February 1, 2024 - 1:00pm
It’s time for a “new economic model”, Shadow Chancellor Rachel Reeves declared earlier this month. “The old model is broken and has not served us well.” Keir Starmer has likewise vowed to establish “a new economic consensus”. Several commentators, meanwhile, have detected a dramatic plan for change. “Labour’s quiet radicalism is getting louder,” writes the New Statesman; “Keir Starmer’s caution conceals a radical plan” suggests the Times; and Starmer is “a radical who could transform the country,” claims the Observer.
But there is no such plan. Labour’s radicalism is a fake radicalism, combining strident words with some very familiar priorities. Under Starmer the party stands for the established model: a rentier capitalism which favours asset-owners over workers, with a leading role for the financial sector.
Reeves’s U-turn this week, in which she announced that Labour would in fact retain the Liz Truss policy of leaving bankers’ bonuses uncapped, is a small thing in itself: arguably all the cap ever did was increase bankers’ fixed pay. But add in everything else — Labour’s courting of City donors, the endless warm words and photo ops, the trumpeting of tax cuts for high earners at Davos — and it points towards a general truth. Under Starmer, the financial sector will be treated with respect, even reverence. Its excesses will be indulged, and its size and power will not be carefully scrutinised but instead uncritically protected.
Labour’s new consensus, according to the party’s leader, means “above all” that “government can and must hold out the hand of partnership to business.” But a partnership between government and business was exactly what defined the consensus of the last 25 years. Hence the surge in outsourcing, and the hundreds of private finance initiative deals which are set to cost taxpayers £200 billion over the next couple of decades.
Similarly, when outlining Labour’s “new economic model”, Reeves says she is asking “some of the world’s biggest financial companies to work with me to look at how an incoming Labour government can boost investment in national infrastructure”. But nothing could be less innovative: the remarkable thing about British infrastructure is how much has been handed over to the private sector. From 2010-15, the UK made a thousand such deals — more than the next 10 European countries combined.
I have written before about the striking coincidence between Labour’s discovery of the City’s virtues and the party’s resolution of its funding issues. There is a more sympathetic view: that whatever the damage done by the financial services industry, it is so central to the British economy that challenging the City is simply impossible — or at least impossible without extraordinary political skill and imagination. But in that case, the Starmer and Reeves approach should be seen as an admission of failure, a meek acceptance that they have no idea how to change the current model.
Just two years ago, after all, Reeves was complaining that “private equity fund managers […] asset strip some of our most valued businesses.” Now she meets the biggest PE firms to get them more involved in the economy. Starmer promised that as Labour leader he would “support common ownership of rail, mail, energy and water; end outsourcing in our NHS, local government and justice system,” on the grounds that “public services should be in public hands, not making profits for shareholders.” Now his great hope is to get shareholders more excited about investing in public services.
What was it that attracted the cash-strapped Labour Party to the City of London? Perhaps a sober appreciation of economic realities. But it looks more like a case of no money and no ideas.
Dan Hitchens writes the newsletter ‘The Pineapple’ and is former editor of the Catholic Herald
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SubscribeThis article is just another instance of whistling in the dark from those who hope that a Labour landslide won’t bury them.
News: it will.
Starmer is hard left – witness the record: Haldane society, taking the knee, prevaricating over the definition of “woman” and his eager support for Corbyn.
His policies are hard left – penalising independent schools, passing laws further repressing free speech and repealing the Tebbit legislation which has protected us from out of control union militancy for forty years.
Here people pop up to squeak that he doesn’t mean it, he won’t do it, other priorities will stop him, etcetera, etcetera – and they are offering nothing but the kind of imprudent rubbish which is only excusable in someone trying to get some sleep.
Wake up, liberal fools and hard right headbangers! Starmer means business and the only way to stop him is a Tory vote. Otherwise, it’s the old Sun headline: will the last person to leave the country turn out the lights?
Not sure about that – many of those policies you refer to were voted on and decided by the Labour party at their conference, such is how the machinations of the party work, which is obviously very left.
Starmer however is entirely fluid, he’ll decide what position and ideology he will take at any given time depending on who he wants to appease or impress.
Fluid or lacking conviction?
What I suspect is on offer is the NSDAP model of an economy wherein large corporations are favoured provided they tow the government political line and cooperate with tame labour unions.. A dirigiste bureaucratic economy : woke socialist capitalism.
100%. That is of course the EU Model par excellence. Net Zero diktat? Tick too. Labour and our Remainiac State have had their minds and imaginations frozen in the 1990s. They will not accept that this model has failed.
Starmer’s platform is an acceleration of the policies which have pulverised the UK economy and society over the past 20 years. That seems pretty radical to me. And because the Tories have presided over these policies, they are in no position to challenge him.
Tragically true – but since we are caught in the tragedy our only option is to do as much as we can to mitigate the catastrophe, which means – despite everything, despite it all – voting Tory.
I’m afraid that the only way to get a traditional Conservative Party re-instated in this country is to give the current lot a massive kicking in the 2024 election, to ensure they change track in time for 2029.
Voting for the Reform party is the only way to achieve this.
Nonsense. Do you have any idea of the speed of demographic change in this country? 70 million by 26. And do you have any inkling of the unpopularity of anything non-socialist or even remotely patriotic among the young? And does the right have a snowball in hell’s chance of being in anything other than a worse position by 29, especially with a Labour government in charge for the five years between elections? All you will do is bring on the disaster. Your conclusion is all the more remarkable in that it flies in the face of your own acknowledged facts and political premises. Now instead of contenting yourself with a downvote or abuse – the all too common recourse of enraged rightists at the moment (thanks, no doubt, to panic) why not address these points?
