Stefan Rousseau/Press Association via AP Images
Labour Party leader Sir Keir Starmer speaks to an audience of military veterans during a visit to the Fusilier Museum in Bury in Greater Manchester, June 3, 2024.
We Americans will be agonizing over the outcome of the U.S. election for the next five months. But at least our British friends appear almost certain to elect a Labour government in just five weeks.
After 14 years of increasingly disastrous incumbency, the Conservatives have been consistently lagging Labour by at least 20 points in the polls, signaling a massive Labour majority in the next Parliament. Almost as a symbol of surrender, Tory Prime Minister Rishi Sunak picked the Fourth of July, of all dates, as the day for the snap election.
This is good news for progressives, right? That remains to be seen.
The Labour leader, Keir Starmer, keeps scuttling to the center. Some of this is tactical, in the hopes of maximizing his win with the support of swing voters and British business and finance. The trouble is that he may believe a lot of what he’s saying.
Judging by his rhetoric, Starmer seems stuck in the era of center-left parties of the 1990s, when Bill Clinton’s New Democrats, Tony Blair’s New Labour, and the Neue Mitte of the German SPD under Gerhard Schröder embraced a lot of the neoliberal recipe. The formula included weakening labor, lowering taxes, balancing budgets, deregulating capital, and letting industry go in favor of a model of global financialized capitalism, tempered by a little welfare spending around the edges. That experiment did not end well, politically or economically.
Particularly discouraging is Starmer’s embrace of fiscal conservatism. If carried out, that policy would neutralize all others.
Starmer’s chancellor of the Exchequer and second in command, Rachel Reeves, goes out of her way to insist that Britain will not raise taxes and that all outlays will be paid for. That completely undermines Labour’s commitment to increase public investment.
In her first major speech of the campaign last week, Reeves described Labour as “the natural partner of business,” adding, “A few years ago, you might not have expected to have heard these things from the Labour Party; think how far we have come in four short years.”
The trouble with that stance is that Britain has been underinvesting in modernizing its economy for decades. A major reason the Tories are in such bad shape is the dire legacy of the party’s austerity policy, begun in 2010 in the pit of the Great Recession, which has devastated the British economy and society writ large. The country’s recovery has been slower than that of any other large nation, if it can even be called a recovery at all. The U.K.’s GDP per capita is now about 8 percent below its 2007 peak.
In particular, the National Health Service, long the crown jewel of the Labour Party’s contribution to a decent British society, is now a shambles. Recently, The New Yorker magazine ran a stunning investigative article about the murder prosecution of an NHS neonatal nurse named Lucy Letby, who was convicted last August of killing seven babies. The British press characterized Letby as a monster. But Rachel Aviv’s piece revealed that the real culprit was the underfunded NHS. Letby, heroically doing several jobs in a grossly understaffed ward, was often present when infants died because she was invariably on the case in crises. She was convicted on the basis of faulty statistical analysis and circumstantial evidence.
The voters are expecting a Labour government to invest massively in restoring the NHS, as well as improve basic public services like education and railroads, but fiscal commitments like those of Reeves make that course impossible.
For the first time in more than a generation, the debilitating ideological divisions that plagued Labour in recent decades are largely past.
Labour has a kind of PTSD when it comes to the party’s recent history of snatching defeat out of the jaws of victory. In the four elections between 2010 and 2019, Labour was given a decent shot at winning at least two, but managed to lose them all. Given this history, Starmer is above all determined not to screw up what appears to be a sure thing.
Labour was also traumatized by the experience of Tory Prime Minister Liz Truss, whose commitment to a large unfunded tax cut in September 2022 spooked financial markets, led to a 20 percent decline in the value of the pound in a week, forced the Bank of England to raise interest rates, and led to Truss’s humiliating resignation after just 49 days in office.
