Malcolm Gooderham is the founder of Elgin Advisory, and a former Conservative Party adviser.
The fiscal agendas of the two main parties are marked by a “conspiracy of silence” to address the tough choices and future of tax and spend. So argues Paul Johnson, of the Institute for Fiscal Studies (IFS), outflanking the spin doctors during Budget week.
He accuses both parties are pursuing narrative fallacies: that Labour would be fiscal hawks in government and that Conservatives would be able to realise productivity gains. Both are also marginalising major existential challenges which are increasing pressure on departmental spending.
To what extent is Johnson’s charge merited? While few governments shine a light on their own weaknesses; it feels counter-intuitive for an Opposition party to be coy about exposing failings or challenges. Yet, for this Labour Party, it is as concerning as it predictable, for two reasons.
First, the electoral strategy of Team Starmer: to ‘minimise the target’. In other words, to present as little information as possible so as to deprive others of the ability to scrutinise their plans.
This extends to limiting discussion about longer-term issues too, again to discourage debate and pressure for policy solutions – which for Labour invariably mean more state regulation or taxation.
Second, the retreat from a battle of ideas: there is no such thing as Starmerism.
Time in Opposition can give leaders time to develop and advance a new political creed or project. Team Bair certainly did this. Not so Team Starmer. Their focus has been to retract (or cancel) policies from the Corbyn era. And more recently, to do the same to Sir Keir’s own prior positions.
By design and by default, Team Starmer is delaying, withdrawing, or withholding putting policy details before the public – presumably due to a lack of imagination, conviction or preparation, or a combination of all three.
This dynamic also raises questions about his leadership. Leaders are supposed to make a case and bring voters with them; not so Sir Keir.
Fiscal policy is a good case in point. The leadership’s pre-election game-plan is defensive if not duplicitous. While Starmer and Rachel Reeves clearly identify with Leftist traditions in British politics, yet they want voters to think their reflex actions in office would be to govern as fiscal conservatives.
Their pre-election tactic is to signal a willingness, albeit reluctant, to keep to Conservative assumptions. At face value their position involves a small variation of about £2 billion to support two so-called retail policies: to boost the number of NHS procedures and to roll-out breakfast clubs in schools.
We await details of how Reeves will fund the £2bn, but this feels like a side-issue. Team Starmer is very keen to restrict the fiscal debate to the figure. But in the scheme of the pressures facing the UK economy, and an annual budget topping £1 trillion, such a debate is mere gesture economics.
For Labour, minimising pre-election fiscal policy differences with the Government may reduce questions from the media and frame debate, but could stoke voter suspicions. Worse, it could pose distinct challenges if elected.
For example, to stay within Jeremy Hunt’s spending envelope entails delivering greater public sector productivity, including securing approximately £20bn from improving efficiency across the public sector.
The next Government will also be required to conduct a Spending Review. The OBR’s forecast for fiscal headroom would require Labour to hold spending across the board to one per cent (above inflation) and implement reductions for non-protected areas of above three per cent per annum, according to the IFS.
Furthermore, the OBR calculates (paragraph 1.29) that past governments in the run-up to the Spending Reviews (in November 2015 and October 2021) topped up departmental expenditure “by an average of £39 billion and £32 billion a year respectively.”
Starmer may be intent on meeting conservative numbers. However, his track record of political pragmatism (or naked opportunism) suggests otherwise. Not only has he renounced Labour’s 2019 manifesto, but the pledges he made when he was seeking the Labour leadership (and speaking of his socialist convictions).
All this has left many Labour members feeling deceived and betrayed. As such, the wider electorate ought to be sceptical about the depth of his new found commitment to fiscal conservatism.
So, how might Starmer inflate spending and meet, unchanged, fiscal rules if elected? The answer lies in two sections of Reeves’ Mais Lecture.
Firstly, an overlooked passage about a new instruction to the OBR. They would be tasked with reporting on “the long-term impact of capital spending decisions”. Plus, as Chancellor, Reeves would “report on wider measures of public sector assets and liabilities at fiscal events” to show how the “health of the public balance sheet is bolstered by good investment decisions”.
This could feasibly create a pre-text for fiscal expansion (and a potential adjustment to her fiscal rules).
