Flesh on the bones: Labour’s economic mission takes shape
As if to make a point about the short term volatility they so frequently criticise the Conservative government for – illustrated today by intense Westminster speculation over the nature and political viability of Rishi Sunak’s ‘Windsor Framework’ – today saw another important step in Labour’s deliberate but meaningful move towards a program for government.
Alongside Labour party leader Keir Starmer, it was the turn of shadow chancellor Rachel Reeves to put further meat on the bones of the first of Starmer’s five national missions, announced last week: growing the economy.
This mission, defined as ‘to secure the highest sustained growth in the G7’, probably raised the most eyebrows when it was trailed last week ahead of Starmer’s tone-setting speech. (You can review our summary of that here.) It was provocative both to pundits and economists questioning the high level of ambition, and to some members of the Labour Party who detected a disquieting Liz Truss-like quality to the relentless focus on growth.
Today’s speeches in the City of London were a chance for Starmer and Reeves to put further detail behind the mission, and illustrate how these long-term goals can help to guide short-term decision-making, even in the whirlwind of volatile, events-driven politics.
And indeed there were several important clarifications. The way to measure growth, according to Labour, is via GDP per capita. On this measure, the UK can certainly be considered to be at best sluggish and at worst losing ground, in a state of ‘managed decline’.
One of the key talking points from today’s speeches was that the UK will be poorer than Poland by 2030 and Hungary and Romania by 2040. This follows on from other recent data showing that the average family in Slovenia will be richer than their UK counterparts as early as next year. The implications of this not merely for UK households in a cost of living crisis, but for UK businesses and sectors faced with a recruitment crisis caused by Brexit, are enormous.
While many of the points in the briefing document released alongside today’s event were recapitulations of previous reports and commissions, it is notable that Labour is now explicitly borrowing language from US President Joe Biden, who frequently refers to growth that comes ‘from the bottom up and the middle out’. The hand of Lisa Nandy – sitting in the front row - was also notable in his phrasing “a new model for economic growth, growth from the grassroots, where wealth is created everywhere, by everyone, for everyone”.
Other key points for businesses and investors to note included:
- Labour aim to eliminate the living standards gap between the median British family and those in France and Germany over time, with progress in closing that gap measurable by the end of a first term
- A Labour government will be an active investor – through ‘catalytic public investment’ designed to ‘crowd in’ private capital, but also through a ‘National Wealth Fund’ that invests in new industries on behalf of the taxpayer
- An Office for Value for Money will be established to test whether public money is being spent well – it appears that this will be separate in its role and remit from the National Audit Office, with the implication being a greater role for data and piloting in the implementation of new spending or contracting
- Significant changes to the Apprenticeship Levy, which will become a ‘Growth and Skills Levy’, potentially changing the ways independent training providers and employers can access funding and deliver training
While most eyes may remain focused on Sunak’s apparent collision course with rebel Tory MPs and the Democratic Unionists over the detail of the new Brexit deal, understanding and engaging with Labour as they continue to set out their alternative plans is vital.
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