There is a slight feeling of a déjà vu about this post. For the second time in a week, I was booked to appear on the Today Programme this morning, and was cancelled before I got anywhere near a microphone. I have to say, however, thr on this occasion, I can understand why given the news elsewhere.
The invitation was to discuss the Labour Party conference, and my reaction to it. The focus was supposed to be upon Starmer's speech, but the remit was a little wider as well. Given that several million people will not now hear my comments, I thought I would share them here.
I do, very obviously, understand Labour's excitement about the position that they are in. Quite unexpectedly, the Tories have imploded to a degree that no one could have anticipated when Johnson won an 80 seat majority in 2019. As a result, Starmer and the Labour Party are looking forward to being elected to government sooner than they ever expected. I doubt if anyone in the shadow cabinet thought they would get hold of a ministerial Redbox before 2029.
Importantly, they might still not do so. However, disciplined Starmer is, and his determination to eliminate opposition cannot be ignored, there are still obstacles in his path before he might reach Downing Street.
Do not doubt that the current situation in Israel is deeply destabilising. This is not a foreign policy blog, and I have no intention of making it into one, but when Harold Macmillan suggested that the thing that every politician should fear was ‘events' he might have offered a more truthful insight than many politicians ever manage. Foreign policy can change a politician's fortunes. At present, I can see no way in which this situation might change Sunak's plight, but that is precisely the point about ‘events': you do not know what they give rise to.
More pragmatically, the likelihood is that Starmer will lead the Labour Party into an election in October next year. That means that he has to maintain the current momentum for a year. Of course, he is assisted by the fact that the Tories appear intent upon pursuing their own curious form of madness,. But, if you want to hear an entirely appropriate reaction to what Rachel Reeves had to say this week, just listen to the interview Emily Maitlis and John Sopel conducted with her on the Newsagents podcast. The questions were blistering.
They suggested that most economists (me included) think that it will cost £50-£70 billion, or more, to provide the boost to the economy that Labour needs to deliver the change that it is talking about, and yet all Rachel Reeves could say in response was that she is going to remove two tax loopholes raising around £5 million between them. You could literally hear the incredulity Maitlis and Sopel shared at her response.
You could similarly sense their bewilderment at her suggestion that she would not raise tax on capital gains and other sources of income derived from wealth because, Reeves said, we need an entrepreneurial economy. Their response was to ask how it can be fair for a person in their 30s on a managerial grade salary to pay a marginal tax rate, including student debt repayment, of more than 50%, when most capital gains are subject to tax at 20%, and Reeves could provide no credible justification. They certainly doubted her explanation that this was required to promote entrepreneurial activity.
Starmer's own speech was characterised by this same lack of detail. His biggest claim was that Labour will deliver 300,000 new houses a year. He did not say where the workforce for this task might come from. Nor did he say how the finance could be found. Some, of course, will be private house sales. However, many first time buyers are still steering clear of the market at present, precisely because of the uncertainty that high interest rates are creating, and Labour is not saying anything about changing them. This means that a significant part of this programme must be represented by social housing. That cost could be well in excess of £20 billion a year, but no one within Labour has said how they are going to fund that within the constraint that Rachel Reeves has set down of so-called national debt falling as a proportion of GDP.
The point that I was going to make within this context is not that Labour need to fear criticism from the left, which is the point that I think I was being asked to deliver. The point that I was going to make, instead, was that what Labour should fear is coherent criticism from anybody who has a reasonable understanding of the UK's national income, investment profile, cost of borrowing, taxation system, and public spending, as well as an awareness of the dire state of our public services. It does not take a genius to work out that literally nothing Labour has said adds up.
You can't deliver 300,000 new houses a year without additional public spending.
You cannot deliver 2 million new NHS appointments and vast numbers of new diagnostic tests without also spending a great deal more on treating those you have now found to be ill, and there is no explanation as to where that money might come from.
You can't solve the problems in education without more money.
You cannot deliver Ed Miliband‘s program for GB Energy without substantial investment, or without even a clear explanation as to what this company might actually be meant to do.
And you cannot put 13,000 new police office on the beat without spending a great deal more than at present.
I am not criticising the commitments, although many appear insufficient to me. What I am criticising is the fact that within the fiscal rules that Rachel Reeves has adopted few, if any, of them can be delivered
In that case, Starmer should have enjoyed his day. But he should not think that he will from hereon be making a triumphal procession from Liverpool to Downing Street, because I think that very unlikely. From left and right credible voices will be raising their concerns about the very obvious gap between what Labour is promising and what it is saying about financing its government's plans. Right now, the two are simply irreconcilable.
