Barring a major upset, Keir Starmer’s Labour Party is on course for a landslide victory in the UK’s general election on July 4. The expected thrashing of the Conservatives after 14 years shouldn’t be mistaken for great enthusiasm for their opponents, however. Labour will need to govern more boldly than it has campaigned if it wants to avoid entrenching the political instability and economic stagnation of recent years.
Starmer’s campaign — under the one-word slogan “Change” — has been so cautious that it is widely referred to as a “Ming vase” strategy. The party promises to increase spending on public services and avoid raising any major taxes while reducing public debt and reining in immigration. If those promises don’t appear to add up, Labour doesn’t seem much bothered by it.
In part, that’s understandable. Having remade his party from the socialist outlier it was under his predecessor, Starmer is keen to highlight a commitment to sound public finances. And Labour is not the only party whose manifesto doesn’t quite square with economic reality.
The danger, however, is that an election strategy focused on not offending anyone will make governing harder when trade-offs have to be spelled out. Although Labour has made some big pledges, including reducing wait times at the National Health Service, building 1.5 million new homes and investing in green technology, there is little detail on how they’ll be achieved (or paid for) in practice.
Making matters worse, even a modest increase in public spending will likely mean cuts in real terms to a number of public services, since certain spending categories, such as health and defense, are protected at higher levels.
By necessity, then, much of Labour’s agenda will depend on the economy emerging from the doldrums. That won’t happen on its own. Britain has been hit by the triple whammy of Brexit, Covid and the war in Ukraine, all of which have hurt growth and public finances. But it has trailed its Group of 7 peers because of other factors, too: years of austerity following the financial crisis, a failure to invest in infrastructure and housing that dates much further back, and a chronic inability to increase productivity growth, which is the key to raising living standards.
Reversing those trends will require bold action. Plans to force local authorities to identify developable land are a start. But Labour should go further and overhaul a planning system that gives local authorities too much discretion. That, in turn, could unlock more building, boost density and create more commutable areas around cities. The party is also right to emphasize energy, but enormous investment will be needed to decarbonize and build out the country’s grid. Simplifying an overly complex tax system would be a further step in the right direction.
Starmer should also be honest about one thing. Demonstrating control over immigration is a political necessity. But there will be no growth-creating construction boom, no functioning health- and social-care sector, no thriving universities without more immigrants. Pretending otherwise serves no one well.
On its face, Britain’s election looks far less disruptive and more predictable than some others this year. But the future shape of the long-successful Conservative Party is up for grabs, while Nigel Farage’s Reform UK party has demonstrated a lingering appetite for populist ideas, no matter how outlandish. Should Labour fail to use its mandate wisely, UK politics could be in for a much rockier time ahead.
Credit: Bloomberg
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