Henry Nicholls/Press Association via AP Images
Prime Minister Sir Keir Starmer during a meeting in Downing Street, London, August 1, 2024
LONDON – After 14 years of Tory misrule, Labour took power in the U.K. in July with a massive parliamentary majority of 412 seats to the Tories’ 121, their second-largest ever. But because of the Conservative Party collapse and wasted votes for other parties under Britain’s “first past the post” electoral system, Labour took a disproportionate number of seats relative to an unimpressive popular vote of only 34 percent. So Labour has less than an overwhelming mandate.
To be re-elected, Prime Minister Keir Starmer and his government will need to deliver positive changes in the lives of ordinary Britons, who have suffered decades of declining real incomes, soaring housing prices, decaying public services, and a threadbare National Health Service. The exit from the EU in 2020 was a self-inflicted wound that has further depressed the U.K.’s growth and added to daily inconveniences. Britain’s leading liberal public intellectual, Will Hutton, former editor of The Observer, points out in an important new book, This Time No Mistakes, that Britain’s living standards outside metropolitan London are now roughly equivalent to those of Mississippi.
Starmer ran a notably risk-averse campaign. This partly reflected his own temperament and partly Labour’s sorry legacy of snatching defeat out of the jaws of victory in several recent elections. Starmer was determined not to screw up a sure thing with unforced errors. He succeeded.
Now, however, that risk aversion has carried over into his term as prime minister. Britain above all needs to restore public investment: to build houses, reinvest in public services, create public- and private-sector jobs, and modernize its economy. That means turning away from an overdependence on the financial sector that was never ideal and is now even more unrealistic with Britain out of the EU. The London Stock Exchange was the world’s third-largest as recently as 2000 but fell to tenth by 2022.
But Starmer is hobbled by the premise that fiscal prudence must come first, a national obsession initiated by the arch-Tory Margaret Thatcher and accepted by both parties ever since. Starmer also committed to not raising taxes, except possibly on the very rich, but Starmer has also bought into the misleading premise that if Britain taxes the rich too much, he will kill the capitalist golden goose. To make matters worse, the outgoing Tory government cooked the books, so Starmer inherits a larger deficit than projected, which puts the budget underwater before he spends a single penny.
Our two nations, assuming Kamala Harris’s election, are now the liberal democratic bulwarks against a rising tide of neofascism elsewhere in the West.
Even before Labour won the election, the presumptive chancellor (finance minister), Rachel Reeves, who serves as emblem and enforcer of fiscal prudence, slashed the budget for one of Labour’s signature initiatives, a promised 28 billion pound green investment program, under the leadership of one of the relative progressives in the Cabinet, Ed Miliband.
One piece of low-hanging fruit is improved tax collection. The Tories underinvested in Britain’s tax office to the point where tens of billions of pounds are left on the table by lax tax enforcement. But better collection will get the government only a fraction of the money needed to modernize Britain.
Another sign of Starmer’s risk aversion is his stance on the EU. Despite the fact that leaving the EU turned out to be a disaster for Britain and the recent turning of public opinion against Brexit, Starmer committed during the campaign not to reopen the subject, which is still treated in some quarters as an untouchable third rail.
Many commentators assumed that once in office, Starmer would work out a deal like the one Norway has, where the country is not in the EU and has no vote in its deliberations but gets the benefits of barrier-free trade. But my conversations here with people close to Starmer suggest that he will not go near the issue of revisiting Britain’s relationship with the EU until a second term—if he gets one.
Yet it is precisely Starmer’s risk aversion on the EU and other issues that could cost him and Labour that second term. And if Starmer fails, waiting in the wings as the opposition is not a reversion to a reconstituted Tory Party but a swing to the far-right Reform Party of Nigel Farage.
What’s the analogy with Harris? Where Starmer has the votes to carry out a bold program but lacks the nerve, Harris increasingly has the nerve but may or may not have the votes to get her program through Congress. In Harris’s case, assuming that she herself is elected, her success as president in delivering concrete benefits to citizens will depend on a handful of votes for senators in Ohio, Montana, Pennsylvania, Michigan, Nevada, and Arizona, all of whom need to be elected if she is to have even a 50-50 Senate.
In short, both Starmer and Harris need to deliver to be re-elected. While some policy changes do not have big price tags, the ones that could make the biggest differences, such as increasing housing supply, are both costly and will not bear fruit overnight. For Harris, the day of reckoning will come earlier than for Starmer, in the 2026 midterms, where a weak performance in her first two years could cost the Democrats one or both houses of Congress and produce more stalemate.
Harris does have a big advantage over Starmer, in that she has already built on Biden’s beginning in getting rid of some perverse neoliberal assumptions. The U.S. is also better positioned than Britain to pursue bold public investment since the dollar as de facto global currency is much less vulnerable than the pound. Moreover, the investments of the Inflation Reduction Act and the CHIPS Act in domestic manufacturing of the critical industries of the future will continue into the next term.
Starmer’s admirers say he is a good social democrat at heart, that he is just getting started, and will find his way to a bolder program in due course. Let’s hope so.
Our two nations, assuming Harris’s election, are now the liberal democratic bulwarks against a rising tide of neofascism elsewhere in the West. These governments owe it to history to succeed.