The Tories might have lost the plot, but the fact is that Starmer needs to find one, and very quickly. He has started on making the promises, but the delivery looks unlikely. That's not the basis for a smooth progression to Downing Street. And a year is a long time in politics.
Please note that an unedited version of this blog was published in error during the evening of 10 October. It contained a lot of errors because it was a quickly dictated first draft. The above text has now been edited.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
I also wish Labour was more forthright with their intentions. And indeed sceptical.
But it was on this blog I learned about Keynes’s view that what a government needs to do, it can afford (someone will no doubt come up with the exact quote). It looks like falling into a Conservative trap to say Labour need to define £X new taxation before they can propose £X expenditure on any progressive policy.
I have no inside knowledge at all of Labour thinking, but I wonder if a lot of heavy lifting is being done by their previous statement that they will not borrow to cover day-to-day expenditure but they will borrow to invest.
There is no point investing if you do not have the people to use what is created
I think you cancelled your own title!
See other comments John
I comment again today.
This article gives me an outlet for my disgust at the current Labour leadership.
I am livid, having just heard Starmer’s alleged foul mouthed berating a member of his staff. Something I would intervene on in the street or business or shop if anyone was behaving in the same way.
If it is a genuine recording, there is no way he should be PM, he sounds deranged. There is no way his colleagues can defend him. Nor the NEC.
I won’t post the link unless asked.
Not that I wish to give Starmer a free pass in terms of policy, but it’s been reported by several news channels (Sky, Mirror, Evening Standard that I found on a quick search) that the clips of him apparently berating a staff member were fake. One of the joys of modern technology and social media – deciding what to believe of what you see and hear.
It’s fake & AI generated, & now well debunked elsewhere. However it indicates what could become an increasingly worrying trend
Thanks
I will not share it
If this is the audio which was being talked about and apparently circulated on twitter yesterday it is a deep fake.
I haven’t heard it myself, so I’m not altogether sure if it is the one referred to here, but I think, in view of the difficulty the right wing media has had in finding any dirt at all on Starmer in the last 3 years, we would have heard long, long ago of any serious bullying behaviour on his part.
It is very worrying that both audio and video can be manipulated to produce convincing fakes. Democracy was well on the wane anyway, with tolerance of dark advertising, this development could kill it altogether.
Please post the link.
Apologies for being critical, but there’s an unusual amount of typos which you might want to correct. Must have bend a busy day perhaps.
This was not meant to be published overnight as it was entirely unedited. The text was dictated by me. No editing , at all, took place and I hit the wrong button to publish rather than save it. Apologies.
I think it would be advantageous to provide a simple list of the constraints Starmer has hedged himself in with that will prevent him achieving the government spending policies (or substantially reduce) he’s declared.
Here is a list. Rachel Reeves, Bank of England economist; extolled for her neoliberalism..
Excellent post – you need to revise it for the typos – quite a few – but you make the points very well and I agree.
There is a credibility gap with Laboured and if they don’t fill it in they will only get one term at best.
This was a dictated first draft published in error
I will be editing this morning
Apart from funding issues, the main problem with the 300,000 houses a year target is that is not based on evidence. [Neither is the governments target or that of the Lib Dems]. Research indicates that current additions to stock are probably about right. Work by Ian Mulheirn shows that we actually have a housing surplus and that supply is not why there are issues around high house prices or rents. Yes there is a housing crisis, but none of the political parties understand the causes and therefore fail to produce appropriate policies. The media does not help (including the BBC), in that they have little understanding of housing and tend to parrot the ‘we need to build more houses’ mantra. For more this blog provides some insights: info https://www.cornwallecon.com/blog
I am not convinced
The housing stock is the oldest in comparable Europe; out of date and unfit for 21st century conditions. Significant amount pre-1920. It is unfit, and much is expensive to repair or update. We are in a bad place with housing stock; buried in blind British inertia. We have been here before. It is impossible to change anything, or knock anything down. Slum clearance proved intractable, long after it was realised much of Britain was unfit for habitation; even in the 19th century (I will not recite the uselessly ineffective Acts). The power of property owners has proved politically intractable; so nothing ever happens; but talk – blah, blah, blah. The only achievements in slum clearance in the 19th century were when the railway interest could force wholesale compulsory purchase through cities. In the 20th century every single Government ducked out rather than face it. New towns, incoherent suburban sprawl is the result.
