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British Labour Party no longer fit for purpose

It was interesting to spend a few weeks in London recently and catch up with friends and research colleagues. It always focuses the mind on issues when one is in situ rather than gazing at data and reports from afar. My view of British Labour as being incapable of providing the British people with a progressive solution to the poly crisis the nation confronts has strengthened in the last few weeks and was emphasised once again by the decision of the leadership to backtrack on its £28 billion green investment strategy – its second U-turn on this key policy in the last few years. Touted as making Britain “A fairer, greener future” for Britain, “Labour’s Green Prosperity Plan” certainly differentiated it somewhat from the ruling Tories. Now that differentiation has been abandoned and the Labour politicians are claiming that “Labour’s fiscal rules … [are] … more important than any policy”, which is about as moronic as it gets. More of the same from the so-called political voice of the working class. I told an audience in London a few weeks ago that I considered the ‘institutions’ that had been created in the late C19 and into the C20 to give political voice to the working class had past their use-by date and were no longer fit for purpose. The British Labour Party is one such institution and it has been so captured by ‘conservatism’ of the worst type (sound finance etc) that it no longer is capable of delivering sustainable prosperity.

Think back to May 6, 2021 when the Conservative party won the – 2021 Hartlepool by-election – after the sitting labour member was forced to resign over sexual harassment allegations.

The Labour Party endured a 9 per cent swing against them while the Tories enjoyed a 23 per cent positive swing and secured 51.9 per cent of the vote.

It had held the seat since 1964 and was not one of the ‘red wall’ that had voted Tory in the 2019 election.

I should note, however, that the Labour candidate for Hartlepool by election, who was pushed on the local electorate by central office, was tainted by scandal himself, which didn’t help.

While the reasons for the failure in the face of the worst Tory government ever were disputed, with Blairist hack and former Hartlepool MP Peter Mandelson maintaining the loss was a hangover from the Corbyn years which he asserted were “still casting a very dark cloud over Labour” (Source), the general understanding is that voters rejected the leadership of Starmer and Reeves.

They were seen by voters as standing for nothing and being obsessed with culling dissenting voices within the Party (aka expelling progressive elements) rather than developing a coherent policy alternative to the Tories.

Further, in the US, after being elected in 2020, the Biden Administration introduced the so-called omnibus bill – Inflation Reduction Act – which became law in August 2022 and was touted as being ” the largest investment into addressing climate change in United States history”.

Several climate initiatives have followed.

The IRA was not the way I would have crafted a green response, given I now consider Green New Deal ‘growth’ strategies to be flawed in a most elemental way.

But it put pressure on Starmer and Co to also be seen as doing something to respond to the growing awareness that we are facing a climate emergency.

Starmer claimed in response to the humiliating election loss that he was (Source):

… absolutely determined to do whatever is necessary to fix things … I am going to set out a strong case to the country, learn the lessons of the elections that have come in, so far, and accept that we must reconnect and rebuild trust with working people, particularly in places like Hartlepool,

So on September 27, 2021, the shadow chancellor announced that if elected, the Labour government would invest £28bn a year on green initiatives as part of its pitch to the win office (Source).

They called the strategy “Labour’s Green Prosperity Plan” and claimed it would build “A fairer, greener future” for Britain (Source):

The £28 billion a year pledge was actually an annual commitment out to 2030, which would help transition the British economy and housing stock but was still a ‘drop in the ocean’ compared to what is needed to bring Britain into a green future.

Like all ‘Green New Deal’ narratives it tried to reconcile saving the planet by delivering “economic growth for every region of Britain” and to “put money in people’s pockets and build the wealth of our nation once again”.

Irreconciliable objectives – but that is another story for another post.

Rachel Reeves had the audacity to claim that she would be the first “green chancellor” in British history.

She said “As chancellor I will not shirk our responsibility to future generations and to workers and businesses in Britain”.

She also said:

No dither, no delay. Labour will meet the challenge head on and seize the opportunities of the green transition. We will provide certainty and show leadership in this decisive decade.

Of course, all this was framed in their self-destructive repeat of the ‘fiscal rules’ which made the last general election platform in 2019 unbelievable.

The shadow chancellor said that “I have set out clear fiscal rules, that we will pay for day-to-day spending with tax receipts and that we will get our debt falling as a share of our national income.”

I have previously pointed out that Labour’s fiscal rules effectively prevent it from achieving large scale infrastructure changes, a point they have consistently denied.

They also rejected nationalising the price-gouging privatised energy companies and that will make it harder for them to lower prices while stimulating renewable energy.

The £28 billion a year pledge was actually an annual commitment out to 2030, which would help transition the British economy and housing stock but was still a ‘drop in the ocean’ compared to what is needed to bring Britain into a green future.

Then in June last year, Reeves “watered the pledge down, saying the party would invest over time from a 2024 election win, reaching £28bn a year after 2027” (Source).