Mitigating against any material change however, is Reeves’ pledge to prioritise stability. She also declared she would not “scrap the rules at any time”. However, it might be possible for her to make the case that an accounting adjustment is not a scrapping of the rules in place when she took office.
A second major challenge will be to boost British growth and productivity. Team Starmer seems to be exceptionally confident that the State can readily be rewired and redirected to deliver higher economic growth, which can make-up any shortfall in spending rather than extra taxation or borrowing.
Starmer is no economist, so is he heavily reliant upon Reeves. Her case largely rests upon a sizable boost coming from new top-down planning reforms and adjusting, and creating new, Whitehall-led bodies, including a state-backed investment fund.
Suspicion about the quality of the assumptions underpinning these hopes ought to be high following the messy implosion of their flagship ‘green prosperity plan’. Reeves and Starmer repeatedly told the country it would be transformative – yet they failed to produce any figures to support their soundbites and satisfy sceptics that they had a robust proposal.
Instead of producing details, they decided to gut the ‘plan’ of investment, casting obvious doubt about the veracity of their claims policymaking in other areas – all compounded by a complete lack of candour about the impact of this decision. That they could achieve the same outcomes without the £20 billion per annum of public money is improbable; but details of which pledges they are dropping has not been forthcoming.
Given Starmer is supposed to be Mr Detail – and Reeves a Bank trained economist – it is not a good look for him or Labour’s Treasury Team.
Now we’re reliving the same story again: Labour is failing to disclose details about the wealth that will be generated for regions and voters from the proposed planning reforms and state-run bodies. Ditto any estimates for growth and a return on capital from a new state-backed investment fund, or when economists will see an uptick in the GDP figures.
The lack of specifics is damning. Either the Shadow Chancellor has plans and won’t reveal them, or she is talking a good game on growth but has no plans to back it up. Neither scenario inspires confidence.
However neither, to date, is any of this denting Labour’s poll lead. For now, it seems, voters are not yet judging Labour on the strength of its own proposals. Which perhaps suggests something. Presenting a small target may well be enough to put Starmer in office. But it is a poor foundation for government.
Malcolm Gooderham is the founder of Elgin Advisory, and a former Conservative Party adviser.
The fiscal agendas of the two main parties are marked by a “conspiracy of silence” to address the tough choices and future of tax and spend. So argues Paul Johnson, of the Institute for Fiscal Studies (IFS), outflanking the spin doctors during Budget week.
He accuses both parties are pursuing narrative fallacies: that Labour would be fiscal hawks in government and that Conservatives would be able to realise productivity gains. Both are also marginalising major existential challenges which are increasing pressure on departmental spending.
To what extent is Johnson’s charge merited? While few governments shine a light on their own weaknesses; it feels counter-intuitive for an Opposition party to be coy about exposing failings or challenges. Yet, for this Labour Party, it is as concerning as it predictable, for two reasons.
First, the electoral strategy of Team Starmer: to ‘minimise the target’. In other words, to present as little information as possible so as to deprive others of the ability to scrutinise their plans.
This extends to limiting discussion about longer-term issues too, again to discourage debate and pressure for policy solutions – which for Labour invariably mean more state regulation or taxation.
Second, the retreat from a battle of ideas: there is no such thing as Starmerism.
Time in Opposition can give leaders time to develop and advance a new political creed or project. Team Bair certainly did this. Not so Team Starmer. Their focus has been to retract (or cancel) policies from the Corbyn era. And more recently, to do the same to Sir Keir’s own prior positions.
By design and by default, Team Starmer is delaying, withdrawing, or withholding putting policy details before the public – presumably due to a lack of imagination, conviction or preparation, or a combination of all three.
This dynamic also raises questions about his leadership. Leaders are supposed to make a case and bring voters with them; not so Sir Keir.
Fiscal policy is a good case in point. The leadership’s pre-election game-plan is defensive if not duplicitous. While Starmer and Rachel Reeves clearly identify with Leftist traditions in British politics, yet they want voters to think their reflex actions in office would be to govern as fiscal conservatives.
Their pre-election tactic is to signal a willingness, albeit reluctant, to keep to Conservative assumptions. At face value their position involves a small variation of about £2 billion to support two so-called retail policies: to boost the number of NHS procedures and to roll-out breakfast clubs in schools.