Governments have failed ever since. Starmer isn’t solving it; he has dug out the old chestnuts again. It is fair to say the Britain is becoming a basket case; lost in a doubtful past it cannot escape.
Money is power.
That’s how I see things.
The question for Laboured is, why then would you pretend that you have no money?
Where is your power in being in power?
As well as claiming that they do not have any power (‘The Government does not create jobs’) they are also apt it give it away (ditch the planning system).
The narrative is all wrong.
The Tories have done an excellent job at breaking this society of ours to the point now that we are being funnelled by Laboured towards the same people who have been propping them up for the answers. The Tories have altered our reality in the worst possible way. They have actually been successful – deliberate incompetence, deliberate callousness.
The results are obvious to me.
The UK now stands for ‘Unlimited Klondike’ – because I think that is what it is going to be like – a rush to make profit at any cost in the name of growing the economy.
Much to agree with
Yup, they’ll simply be facilitating more looting by the private sector – their backers – and calling it growth.
300,000 houses would be great, the way they want to get there not so much.
My own idea was that if you funded a social housing programme, managed by local councils and owned by the state, you could probably fund it through borrowing around £15bn a year if you did it over 10 years, or £30bn over 5.
Current housing benefit stands at £15.4bn a year. Over time, you mitigate the cost and it becomes a net benefit to the treasury over those 10 years and the state has the corresponding assets on the public balance sheet.
Written on mobile so I hope that’s coherent
Without deatils of what you are saying I have no idea if your numbers add up
It’s back of a fag packet math tbh.
Presuming 1.5 million homes at a build cost of £100k per house, total spend totalling £150bn.
The total spend on housing benefit is based on 22/23 welfare spend.
As I said, haven’t really gone into figures in detail, but I do think it’s a way of the state being able to make a positive intervention in the economy with a net benefit for all, except maybe private landlords.
House build prices cannot simply be pegged at £100K each unless you are building on HUGE sites everywhere – what determines build cost is site size – the fewer the houses, the higher the cost of each. Its a law of development physics and a measure of VFM.
I’m building a 36 unit scheme and that comes out at £144K per unit at the moment. Ten less that that, and it would not be worth it and unviable. You would not pay it off in 50 years.
£100K per unit was before Covid, in fact circa 2011-15. All I can tell you is that we have been comparing pre Covid/BREXIT prices with current ones and it is quite simple – everything has doubled in cost and skilled manpower remains a problem.
This is the huge gap in Laboured’s narrative – there is no recognition of the ill effects of BREXIT – like the fascists they are, they have played the blame game and made planners the enemy within.
Pathetic and un-socialist but also anti-green as well.
Thanks
Here’s a quote from Pavlina Tcherneva concerning government spending during the early days of Covid at the very least it ought to make Starmer scratch his head a little!
“governments budgeted anywhere from one-tenth to more than one-half of their economies to fight the pandemic. No taxpayers were called upon to foot the bill, no creditors were asked to lend them money. Governments voted for the budgets they considered to be necessary and their central banks made the payments. The size of the response was all the evidence one needed to grasp the monetary reality. Governments which issue and control their own currencies face no financing constraints and no threat of insolvency or default.”
https://www.goodreads.com/author/quotes/2354914.Pavlina_R_Tcherneva
Also consider how unemployment information ought to be read by politicians, that there are in fact many people who have given up seeking jobs for a variety of reasons some of which I am sure relate to not being able to get timely treatment by the NHS!
https://www.centreforcities.org/data/uk-unemployment-tracker/
One of the biggest tragedies is that Labour has rid itself of many of its most intelligent and caring supporters who all now feel homeless.
Millions of people see through privatisation and want to see commitments to the public services they still fork out direct and indirect taxes for.
And with Modern Monetary Theory why is Rachel Reeves not able to show that investment in these things will bring its own rewards/repayment to the Exchequer?
On the short drive to work this morning, I caught a few minutes of Today with Nick Robinson talking to a representative from Momentum and the incorrigibly useless John McTernan, asking which was the real Starmer – the one who became leader of the Labour Party by promising nationalisation and so forth, or the one we’re left with today.
Notable that the Momentum commentator (sorry, didn’t catch the lady’s name), supposedly from the far left of the party) was realistic, noting that what was required was, and I quote, “cold, hard cash”, to reverse the effects of the Tory years and put in the necessary investment. McTernan, of course, took the opposite tack saying all we needed to do was have a Labour PM and Chancellor in power for a decade and the growth fairy would resolve all our ills. In the segment I heard, there was no acknowledgment from him that large levels of spending would be required, though admittedly he was still talking when I turned the radio off in disgust.
