It is the economy, stupid – but Labour needs a story of economic change

by Jonathan Todd

Remember when the war on woke was going to keep the Tories in government till 2030s?

We used to hear more of this claim, a year or so ago. Lee Anderson was banning himself from watching the England men’s team nearly win the Euros. Tortoise was profiling anti-woke, power couple Munira Mirza and Dougie Smith. Brexit was an identity issue and others – such as, Anderson thought, taking the knee – would be stoked to retain the 2019 Tory coalition.

Since then, the economic challenges of Brexit (ask a trucker or holidaymaker queueing at Dover if Brexit is an identity issue) and the longer-term economic impacts of Covid-19 have crystallised.

Vaccine rollout powered a Tory victory in the Hartlepool byelection in May 2021 and a post-lockdown household spending surge. Meeting this demand has not always been easy. Long Covid diminished the UK workforce and global supply chains cannot be smoothly switched off and on – especially with China persisting with a damaging zero-Covid strategy.

These problems have been turbocharged by the war in Ukraine and associated energy sanctions on Russia – rapidly increasing UK inflation, now forecast to hit 13% during 2022.

Getting on top of the cost-of-living crisis – inflation outstripping wage growth, reducing the ability of households to afford their way of life – requires a restructuring of the UK economy much bigger than Tory imaginations.

Tax cuts and fracking is how putative PM Liz Truss says she will reduce energy bills. It is not much of an answer. Gordon Brown has some better ideas.

Truss has been critical of the Bank of England. The Bank is responsible for controlling inflation – but monetary policy in the UK is inadequate to seismic events in China and Ukraine.

Being a political teacher with a skill for explanation and making sense of complex issues is an essential qualification of successful PMs, according to Steve Richards’ engaging book on recent holders of this office.

Keir Starmer needs to explain the cost-of-living crisis and how Labour will overcome it. Economic growth, economic growth, economic growth, he recently, Blair-like intoned.

More growth would certainly help. Reporting of Starmer’s remarks doubtfully contended that this, “approach represents a challenge to his party’s instincts”. Party members – like the rest of the country – want better jobs and higher incomes.

“Looking at the impediments to economic progress in recent years,” according to an analysis in The Times recently, “a greater focus on occupational health post-pandemic, establishing a stable relationship with the EU and less frequent tinkering with the UK’s industrial strategy are more likely to improve Britain’s growth performance” than the tax cuts proposed in the Tory leadership race.

The dominance of tax cuts in the Tory leadership debate is testament to the enduring force of Thatcherite narratives within our governing party. The UK yearns for a new story.

None of the proposals floated in The Times (hardly a home of radical thought) will come easily to a party still playing the anti-government tunes of the 1980s and the Brexit hits of 2019. Nor will the steps that Brown advocates. Counterintuitively, we have a price cap that keeps rising – now expected to hit a staggering £4,266 a year from January 2023 for the typical household, up from £1,971 a year now. Brown wants to turn the cap into a real cap by freezing prices.

Energy responds to both sides of our emerging stagflation nightmare: properly capping energy prices curbs inflation and investment drives demand to minimise recessionary pressures.

Brown’s price freeze will bring immediate relief to households. This needs to be reinforced with a national plan for strengthening the UK’s energy system: insulation to reduce household demand; stronger incentives for households to take-up renewables and communities to deploy wind and solar energy; nuclear, hydrogen, and battery technology investment with national mission and verve.

This is a story of national renewal that needs to frame the energy package that Labour will bring forward before the latest “price cap” announcement from Ofgem on 26 August.

It is – as James Carville stressed – the economy, stupid. And energy is the key to economic advancement.

The other two dictums that James Carville hung on Bill Clinton’s campaign headquarters in 1992 were:

  1. Change versus more of the same
  2. Don’t forget health care

Change, unsurprisingly, does not now mean what it did in the 1990s. The Inflation Reduction Act that Joe Biden is signing into US law is much more interventionist than anything Clinton contemplated and positions energy as pivotal to inflation control.

Labour needs a story of similarly bold, energy-focused change. And – plus ça change – don’t forget health care: the NHS is facing the biggest crisis in its history.

It is invariably the function of Labour governments to save the NHS from the failings of Tory governments. But campaigning on the NHS alone is rarely enough to get Labour into this position. It needs to combine with an economic message targeted on winning today’s battles, not those of the past or claims that primarily seek distance from the Corbyn-era (e.g., the questionable suggestion that Labour has degrowth leanings).

This story of economic change needs to be told by Starmer – providing the UK with a clearer and more compelling explanation of its position and future than Truss’ fever dreams of the 1980s. This – pace Anderson, Mirza et al – is what will determine who leads the UK.

Jonathan Todd is Deputy Editor of Labour Uncut

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