Keir Starmer is about to announce his party’s plan for government in Manchester in a speech in which he will declare Labour “the party of wealth creation” and say that economic growth is “our core business – the end and the means of national renewal”.
One of the main objectives of the Labour campaign is to offer people hope, in contrast to a Tory campaign that offers insecurity and the idea that Labour would raise taxes (everyone would raise taxes). Is that hope justifiable?
Possibly. One reason to be cheerful is that our economy and the policies that manage it are exceptional in a number of ways. Giles Wilkes, a former No 10 adviser on economic policy and senior fellow at the Institute for Government, told me that if Britain “just moved back towards the median in terms of what other countries regard as normal – normal levels of pro-growth, devolved local administrations, second-tier cities, a better relationship with Europe, a normal, functioning skill system that doesn’t change every few years – you can see the sustainable growth rate eventually rising by half a percentage point. Which sounds measly in a manifesto, but would be revolutionary compared to what the Tories did.”
But a return to the mean involves a lot of “hard, boring governance”, Wilkes told me, requiring years (probably ten years) of resolve and forensic attention to detail. “But it’s not impossible. And that’s what they should be shooting for.”
However, Labour’s manifesto also includes some big numbers – 1.5 million homes, 100,000 new nursery places – that imply doing more than just acting normal. For many years the UK has concentrated on creating jobs, or creating better jobs, but plans of this magnitude will come up against a problem Britain had in the 1950s and 1960s: where are the people? Where are all these builders and nursery workers going to come from?
The answer used in previous decades – immigration – would be very difficult to swing politically. YouGov polling shows that a major reason for the Tories being on the brink of electoral disaster is its perceived failure on immigration and asylum, which 93 per cent of respondents see as one of the top issues facing the country.
If immigration is like getting a takeaway – faster, easier and in many cases provides something you wouldn’t have been able to make yourself – then the home-cooked recipe is health and education. The number of working-age people in the UK who are out of work due to long-term sickness or disability is at a record high of 2.8 million, and continues to grow at 40,000 new disability benefit claims per month. The Tory answer to this is to assume these people are scroungers and to promise a vague but punitive-sounding programme of “reform” (benefit cuts).
But when I spoke to Louise Murphy, senior economist at the Resolution Foundation, recently, she told me that there “doesn’t seem to be much evidence of people not wanting to work” but that the problem is of “a growing ill-health among the population in quite a general sense”. Very roughly this could be described as a problem of young people who can’t get clear paths into work from school and becoming less mentally healthy, and older people who can’t get GP appointments developing musculoskeletal problems, and both groups getting to the point at which they can no longer work.
Wilkes said the government has trouble knowing exactly what’s going on in the labour market because the response rates to surveys are so low, but he agrees that the UK could invest more in its people: “Other countries with better-funded welfare systems are able to give workers the confidence to shift towards better jobs, and we haven’t really done that. That’s a real issue. It should be one of the focuses of the industrial strategy – not how can I create jobs, but how can I make each individual work more productively?”
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.
[See also: What a historic Labour win will mean for Britain]
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