For all the years where Corbyn and co were being decried as unrealistic about their spending plans, we’ve gone full circle where the Starmer/Reeves axis are being unrealistic about what they will achieve. It seems that somebody in the country still believes in ‘expansionary austerity’. I bet Osborne is wetting himself laughing about all this.
She got the slot I was invited to fill last night.
McTernan was hopeless.
It’s a shame you weren’t retained for the slot, Richard, but I thought the Momentum lady did a pretty reasonable job putting sensible points across from the bits I heard. I’m not sure if she got the chance to dismantle McTernan’s argument as I’m sure you would have done!
It seemed he was given the last word…
She did not really engage with him
I am trying to square the Labour circle. Rachel Reeves follows the ‘there is no money’. Starmer agrees, but is going to “build” for the future; 1.5m new houses; repair the NHS (“More operations. More appointments. More diagnostic tests.You will be seen more quickly. In an NHS clearing the backlog seven days a week … Mental health treatment when you need it. We’ll guarantee that. The 8am scramble for a GP appointment. We will end it. Dangerous waits for a cancer diagnosis. We will consign them to history”); More police (“in your town, fighting anti-social behaviour, taking back our streets”); “Infrastructure gets built”; “we commit to a new generation of colleges. Technical Excellence Colleges. Colleges with stronger links to their local economies” (“Training lab workers in Derbyshire. Automotive Engineers in Wolverhampton.
Computer Scientists in Manchester. Nuclear Technicians in Somerset. Builders in Staffordshire. Toolmakers in Hull.”); A Climate Mission (“Speed ahead with investment. Speed ahead with half a million jobs. Speed ahead with Great British Energy. A new energy company that will harness clean British power for good British jobs. A company that will be publicly owned, conference, and that will be based in Scotland”).
All that with no money. A miracle; and they are telling you both are possible. Loaves and fish.
Precisely
I suspect that some form of PFI would be used to create another financial black hole & no doubt shoddy work to boot. Despite the evidence to the contrary, the UK government are still singing it’s praises –
‘PFIs have delivered around £56 billion of private sector capital investment in over 700 UK infrastructure projects. These include new schools, hospitals, roads, housing, prisons, and military equipment and accommodation.’
‘PFIs transfer delivery, cost and performance risk to the private sector – this protects the public sector from delays, cost overruns and poor performance.’
https://www.gov.uk/government/collections/public-private-partnerships
As I’ve said, more looting then.
Do you really mean £5million from closing the two tax loopholes? Not that £5billion is significantly closer to the £50-70billion required.
I should have said billion
Josh Ryan-Collins having a go at Labour’s lack of joined up thinking:-
https://www.theguardian.com/commentisfree/2023/oct/10/rachel-reeves-growth-strategy-public-services-business-labour-health-education#comments
He gets it
Isn’t the answer for Labour’s extreme caution: politics? That if they show some ankle, the Rightwing press will be all over them?
It is maddeningly frustrating, and I believe grossly undemocratic, that we cannot have sensible, frank discussions on the real, proper cost of repairing the damage the Tories have caused to the fabric of the country because we’re all so frightened of the howling that will provoke from a deeply corrupt conservative press establishment.
At some point these self serving conservative interest groups are going to need to be met head on and faced down, because if they’re not we face perpetual decline and under performance with all the dire consequences for everyone in this country outside that gilded elite.
The one hope is that if Labour does win, and I think it will, it is simply hiding its boldness under a bushel and finally comes right out and rolls up its sleeve. The current rhetoric is not helpful
To be honest I think a great many voters treat electing a government much like placing a bet at the bookies, very few actually study the form! It’s depressing but things will have to get much worse I fear before they start to take their democracy seriously.
… by which time they will have lost it.
Indeed I think it’s possible to be even more precise and say it’s a lack of curiosity about money, who can create this medium of exchange and how it needs to be used, that is undermining the country’s democracy. Sadly all political parties in the UK lack this curiosity with the possible exception of the Green Party. Very obviously the Labour Party is a dead-in-the-water party in this respect with a huge gulf between its policy aspirations and actually being capable of accessing money to make them happen. It’s not just this though it’s also the need to understand how money as a medium of exchange is being used in the global economy and the lack of understanding this will turn the UK into a back-water.