“When we speak of a decade of national renewal, that is what we mean. As we did at the end of the 1970s, we stand at an inflection point.”
Thus spake Rachel Reeves in yesterday’s Mais Lecture. It’s a good sentiment, as far as it goes. But is Labour really prepared for the sort of change implied by the comparison with 1979? It doesn’t look like it. The Shadow Chancellor says she’s an optimist; strong evidence for that is her apparent belief that we are at the end of our generation’s equivalent of the 1970s.
That decade is a good comparator to today because then, as now, British politics was stuck. The political economy of the post-war consensus was tangibly failing – yet the foundations of that consensus remained too well-entrenched and popular to challenge, as Edward Heath learned the hard way.
If you doubt that today’s consensus remains secure, at least amongst the politicians, look no further than the battle between Reeves and Jeremy Hunt. Despite strongly criticising the Conservatives’ economic record and commanding a healthy polling lead, on spending the Shadow Chancellor chooses to fight only over a very narrow strip of political territory. There’s a simple reason why:
“Both Hunt and Reeves know that there are neither many easy cuts (although the Chancellor can nonetheless build his spending plans around making them on the other side of an election he expects to lose) or big new revenue streams – not without taxing housing wealth and/or building lots of new homes, both of which would play very badly in what we are now asked to call the “grey wall”.”
As Karl Williams recently explained on this site, this country’s current political settlement – “on housing, childcare, higher education and a host of other issues” – looks bleak for the young.
To that list we might add social care, which to date has been kept of Whitehall’s books by palming it off on local government. Yet despite turning council tax into a de facto social care levy, local government budgets are reaching breaking point; making them sell assets to cover unsustainable costs is only postponing what will be a difficult reckoning.
Labour is talking a pretty good game on housebuilding, although it remains to be seen if they follow through. But that’s about as far as anything resembling what we might call “1979 thinking” really goes. It is good to talk about supply-side reform, and perhaps new technology really can deliver big improvements to the NHS, as Wes Streeting says.
But notably, whilst “growth” appears 58 times in Reeves’ lecture, the words “per capita” don’t appear at all. Thus, the Shadow Chancellor is not offering a break from the immigration-driven, book-cooking form of growth favoured by the Treasury, whereby government makes the economy bigger by adding people to it without making people actually better off.
Sir Keir Starmer is also unlikely to come up with anything dramatic on pensions and social care. Understandably, perhaps, for when Theresa May tried to use a large poll lead to do so she almost threw the election. But it leaves those budgets, and the mounting injustice of refusing to tax asset-rich older people to pay for them, hanging over a Labour government.
Even on childcare, which ministers have regulated into a luxury product, the Opposition are if anything ideologically predisposed to making the problem worse, adding to the normal Treasury bias toward strong-arming parents back into work as soon as possible Bridget Phillipson’s proposal to make childcare a graduate profession, further restricting supply.
Returning to Reeves’ speech, immediately after the quote at the top of this piece she said the following:
“And as in earlier decades, the solution lies in wide-ranging supply-side reform to drive investment, remove the blockages constraining our productive capacity, and fashion a new economic settlement drawing on evolutions in economic thought. A new chapter in Britain’s economic history. And unlike the 1980s, growth in the years to come must be broad-based, inclusive, and resilient.”
It may well be possible to reset Britain’s economic settlement in a more resilient manner than Margaret Thatcher did in the 1980s; certainly, the challenges we face today are quite different to those she confronted.
But taken together with Labour’s thin policy offer, pandering to pensioners, and commitment to gold-plating even the most counter-productive regulations, one cannot help but suspect this sentiment is really a desire to try and deliver a 1979-style transformation without making difficult decisions, or picking fights with anyone beyond easy targets such as non-doms and parents of private-school children.
That isn’t going to be possible. The current settlement is so durable precisely because it has winners: homeowners whose asset values have soared, pensioners guaranteed above-inflation income increases, businesses and universities who depend on the easy import of labour and students. Any transformational change will mean taking on one or all of those groups.
If Labour hasn’t accepted that, Reeves has no business talking about 1979. The best she can expect is 1972.