The problem with Keir Starmer's Labour representing the status quo

We are currently living through the fag end of a disastrous Tory government. Besides that, we are experiencing the demise of Tory failed economics and dogmatic assumptions – from Thatcherism to George Osborne’s austerity and Trussonomics.

Labour are increasingly looking like, and seen as, a government-in-waiting. What Labour senior politicians say therefore really matters and should be taken seriously. Keir Starmer’s pronouncements over the weekend, including refusing to commit to extra public spending and more monies for public sector workers, are both significant and counter-productive.

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Starmer is trying to do several things at the same time. Attempting to reassure wary voters and markets nervous about the economy, levels of taxation and public spending and simultaneously trying to minimise Tory and right-wing media attacks.

The argument put forward is not only that Labour cannot take any risks with public finances, but in the words of Blairite commentator John Rentoul in The Independent, there is a case for “lowering expectations of what Labour can achieve” and that “being a responsible government-in-waiting will help to maximise the Labour vote at the election".

There is a sort of logic in this. Specifically that a Labour government cannot promise all that its most ardent supporters want and there is no room for a “Trussonomics of the left” – how some in Starmer’s team characterise the Corbynite agenda of 2019.

This stance begs huge questions. One being what will be the retail offer of a Labour government? Starmer’s five mission points announced at the start of this year are forgettable and with little cut-through. Meant as a counter to Rishi Sunak’s five pledges, they lack the same populist edge and have not learnt from the simplicity of New Labour’s 1997 five-point pledge card.

This raises the question of what difference a Labour government could make. It is hard to discern when the party leadership have minimised the gap between themselves and the Tories by hugging the latter close on public spending. Starmer’s commitment at the weekend to retaining the Tory two-child benefit cap (“a nasty dog whistle” according to Andrew Harrop of the Fabian Society), “making Brexit work”, “stopping the small boats” and an immigration cap all smack of appeasing the right.

Labour’s messaging contains a deep-seated contradiction. The party are saying simultaneously that a Labour government is about change, and there will be no change with a Labour government. These two very different messages are aimed at two different constituencies.

The first is intended for people impatient for centre-left change; the second is for those who need to be won over and require reassurance. The problem is that these are incompatible messages and if not properly squared will fundamentally destabilise the prospects of success of a future Labour administration.

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This Labour problem is partly tactical. The politics of triangulation – identifying Tory positions and placing the party close to them or in the middle ground – inevitably has shortcomings and consequences. As UK politics has lurched to the right over the last couple of decades, it has taken Labour with it thus aiding that rightward shift.

Added to this is a more long-term concern. Labour have historically seen themselves as moral crusaders for social justice, redistribution and greater equality. Yet, the philosophy behind Labour’s current thinking is threadbare, lacks progressive credentials and is deeply defensive. Starmer wrote in The Observer that “everywhere you look … things are broken”, before issuing a reprimand: “Frankly, the left has to start caring a lot more about growth, about creating wealth, attracting inward investment and kick-starting a spirit of enterprise.”

Starmer then gets tough with public sector workers and expectations. Not only is there no new funding available, even if there was, extra spending would be to “simply service failure”. This is the unambiguous language of Blairism and plays to conservative right-wing ideas on public services. Similarly, Labour shadow ministers talk the same language. Shadow health secretary Wes Streeting recently said: “The only thing worse than no hope is false hope.” And Rachel Reeves, shadow chancellor, is considering adopting Tory tax and spending plans for the first two years of a Labour government, aping Gordon Brown in 1997. The difference is then public spending was rising, whereas now it is falling in real terms.

It is not as simple as Labour needing to adopt bolder, more radical policies. Just because the UK is a broken society and economy with a corrupt politics and hollowed-out, corporatised public sphere, does not mean that laying out a coherent alternative which makes sense and can win voters is easy. For example, any politics of redistribution involves creating winners and losers and will be amplified by an increasingly hysterical right-wing press.

Any move to tax wealth or financial transactions, such as raising tax rates on capital gains tax (currently lower than standard rate income tax), will be presented as an attack on wealth creation. Nevermind that increasingly the City has become about speculative transactions divorced from the real economy.

Such constraints exist against the backdrop of the conservative dominance of UK politics in the last few decades – of the centre-left not talking about the economy, political economy and shortcomings of British capitalism. Take one point: UK investment as a share of the UK economy is the lowest of all the G7 nations at 19.1%. Don’t expect to hear this from Labour.

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This would entail talking about short-termist British capitalism, its lack of investment and R&D, and the tyranny of shareholder interests. This extraction model has harmed growth, productivity and prosperity since the late 19th century, and still does. Water privatisation in England and Wales 30 years ago has seen £72 billion paid out to shareholders and dividends, all of which has meant investment has been negligible – with damaging results for the water industry, environment and the public.

Across the world there is an increasing realisation that the economic assumptions of the neoliberal era – which the British state has been a leading advocate of – have failed. The economist Thomas Piketty, chronicler of global inequality, notes that a broader shift is now underway: “Beginning with the 2008 financial crisis, we’ve seen the beginning of the end of this sort of neo-liberal euphoria and the pandemic transformed this transformation”.

This is a major moment. Not just the fag end of a failed Tory government presiding over a broken society and economy, but a dramatic shift in how the global economy, politics and role of government are thought of.

This will be a chance to overthrow the orthodoxies which have defined UK politics and Conservative and Labour governments in recent decades. This has consequences for Scottish politics which have, beyond the constitutional question, seen a degree of consensus between the SNP and Labour with little to choose between them on the big issues of the economy, public services and taxation.

The logic of SNP and Labour has one difference: the former assumes these huge issues can be left the other side of independence, and Labour believe such macro-issues should be left to the UK state. Neither want to build up a Scottish critique of the existing economic status quo or develop an understanding of how Treasury orthodoxies have hurt Scotland and the need for full fiscal autonomy.

“Never waste a crisis” is a proven mantra and one continually embraced by the right. It is time for those on the centre-left to understand that they cannot represent the forces of no change, dashing expectations, and clinging to discredited economic and political ideas.

This is a message that Starmer and Labour need to understand. Labour cannot stand for the status quo and if it does in office it will be defeated by the combined forces of its own disappointed supporters and the rancid forces of the populist right.

The same is true in Scotland. There cannot be a successful independence which doesn’t talk about the economy, the failure of the UK model and inadequacies of any self-government which merely replaces the Treasury-Bank of England model with a mini-Britain in Scotland.

Change is coming in the UK and globally. The ideas are emerging to break with economic and political orthodoxies, and Labour, the SNP and independence supporters need to embrace this.