But surely the moral of the Truss story is not a Labour government devoted to low taxes, fiscal austerity, and little public investment. It’s reasonable to limit deficit spending, but the key to the increased investment that Britain needs is to restore taxes on the rich.
British governments have steadily lowed taxes, especially taxes on capital, beginning with Margaret Thatcher and intensifying under the Labour government of Tony Blair and more recently under 14 years of Tory rule. Thatcher successively reduced the top marginal tax rate from 83 percent when she took office to 40 percent. She also abolished higher rates on investment income. The bottom rate was also cut, but those cuts for working people were more than offset by increased regressive taxes on social insurance and the VAT. Further tax cuts ensued under both Blair and the Tories. British taxes on capital are now below even U.S. levels.
Ever since Thatcher, Britain’s economic recipe has been to let industry and public services go, and to bet heavily on Britain as a center of global banking. Financial deregulation began with Thatcher and intensified under Blair. That formula collapsed with the financial crisis of 2008.
The coup de grâce for Britain’s remaining role as financial powerhouse was its exit from the EU, a desperation ploy by the Tories intended to take votes from the far right, but which unexpectedly was approved by the voters. With Brexit, British financial companies cannot offer barrier-free access to Europe.
So Britain is overdue for a different economic strategy. And that strategy should be a natural for a Labour government.
Starmer has been cagey about whether and how Britain will rejoin Europe. But a Labour government will surely negotiate something like the deal with the EU that Norway has, for barrier-free commerce but without formal membership in the EU’s governing bodies.
However, rejoining Europe is only the beginning. A wholly different economic model requires massive investments in Britain’s underperforming assets.
As former AFL-CIO policy director Damon Silvers, now at University College London, has pointed out, the NHS, with proper investment, has the world’s best database of medical histories, going back to the late 1940s. With proper privacy safeguards, it could be a valuable public property for global biomedical research.
Britain also has world-class universities and technical and engineering talent. Despite partial deindustrialization, the U.K. has some of the world’s most advanced auto plants, such as the Nissan factory in Sunderland near Newcastle.
As architects like to say of grand, old, dilapidated houses, Britain has good bones. What it needs is investment. But a fiscal straitjacket will undermine all of it. The risk is that Labour will make token public investments at a scale too small to make a difference.
In principle, Labour’s program includes a superb blueprint for a green transition. But Ed Miliband, the shadow climate minister, has watched in dismay as the proposed level of investment has been sacrificed from 28 billion pounds in new money to something more like five billion, on the altar of fiscal austerity.
Politically, the crunch will come early this fall, when the new government presents its first budget. If that budget looks as if Labour is joining the Tories in sacrificing the NHS, and shortchanging other long-overdue public investments, there will be hell to pay from the voters.
Besides the mandate of a predicted landslide, Starmer begins with one other advantage relative to his recent predecessors. For the first time in more than a generation, the debilitating ideological divisions that plagued Labour in recent decades are largely past.
From the time of Blair’s election as party leader in 1994, Blair did everything he could to purge Labour’s left wing and match Thatcher in weakening the unions. That did not stop Jeremy Corbyn, the most left-wing Labour leader in half a century, from being chosen by the rank and file to lead the party in 2015. As leader, Corbyn was at odds with most of the parliamentary party. In the 2019 election, he led Labour to its worst defeat since 1935.
Today, most of Labour is more pragmatically progressive than Blair, but not far-left like Corbyn. As prime minister, Starmer will enjoy a relatively unified party, including at least 200 new Labour MPs if the expected landslide materializes. The party’s terrible schism over Brexit is also behind it.
Yesterday’s intraparty battles were bitter struggles over ideology. Today’s are about policy. Given the utter failure of neoliberalism, those are arguments that progressives can win.
The best thing that Starmer’s defenders can find to say is that he is an opportunist, who will say what it takes to get elected and then revert to a better set of progressive policies once in office. That’s faint praise, to say the least. But if it turns out to be true, Starmer will be forgiven.
