‘Keir Starmer is Missing His Big Chance to Rebuild Broken Britain’

The Labour leader is missing a once in a generation chance to set out radical reforms for a broken nation, argues his former advisor Simon Fletcher

Jeremy Hunt’s Budget won’t save the Conservative party. Hunt’s gift to pension millionaires this week also handed Labour a much-needed target, which the Labour leader Keir Starmer immediately attacked as ‘a huge giveaway on the very wealthiest’.

Meanwhile household incomes are due to fall by 5.7 per cent over the next two years – the largest two-year fall since records began. Yet Hunt offered nothing to tackle this.

As Paul Johnson of the Institute of Fiscal Studies noted, “the Government has spent months saying it can't find any money to prevent nurses and teachers getting very big pay cuts. He just found £6 billion to cut fuel duties. That's a choice”. Even though the NHS strikes have now secured an improved pay offer, the fundamentals of the cost of living crisis remain. 

So despite this week’s Budget, a Labour Government still looks very much on the cards.

But what about the prospects for that Labour Government, particularly on the central questions of living standards? 

Labour’s internal debate frequently turns to the lessons of previous Labour governments. Supporters are prone to compare and contrast the present with the past. Do we need an Attlee, a Wilson or a Blair? Are we in a 1945 moment or a 1997? The choices often act as proxy skirmishes for present-day internal battles, a competition between favoured pasts.  

In any state of affairs there are things to be learnt from the past but each period is also specific. It is more instructive to look at the scale of what is needed rather than to search for carbon copies.

In the post-war period Labour has had four periods of government – from 1945, in the mid-late 1960s, the mid-late 1970s, and from 1997. But though Labour has spent less time in power than the Conservatives, the party is also a resilient organisation. Even when it is not winning, Labour’s position as one of two potential governments of Britain remains. Presently, after its huge general election defeat of 2019, Labour leads one country – Wales. It runs swathes of local councils and major English cities, and holds most of the big city mayoralties. 

Yet for all its resilience, Labour’s periods in government haunt its political thought. In the midst of the pandemic’s profound impact, Keir Starmer himself argued in a speech two years ago that "people are now looking for more from their government – like they were after the Second World War".

To take that question of 1945, the present scenario is self-evidently not as extreme as the aftermath of a global war. But it is also closer in its sheer scale to that of 1945 than the benign economic outlook of 1997. There is a lot to be said for the argument that Labour faces a 1945-style epic challenge, armed with a 1997-style agenda for government - though by no means identical, of course.

From 1997 onwards, the Blair-Brown Governments introduced positive reforms that helped many people - those who benefited from Sure Start, for example. Nonetheless, in a period of economic stability, Labour did not change the fundamentals of the economy and society. It did not forge a new and far-reaching consensus as was done in 1945.

Like 1997, Labour’s present leadership will also introduce a programme of reforms. It has started to outline these - such as on energy, public transport, the constitution, employment rights and childcare. But the question is whether Labour’s programme is equal to the scale of what such a government will face, and whether it can withstand the pressures it will come under. 

At a global level, climate change is of an epochal magnitude. Meanwhile, British society and its economy have been through over a decade of shocks. The crash of 2008 ushered-in deep austerity. The Covid pandemic exposed the multiple weaknesses austerity had caused and created its own new pressures. Stagnation of wages has turned into a wages crisis, with government-imposed real terms pay cuts in the public sector.

Britain’s model of privatisation is demonstrably failing. Look no further than the scandal of the water companies’ pollution of the rivers. 

There are signposts of future difficulties already. Labour is moving away from positions that would take it closer to the extent of the challenge – such as with the rapid retreat from public ownership of natural monopolies. Labour has not set out a programme to raise the share of the economy that goes into wages, or to correct the decline in real-terms pay. Widespread reductions in household incomes involve bringing down the spending power of the entire working class. Labour’s reticence on pay has been maintained in the teeth of a strike wave, itself driven by the wages squeeze and attempts to make many people work more, for less and with reduced employment conditions.

The wages issue has real consequences for the Labour Party’s own policy goals. The Shadow Health Secretary, Wes Streeting, wants to increase staffing levels in the NHS. But real-terms pay cuts are causing a recruitment and retention crisis across the service. So pay has to go up more and in a sustained fashion if the staffing shortages are to be resolved. To see how the tensions around living standards and pay have the potential to play out in government, note Keir Starmer’s description of the nurses’ pay request as ‘unaffordable’. 

In his conference speech last year, and repeatedly over the last few months, the Labour leader has argued that the country’s finances means Labour is “not being able to do things – good Labour things – as quickly as we might like”. However, such self-restraint could very quickly become self-defeating. A Labour Government will initially benefit from people’s relief in getting rid of the Conservatives. But that mood cannot last forever, and the contradictions caused by the pent-up demand for change have the potential to catch up with Labour rapidly. 

Britain’s bottle-neck of problems demands the construction of a new consensus. What Britain needs is a government that will both take longer-term decisions for the economy and climate and at the same time fund public services and address the now deeply-embedded difficulties of living standards, incomes and spending power. 

Any successful left or centre-left government either has to confront the generation-defining choices that are now posed, or find that the dynamics may well shift the ground under its feet. 

Simon Fletcher was campaigns and elections advisor to Keir Starmer until 2021 and previously worked as a senior advisor to both Jeremy Corbyn and Ed Miliband

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