Labour shouldn't get a free ride to No. 10

Labour shouldn't get a free ride to No. 10

Many of Labour’s defining policies are either naive or dangerous or a combination of the two — a throwback to the “bad” Labour of the 1970s rather than a continuation of the “good” Labour of 1997.

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Last Updated : 01 July 2024, 07:19 IST

By Adrian Wooldridge

On July 4, the British people are likely to do something remarkable: hand the Labour Party almost absolute power without subjecting it to even rudimentary scrutiny.

The British political system is what the Tory grandee Lord Hailsham once described as an “elective dictatorship”: The prime minister doesn’t confront the system of checks and balances that are common in liberal democracies, most obviously in the US. The second chamber is unelected, the Supreme Court is a novelty and local government is weak. And Starmer is likely to enjoy both a huge majority and the support of the civil service and the wider intelligentsia.

Yet the electorate has subjected Britain’s future leader to only the feeblest scrutiny. The Conservative Party has run the worst campaign in living memory — and nobody listens to the party anyway. The conservative media, particularly the Daily Telegraph and the Daily Mail, is a collection of exploded volcanoes. And the broader intelligentsia has put the sacred job of getting rid of the Tories above asking Starmer tough questions.

Yet many of Labour’s defining policies are either naive or dangerous or a combination of the two — a throwback to the “bad” Labour of the 1970s rather than a continuation of the “good” Labour of 1997. Then-Prime Minister Tony Blair deliberately challenged the party’s worst instincts by introducing internal markets into the public sector and embracing wealth creation. Starmer has instead revived Labour’s infatuation with state activism and egalitarianism.

The contrast between Blair’s and Starmer’s approaches to education is telling. Blair introduced a panoply of policies to stimulate competition — academy schools (the equivalent of US charter schools) to increase diversity and league tables to provide parents with more information. Starmer’s headline policy is removing value-added tax exemption from private schools — a policy that will increase the cost of alternative education providers by 20 per cent (the rate of VAT) and may drive some establishments out of business.

This draws on two of Labour’s most disagreeable instincts: hostility to diversity of provision of public goods (many Labour thinkers would like a complete public-sector monopoly of education) and belief in levelling down rather than levelling up. Labour’s policy flies in the face of the best Social Democratic practices of the continent: The EU regards private education as a human right, and Sweden and Denmark subsidise parents to send their children to private schools. It also imposes a sudden tax on one of Britain’s most successful export industries, private education. Tellingly, the VAT policy was dreamed up during the Jeremy Corbyn years, with overwhelming support from the most reactionary bit of the public sector, the teaching unions.

One reason Labour might be blind to this obvious bit of special pleading (removing competition to iffy public-sector providers) is that the party’s leadership is the product of the public sector or public-sector-dependent unions. Starmer was a barrister specializing in human rights rather than commercial law before becoming director of public prosecutions. The deputy leader, Angela Rayner, rose through the trade unions. Soon-to-be chancellor Rachel Reeves worked for the Bank of England. It is hard to find anybody in Labour high command with any firsthand business experience. (Reeves worked briefly for HBOS but under the guise of an up-and-coming politician.)

This lack of commercial experience gives Labour a bias in favor of producers (particularly public-sector producers) rather than consumers. Here, Labour’s indifference to middle-class parents struggling to find the money to give their children the best education available is a worrying sign of things to come, as is Starmer’s insistence during the first prime ministerial debate that he would rather allow a relative to die than pay for a life-saving operation in a private hospital.

There is a great deal of talk in Labour circles about negotiating with various producer interests such as doctors or teachers. There is little to no talk about empowering consumers or giving them a way of exiting from dismal public services. This pro-producer bias suggests that Labour is ill-equipped to deal with perhaps the biggest challenge facing the incoming government — improving the productivity of the public sector. It also hints at a political fault-line to come: Just as Conservatives’ dependence on older voters prevented them from implementing planning reforms, so Labour’s dependence on the public-sector middle-classes will prevent it from getting Britain moving.

This lack of commercial experience also makes Labour a sucker for airy-fairy schemes of “partnering” with the private sector. The party constantly talks about being in favor of both employers and workers as if there are no difficult tradeoffs to make, and as if productivity improvement isn’t, by its nature, a job-destroying activity. It also waxes lyrical about all sorts of corporatist institutions that will supposedly give businesspeople the guidance that they need to succeed — the British Infrastructure Council, a National Wealth Fund, an Industrial Strategy council, Great British Energy and sundry investment funds.

But does the Gentleman and Gentlewoman in Whitehall really know best what is good for British business? Prospective chancellor Reeves can point out that industrial policy is fashionable all around the world — not least in the US, where President Joe Biden is picking winners and pouring money into favored industries such as green energy.

Yet Britain has always failed at industrial policy whether it is fashionable abroad or not. The 1970s was a depressing litany of propping up losers (British Leyland, British Steel Corp. and, one for Starmer, the machine-tool maker Alfred Herbert) and betting on money pits (Concorde) rather than picking winners — a litany that ended in bankruptcy, industrial strife and apologetic memoranda. Hope springs eternal, of course, but so far Reeves and Co. have failed to produce a convincing case as to why it will be different this time.

Public-sector unions aren’t the only groups exercising a disproportionate influence over Labour. The same is also true of the vast and ever-proliferating army of nongovernmental organizations and other campaigns that are constantly pressing the government to spend money on this or that “noble” cause or establish this or that new regulation. These pressure groups have some of the same defects of trade unions: They frequently ignore the interests of consumers and habitually try to reeducate regular people. But in many ways, they are more powerful than trade unions: They are better at tugging at the heartstrings and are forever mutating as new causes become fashionable. Show them any weakness and the demands will become ever greater and the mutations ever more rapid.

We can expect Starmer to lean toward the activists in the future — not overtly picking fights with Middle England but covertly giving pressure groups almost free reign in central and local government. Britain faces an ever more powerful public sector answerable to an ever-narrower class of emboldened activists.

The British seized on the election campaign that comes to an end this week as a chance to give the Conservative Party a good kicking. This is understandable after the past 14 years of arrogance, incompetence and trauma. But elections are about more than getting rid of the old lot. They are about bringing in a new lot too. The Labour Party’s agenda, with its warmed-up corporatism, sullen egalitarianism and public-sector fetishism, gives little cause for hope and a great deal of cause for angst.


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