Labour party constantly finds itself on probation in our punitive politics. This is evident in the cautious approach taken by Keir Starmer and the party's tendency to discard or reduce policies as elections approach. The party's struggle to establish credibility as a governing party is most apparent in its handling of public finances. While topics such as state spending, investment, borrowing, and deficits may seem dry, they pose a challenge for Labour, torn between seeking financial respectability defined by establishment interests and using government to create a more equitable society.
The recent episode involving Labour's reduction of its £28bn annual investment plan, aimed at creating greener jobs, homes, and energy, highlights the party's internal divisions and its difficulty in maneuvering and communicating under pressure. In contrast, the Conservatives, labeling the plan as an unnecessary spending spree, choose to deny the climate crisis to maintain their grip on power.
This episode reflects a recurring problem for Labour and anyone advocating for increased public spending. The belief that left-leaning governments are spendthrifts and irresponsible with money is not limited to the Tories and the right-wing press. Many voters, business leaders, political historians, non-Tory journalists, and even left-wing activists, politicians, and strategists share this perception. The narrative of progressive governments transitioning from optimistic spending to disillusionment with debt is deeply ingrained in Britain's self-perception.
Labour's periods in office are often remembered for their worst financial moments, overshadowing their significant achievements. This unfairly overlooks the fiscal performance of Conservative governments, which has often been worse. Despite the evidence, Labour is continually required to prove its financial credentials. The assumption that left-leaning governments are economically incompetent persists, fueled by the right-wing media and conservative business entities. Despite successful left-of-center leaders in Europe and the US, suspicions linger that Labour struggles with economic tasks and finding the right balance between government revenue and expenditure.
Labour's solution to its fiscal credibility problem has typically been self-imposed spending limits, occasionally successful under leaders like Blair and Brown. Starmer and Reeves aim to neutralize Tory attacks by invoking their own "fiscal rules" and criticizing the Tories for financial recklessness. However, this approach may not always work, as Miliband's experience with austerity showed. Labour's poll lead diminished as it was seen as both too pro-austerity and not pro-austerity enough.
The political landscape has changed since then, with the Tories facing increased unpopularity. Starmer enjoys more authority within Labour and as a public figure compared to Miliband. Support for higher public spending has also grown. Despite ongoing Tory attacks on Labour's scaled-back £28bn plan, the party's poll lead remains strong. However, if Labour forms a government, it must act with confidence and emulate the successful Conservative administrations. Instead of allowing Sunak's failures to limit their agenda, Starmer and Reeves should reshape the narrative around public spending, establish new financial rules, and be willing to bend them if necessary. This would be a challenging task, but it would help end Labour's probation period.