Don’t assume, even now, even after everything, that Britain will elect a Labour government next time. Sir Keir Starmer would make a fine prime minister. From afar, in the US, he always struck me as Joe Biden-like in his low standing among pundits who over-index charisma. But the exorbitant privilege of having Liz Truss as an opponent will soon end. And his party has liabilities of its own that time will expose. Vestiges of the hard left survive in its grassroots, its backbenches, its bureaucracy. Little in recent UK history suggests the soft left is much more electable. Midterm polls, like sterling, are only worth so much.
Even if Labour wins, there is no social democratic Shangri-La at hand. What has died in Britain over recent weeks is the progressive dream, not just the libertarian one. With little money to spend, the point of the next Labour government is – what, exactly? A more equitable kind of fiscal restraint? A bit more stress on tax rises and a tad less on spending cuts?
That is something. But it is also much less than the party and its keenest supporters are prone to expect. Tony Blair tripled National Health Service spending in cash terms and still ended up persona non grata with the left. Starmer should brace for a similar fate as a disappointer of millions.
When Labour last took office in 1997, the budget was heading towards balance, public debt was 45 per cent of national output and inflation was low. There was scope to borrow in order to spend. Even at the time, it felt strange that Labour did not begin the process sooner.
Donald Trump’s return adds urgency and uncertainty to third winter of full Russia-Ukraine war
Matt Gaetz perched on the tightrope between political glory and infamy
Vote on assisted dying Bill due to be a cliffhanger as Britain’s Labour opposition mounts
China may be better prepared for Trump this time
Now, on all three counts — the deficit, debt and prices – Starmer is hemmed in. And if he can’t borrow, nor can he raise taxes, at least not much. He will inherit a corporation tax rate that is already going up. The top rate of income tax will be higher than the last Labour government thought appropriate for 12 of its 13 years in office. And this is before the present government raises other levies (value added tax, I suspect), as it surely must.
[ Liz Truss apologises for mistakes and vows to lead Tories into next electionOpens in new window ]
“In the end,” goes an old Tory line, “Labour governments run out of money.” This time, through no fault of its own, a Labour government will run out of money at the start. The implications should induce a shiver in the shadow cabinet. Improvements in healthcare and other services will have to come from structural reform of the kind that unions loathe, not raw cash. Higher benefits for the poor will force the government to economise on state pensions or other kinds of social security. Power is still better than its absence. But Labour will hate every minute of it.
And this will be much more painful. Progressives have got through the last decade or so with a story about an ogre called “austerity”. Had the Tories not been so tight from 2010 – according to this tale – Britain would have grown faster, at minimal risk to its financial stability.
What is troubling here is not the argument itself, which may be right, but the certainty with which it is held. What began as a plausible thesis has become an article of dinner-party faith. And, like all religions, it is heedless of contradiction. You now meet people who say growth is too complex a thing to be stimulated by tax cuts and that more largesse in 2010-15 would have had a profound effect.
It is fruitless to revisit the substance of a dispute that is over a decade old. But recent events have at least changed the politics around it. The new intellectual confidence of the austere since the “mini” Budget is unmistakable. Their central point, that governments cannot know what will trigger a loss of credibility, has been made for them. Labour’s account of the past 12 years now looks, if not wrong, a shade overconfident.
[ The Irish Times view on Liz Truss: a dismal spectacleOpens in new window ]
Politics is downwind of such shifts in the intellectual atmosphere. It is impossible, for now, to picture the Tories salvaging respectable defeat, let alone victory, from the polls. But a Rishi Sunak and Jeremy Hunt hydra of an administration would change a lot. And the hot light of scrutiny turns from government to opposition as an election nears.
Everyone says this, I know, but without recalling quite how savage and exposing the beam is. In its market-enforced retreat from pie-in-the-sky economics, the government has been likened to that of François Mitterrand, the Socialist president in early 1980s France. He didn’t leave office until 1995. – Copyright The Financial Times Limited 2022