990 and 2022, while in the public sector it fell 8%.
Starmer can’t really believe his absurd claim that recent Tory administrations have been in favour of uncontrolled markets. After all, he is carrying on with Rishi Sunak’s plans to make it illegal to buy cigarettes and to impose a football regulator, while his own Chancellor will soon be struggling to add even more taxes on top of the record-breaking levies planned by Jeremy Hunt.
Instead, the Prime Minister should take a closer look at the dangers of controlled markets, which inhibit growth, innovation and opportunity. Starmer wants us to be closer to the EU, and follow its regulatory lead. Yet even the EU has realised, belatedly, that it has regulated itself out of leadership on tech. Artificial intelligence is the most exciting technological development in decades, but the EU’s attempts to control it are increasingly turning the continent into a slow lane for AI progress.
Mark Zuckerberg unveiled a new MetaAI model this week. It promises to talk to you in the voice of Dame Judi Dench, but not, so far, in the EU and the UK due to regulatory uncertainty. The UK is likely to get access before the EU – thanks to the flexibility Brexit affords us, we are going to be one of the places where Meta’s AI model is trained. But that is only because the British public understood ‘Take back control’ very differently to Starmer.
That brings me to the third – and biggest – problem with Starmer’s vision. Even if the state could deliver on his plans, and even if free enterprise wasn’t the true path to prosperity and opportunity, Starmer’s way is about giving power to him and his courtiers, with the promise that one day they’ll deliver for you.
Even Labour know that’s not what people really want. That’s why Rachel Reeves caricatured the Tory approach as believing that ‘a strong economy can be built through the contribution of just a few people’. People want to be empowered to live their lives and seek their fortunes in a dynamic, inclusive and open economy. But this is the promise of capitalism, perhaps best outlined in the Nobel-winning economist Edmund Phelps’ book ‘Mass Flourishing’. Labour’s approach, as the public is quickly realising, is to offer jam today to its inner circle and favoured clients, while everyone else gets told to tighten their belts.
Starmer has been seduced by the glamour of control. It is, no doubt, thrilling for those who find themselves in charge: you can see it in the faces of Labour’s new front bench. Yet as accusations of cronyism and special favours for the chosen few fill the front pages, and as the levers of state start to rattle ineffectively in his hands, the Prime Minister should reflect on whether taking control away from everyone else is really such a promising political strategy. When things go wrong, there is, after all, no one else left to blame.
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