Labour weighs pursuit of growth and risk of reawakening voter fears

Good morning. Thursdays and Fridays tend to be quieter days in government, when MPs are in their constituencies. So opposition parties often try to make news on those days. Some thoughts on what Keir Starmer is trying to do with his five missions below.

Scream if you wanna grow faster

Keir Starmer is doing an awful lot with his five missions for Labour. While the government is so paralysed by internal divisions, and will therefore be in electioneering mode for much of the next two years, it is still far too early for Labour to reveal what political strategists like to call its “retail offers”.

These missions essentially cover the four big vote-moving areas on which Labour will want to fight the next election: the condition of public services, crime and antisocial behaviour, climate change and childcare. That is exactly what you’d expect an opposition party to be doing at this point. But they also include an ambitious pledge about a crucial topic: to turn around the UK’s subpar growth rate and make the UK the fastest-growing country in the G7.

(A good way to think about the difference between your objectives and your retail offer is this: your objective is something like “safer streets”, but your retail offer is “10,000 more police officers by the end of the parliament”.)

As Tom Hamilton, a veteran senior Labourite and now director of WPI Strategy, explains in this smart LinkedIn post:

We are probably more than 18 months from an election, and Labour needs something to shape its narrative and messaging over the next year or so; the gradual fleshing out of five missions provides a peg to hang speeches and interventions from. Nothing about the existence of missions precludes the announcement of granular policies — quite the opposite.

It is perfectly possible, even likely, that Labour will still go into the election with some kind of pledge card, separate from these five missions, with concrete and costed policies with stronger consumer appeal. It is absolutely certain that Labour will have no political choice but to say things about taxation, for example, which do not feature in the missions at all except by implication.

Taxation is Labour’s biggest vulnerability, as I’ve written before. Those old, old, old fears people have about the Labour party and tax are Rishi Sunak’s best hope of overhauling them. So far, Labour’s announced tax policies are largely trivial and small-bore measures that are popular among the public, but raise little in terms of revenue. Its commitment to ending the loophole that allows private equity bosses to pay less tax on their bonuses would raise £440mn a year for the exchequer. So Labour’s ambitious mission to increase UK growth is in part a way for shadow ministers to square the circle on the party’s tax policies with their bold visions of public service “renewal”.

As shadow chancellor Rachel Reeves is fond of saying, the UK is becoming a high-tax country because we have become a low-growth one. Stagnant incomes mean stagnant tax takes. This persists at a time when the UK’s defence needs have increased and when, with more people living past 90 than ever before, health costs are increasing too. So Starmer’s focus on growth allows his frontbenchers to say a Labour government will break the UK’s negative spiral of increased taxes and deteriorating public services.

It also, of course, matters a great deal: the UK’s weak growth makes almost everything more difficult.

But Labour’s growth mission comes with a political risk. It’s not that they might not fulfil the pledges that matters. Ultimately if people feel like the UK is enjoying decent growth again then Labour is not going to struggle politically if the UK is “only” middle-of-the-pack.

In efforts to boost the economy, Labour can draw from a big bucket of policies which the Conservatives would find too risky to commit to. Planning reform is one, and a less confrontational relationship with the EU is another.

However, there is a slew of policies that the party wants to avoid talking about. Finding a way back to the European single market and customs union, for example. Easing some of the restrictions that make it so expensive and difficult for businesses to hire skilled workers from overseas. Moving away from the UK’s points-based immigration system.

While there is an audience within the Labour party for essentially all of those, they are off the table as far as the Labour leadership is concerned, for fear that it will reawaken voter fears about the party’s intentions on Brexit and immigration. In the LSE politics blog, Derrick Wyatt, emeritus professor of Law at Oxford university, underlines the risks for Labour of rejoining the EU — despite opinion polls suggesting a majority of Britons would support having another referendum on EU membership.

There are too many uncertainties in the political equation to tell the difference between a missed opportunity and a poisoned chalice . . . Labour’s strategy of the clean break might make a lot more sense than some of its pro-EU critics concede.

Starmer has the right idea in prioritising avoiding getting hit over the head on tax rises, and there is no risk-free way to do that. But his growth target leaves him vulnerable to an increasing number of demands — especially for him to do the thing many in his party believe would unlock greater growth but that Starmer thinks would cost him the election: a deal to significantly soften or reverse Brexit.

Now try this

I saw Marcel the Shell With Shoes On yesterday: a charming, whimsical and funny film that is very much worth your time.

However you spend it, have a wonderful weekend.

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