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With the Conservatives set to be routed at the next general election, the idea that Britain couldn’t sink any lower than it has under this inept Government is rapidly becoming received wisdom. It’s a tempting attitude. Unfortunately, it is also dangerously untrue. Sir Keir Starmer’s Labour will be significantly worse than the current lot.
Understandably, most would prefer not to engage with the idea that Britain may not yet have actually reached rock bottom. Instead, they cling to the comforting delusion that our politics is self-correcting and cyclical. More and more often, I hear swing voters insist that “the Right needs time in opposition”, with the exasperated tone of a parent consigning their child to the naughty step. Others shrug: “The Tories have had their chance. Let’s give Labour a go.”
But to vote Labour is not merely to take a punt with a tenner one can afford to lose. It is to gamble one’s last pennies on an ailing and erratic horse with a lethal buck, and a track record of falling at the first hurdle.
It is one thing accepting a Labour government when economic conditions are reasonably rosy. But voting in a Left-wing regime that manifestly lacks even the most basic plan at a time when the country is in the grips of a deep stagnation – and sleepwalking into a debt crisis – is another story entirely. To swing behind Labour in such circumstances is a stupendously reckless roll of the dice.
The Tories’ economic record is obviously indefensible. Sadly for the British people, however, it does not follow that Labour is then a lesser evil. Far from it: a vote for Labour would propel the country even further down the road to national bankruptcy. This is not because Starmer is plotting an “unfunded spending spree”. Ironically, the threat that Labour poses to the country lies in the fact that it has shifted too far the other way.
To understand this point, it is vital to grasp Starmer’s cynical style of politics. Eager to replicate New Labour’s 1997 landslide, he has copied and pasted Blair’s strategy of reassuring the middle classes with cast-iron guarantees of fiscal prudence. If anything, the Liz Truss debacle has encouraged him to double down on this strategy, as he seeks to rebrand his party as a restrained, market-friendly alternative to the Tories.
Some plans are so fundamentally stupid that only a self-consciously clever politician could ever conceive of them. Such is the case with Starmer’s ploy. In taking ruthless aim at the Conservatives’ reputation for fiscal credibility, he has seen his own growth plan killed in the crossfire. After months of sustained Tory pressure, last week he finally dismantled his £28 billion Green New Deal.
Yes, Starmer’s flagship project to rekindle growth by investing big in green jobs and infrastructure was flawed. Rather than a big renewables splurge, Britain would do better to focus on the kind of targeted tax cuts and investments in skills and reliable electricity generation that would attract the likes of Google or Amazon to build the infrastructure that will be vital to transforming Britain into an AI superpower.
Still, at least underlying Starmer’s old green plan was a recognition of precisely the point that Truss tried to make in office: namely that, just to maintain public services at current levels, Britain needs massive economic growth. And to grow, it needs to invest, and to invest it must find a way to borrow quite large sums without blowing up the markets.
Labour’s abandonment of this position – having never dared to openly articulate or defend it – is a disaster. It reflects the centre Left’s cowardice, its refusal to confront voters and the markets with the reality that our present course is not just a recipe for misery – but for fiscal catastrophe, in which the rock of ever-expanding demands on the state meets the hard place of economic stagnation. It means that, in the next Parliament, massive new tax rises or spending cuts are surely inevitable.
To be fair, the Tories are proving little better at grasping this particular nettle. After the Truss experiment, they have fled back to their comfort zone of short-term fiscal prudence. But the crucial difference between Labour and the Tories is one of emphasis. Indeed, we can safely assume that Labour would choose a higher ratio of tax hikes to spending cuts than the Conservatives would opt for.
Consider this potential scenario. Labour has already put out feelers, with a plan to raise a few billion through a raid on the earnings of private equity chiefs, taxes on private school fees and ending non-dom status. But that would raise nothing like the sums likely to be required. Where else would the party be likely to look? Centre-Left think tanks are calling for a tax on business property and a wealth tax on those with assets worth over £1 million. Rachel Reeves has said that wealth taxes are off the table. But when push comes to shove, can we really believe her?
Needless to say, wealth taxes would be an unmitigated disaster. They would cause the wealthiest to flee and deter business investment, an outcome that Remainer Starmer might well be tempted to offset through a deal that brings the UK closer to the EU. And if even that failed, Labour would have little choice but to contemplate hikes in VAT, income tax and national insurance.
At this point, the economy would likely enter a deep recession. With Labour unwilling to cut the welfare state, the country’s fiscal deficit may well reach a tipping point. We must take seriously the prospect that history could repeat itself, with Britain once again forced to go to the IMF cap in hand for a bailout.
That is not to say that things wouldn’t also be grim under the Tories. They would inevitably put up taxes further. But however useless they have proven thus far, ideologically they would be a better bet for implementing the kind of swingeing cuts that may ultimately be necessary to avoid a full-blown debt crisis if Britain is incapable of pursuing a proper growth plan.
“Things could only get better”, was the soundtrack to the last Labour government’s rise to power.
These days I find the wise words of the country music artist Kenny Rogers ringing in my ears: “Every gambler knows / That the secret to survivin’ / Is knowin’ what to throw away / And knowin’ what to keep. Cause every hand’s a winner / And every hand’s a loser /And the best that you can hope for / Is to die in your sleep.”