We await details of how Reeves will fund the £2bn, but this feels like a side-issue. Team Starmer is very keen to restrict the fiscal debate to the figure. But in the scheme of the pressures facing the UK economy, and an annual budget topping £1 trillion, such a debate is mere gesture economics.
For Labour, minimising pre-election fiscal policy differences with the Government may reduce questions from the media and frame debate, but could stoke voter suspicions. Worse, it could pose distinct challenges if elected.
For example, to stay within Jeremy Hunt’s spending envelope entails delivering greater public sector productivity, including securing approximately £20bn from improving efficiency across the public sector.
The next Government will also be required to conduct a Spending Review. The OBR’s forecast for fiscal headroom would require Labour to hold spending across the board to one per cent (above inflation) and implement reductions for non-protected areas of above three per cent per annum, according to the IFS.
Furthermore, the OBR calculates (paragraph 1.29) that past governments in the run-up to the Spending Reviews (in November 2015 and October 2021) topped up departmental expenditure “by an average of £39 billion and £32 billion a year respectively.”
Starmer may be intent on meeting conservative numbers. However, his track record of political pragmatism (or naked opportunism) suggests otherwise. Not only has he renounced Labour’s 2019 manifesto, but the pledges he made when he was seeking the Labour leadership (and speaking of his socialist convictions).
All this has left many Labour members feeling deceived and betrayed. As such, the wider electorate ought to be sceptical about the depth of his new found commitment to fiscal conservatism.
So, how might Starmer inflate spending and meet, unchanged, fiscal rules if elected? The answer lies in two sections of Reeves’ Mais Lecture.
Firstly, an overlooked passage about a new instruction to the OBR. They would be tasked with reporting on “the long-term impact of capital spending decisions”. Plus, as Chancellor, Reeves would “report on wider measures of public sector assets and liabilities at fiscal events” to show how the “health of the public balance sheet is bolstered by good investment decisions”.
This could feasibly create a pre-text for fiscal expansion (and a potential adjustment to her fiscal rules).
Mitigating against any material change however, is Reeves’ pledge to prioritise stability. She also declared she would not “scrap the rules at any time”. However, it might be possible for her to make the case that an accounting adjustment is not a scrapping of the rules in place when she took office.
A second major challenge will be to boost British growth and productivity. Team Starmer seems to be exceptionally confident that the State can readily be rewired and redirected to deliver higher economic growth, which can make-up any shortfall in spending rather than extra taxation or borrowing.
Starmer is no economist, so is he heavily reliant upon Reeves. Her case largely rests upon a sizable boost coming from new top-down planning reforms and adjusting, and creating new, Whitehall-led bodies, including a state-backed investment fund.
Suspicion about the quality of the assumptions underpinning these hopes ought to be high following the messy implosion of their flagship ‘green prosperity plan’. Reeves and Starmer repeatedly told the country it would be transformative – yet they failed to produce any figures to support their soundbites and satisfy sceptics that they had a robust proposal.
Instead of producing details, they decided to gut the ‘plan’ of investment, casting obvious doubt about the veracity of their claims policymaking in other areas – all compounded by a complete lack of candour about the impact of this decision. That they could achieve the same outcomes without the £20 billion per annum of public money is improbable; but details of which pledges they are dropping has not been forthcoming.
Given Starmer is supposed to be Mr Detail – and Reeves a Bank trained economist – it is not a good look for him or Labour’s Treasury Team.
Now we’re reliving the same story again: Labour is failing to disclose details about the wealth that will be generated for regions and voters from the proposed planning reforms and state-run bodies. Ditto any estimates for growth and a return on capital from a new state-backed investment fund, or when economists will see an uptick in the GDP figures.
The lack of specifics is damning. Either the Shadow Chancellor has plans and won’t reveal them, or she is talking a good game on growth but has no plans to back it up. Neither scenario inspires confidence.
However neither, to date, is any of this denting Labour’s poll lead. For now, it seems, voters are not yet judging Labour on the strength of its own proposals. Which perhaps suggests something. Presenting a small target may well be enough to put Starmer in office. But it is a poor foundation for government.