Do you have any idea of the speed of demographic change in this country? 70 million by 26. And do you have any inkling of the unpopularity of anything non-socialist or even remotely patriotic among the young? And does the right have a snowball in hell’s chance of being in anything other than a worse position by 29, especially with a Labour government in charge for the five years between elections? All you will do is bring on the disaster. Your conclusion is all the more remarkable in that it flies in the face of your own acknowledged facts and political premises.
Do you have any idea of the speed of demographic change in this country? 70 million by 26. And do you have any inkling of the unpopularity of anything non-socialist or even remotely patriotic among the young?
Do you have any idea of the speed of demographic change in this country?
Do you have any idea of the speed of change in this country? And do you have any inkling of the unpopularity of anything non-socialist or even remotely patriotic among the young? And does the right have the slightest chance of being in anything other than a worse position by 29, especially with a Labour government in charge for the five years between elections? All you will do is bring on the disaster. Your conclusion is all the more remarkable in that it flies in the face of your own acknowledged facts and political premises. Now instead of contenting yourself with a downvote or abuse – the all too common recourse of enraged rightists at the moment (thanks, no doubt, to panic) why not address these points?
Absolutely so !
Well said. Its so sinister. He and Rach charge around wrapped in union jack with what looks like the Old Blairite Neo Tory Manifesto: let the City coin it while we splurge the tax revenues on our crappy vast public sector. Only its not 1994. Twenty years of progressive/EU rule has wiped out the Thatcherite renaissance and freedoms. Lockdown insanity, magic money bailouts, the Zero Interest Rate lala regime and the Regulatory Hellzone imposed on enterprise by Brussels/Blob diktat has made us a super high tax super low growth anti capitalist semi socialist economy. Under the surface, Starmers Labour still has nasty class envy, wealth aversion and the Welfarist grievance and entitlement mania lurking in its DNA, topped off by a desperate deranged suicidal commitment to Net Zero Gosplanning. All the horror of the status quo minus any prospect of change. Expect insane Bidenesque kowtowing to nasty reempowered trade unions, yet more destructive eco diktat and energy crises, yet more taxes, the works. He offers nothing credible, nothing brave. Captain Potemkin.
Not to mention the erasure of women as a sex class!! No woman I know will be voting for Labour even though most of us have done so for most of our lives. Spoilt paper is all I can think of. Respect my Sex or you don’t get my X.
Keir Starmer has likewise vowed to establish “a new economic consensus”. — Will this be anything like the manufactured climate consensus that conflates fear with reality? In the entirety of human history, one economic model has surpassed all of the others. By a wide margin. That model did not rely on career bureaucrats who have never made a payroll, fretted over expenses, and paid all the taxes involved.
So Labour isn’t Socialist after all? Well thank heavens for that!
Hmm so Starmer & Reeves going to declare all theirradical intent 10 month out? Did Brown mention BoE independence before 97 victory?
They know early on calming Bond markets vital even if nauseating.
We’re likely to have grown-ups taking a longer view than the shambolic panic of recent Tory Govts and that’s what is painfully apparent to many of the Right who’ve been responsible for 14 years stagnation. Own it and pipe down.
So we’re set for a replay of Blair/Brown and their “pimping the City” playbook i.e. raking off City earnings rather than direct tax increases (apart from the continuing stealth ones – like freezing personal allowances).
But we know how this movie ends – eventually the Gordon Brown character lets spending run out of control. It’s not widely recognised just how badly he let control of spending in the final years. Instead, people bleat on about “austerity”. They never mention Brown firehosing money at public sector organisations incapable of putting it to good use – and calling it “investment”.
To their Thatcher, Trump, Wilders and Milei toupées, those who besport themselves in such headwear now need to add the Reeves. Labour is going into the General Election to the right of the IMF, and specifically committed to the retention of two caps, one on bankers’ bonuses, the other on benefits for third and subsequent children.
Tax cuts for whom? 42 per cent of adults do not have the gross monthly incomes from all sources of just over a thousand pounds to pay income tax, and most of the rest might get a tax cut of, what, fifty quid a month? If that. In any case, the IMF, speaking for all the rest of that lot, has specifically said no in advance. This could turn nasty.
Already, it is all kicking off in Argentina. That, in turn, means that Javier Milei could reach for an invasion of the Falkland Islands. He is mad enough, the claim is of course fundamental to the Argentine Right, and then what would his fanboys say, in between taking receipt of their redundancy notices from the Telegraph Group and moving onto their new desks at Rachel Reeves’s Labour Party?
If Labour really means it, that suggests a willingness to continue a reasonably free capitalist society, and that is very good news. If they understand all the things that go with supporting business and light touch regulation – such as low tax, allowing bad businesses to fail, then they will be better than Hunt and his ship of fools, and the outlook is maybe not so grim.
The test might be the railways though; they need further freeing up to continue the great improvements of the last 30 years, not renationalising. Will Reeves brave words be applied to the train set?
the only way to restore a balanced state of affairs economically, and morally, and to address the real needs of the British people is to return to the foundational principles and policies of 1945. The current Labour Party is Iory Party 2.
Blair 2 on Steroids: The British People will continue to suffer the ongoing Deadly Vision of Thatcherism.