It was stated that “Labour’s fiscal rules were more important than any policy”, which is about as moronic as it gets.

Moronic because it totally recasts the purpose of fiscal policy, which should be to advance human and natural well-being rather than recording particular numbers in fiscal statements.

Anyway, that was U-turn number 1.

Last week (February 9, 2024), it was U-turn number 2.

Starmer scrapped the Green Prosperity Plan and instead said that they would spend £4.7 billion a year instead, the ‘drop in the ocean’ becomes a miniscule droplet.

The self-styled ‘first green chancellor’ is looking an embarrassing red.

Starmer claimed it was because Liz Truss had wrecked the ‘public finances’ of Britain, but that assessment just reflects how moronic the Party has become in terms of economic literacy.

Who is advising them?

Well, I know who and they should resign forthwith.

And all of this follows the release on January 22, 2024 of a major report from climate aware researchers, which concluded that the British government should be investing £26 billion a year (around one per cent of GDP) on initiatives to address climate change.

The report – Boosting growth and productivity in the United Kingdom through investments in the sustainable economy – identifies a massive shortfall in investment in both the public and private sector in “sustainable technologies and infrastructure” in Britain.

Years of Tory austerity has left a huge infrastructure deficit, not to mention the destructive privatisations that placed key utilities in the hands of short-term profit maximisers rather than being held in public hands where they could think about long-term sustainable investments.

The Report said that:

1. “Too much current investment continues to be in the unsustainable economy, such as development of new oil and gas fields in the North Sea and the construction of homes and offices that are not energy-efficient or climate-resilient – this raises costly risks.”

2. “Investment needs to cover all key sectors: energy, transport, housing and industry, plus agriculture and waste.”

3. “We estimate that the UK needs to increase annual public investment by around 1% of GDP (£26 billion at current prices) to make up for decades of underinvestment in its physical, natural, social, knowledge and human capital, to deliver on the need to tackle climate change, biodiversity loss and environmental degradation, and to be economically productive, efficient and competitive in the future.”

The Report was not without its shortcomings though – falling into the ‘deficit dove’ category.

It claims that the “direct public finance required to support this transition should not be expected to worsen public debt/GDP dynamics” because the government borrowing would pay for itself by stimulating necessary growth and tax revenue.

It claims that:

There will be upfront investment costs to delivering the transition to sustainable, inclusive and resilient growth, but targeted and temporary borrowing for good public net investment reduces the debt-to-GDP ratio over time and is fiscally responsible”

Of course, that sort of narrative is one of the reasons that the Labour Party has abandoned its pledge in the first place.

It simply doesn’t think the ‘finances’ would be sustainable in their flawed framework.

The only way to deal with climate change effectively (if we can) is to abandon the ‘sound finance’ straitjacket that the entire GND debate is being conducted within.

The UK government will only be restricted by the availability of real productive resources that are suitable for the task (which includes the technologies necessary to ensure a sustainable future) and logistics of shifting existing resources out of their carbon-intensive uses into sustainable uses.

Those restrictions alone are massive and will pose a major political problem for governments in the future.

Compounding those problems with false claims that the government doesn’t have the necessary finances to make the necessary changes possible will just kill appropriate responses.

We are not dealing with the funding of a new school or not here.

The globe is facing an existential threat and action is needed.

I fear our responses will not be sufficient.

The latest U-turn by the British Labour Party means it now faces the voters with nothing special to offer.

It appears that it is just now finally distilled its message to one of – ‘We are just going to do what the Tories do but better’.

They will tell the people that the Tories have been a disaster but that not much will effectively change under Labour, except there won’t be as many Prime Ministers in the next term of office.

That is a very depressing offer in my view.

Walking around London over the last few weeks, I was aware that the public infrastructure of the city has deteriorated considerably since I was last there at the outset of the pandemic.

There are more visible signs of personal hardship and many more buildings appear vacant.

The other point to understand is that even in the context of the sound finance narrative that Starmer and Co are operating in, the latest ‘public finance’ data from the British Office of National Statistics (released January 23, 2024) – Public sector finances, UK: December 2023 – doesn’t support their narrative that the situation has deteriorated in such a way to support abandoning their pledge.

Relative to the height of the pandemic, net borrowing has falling considerably, public sector spending is flat and net debt as a per cent of GDP is slightly lower.

Moreover, with GDP growth in decline in the September-quarter and unemployment rising, it is likely that the fiscal position will record higher deficits as activity falls.

Far from being a sign that fiscal policy should tighten further, these ‘bad’ deficits are a sign of a spending gap in the non-government sector and provides a non-inflationary space for government investment to be made.

Conclusion

The lack of mission exposed by these U-turns by the British Labour Party are mirrored around the world.

In Australia, our Labor government is obsessed with running fiscal surpluses as the society faces major issues relating to housing, transport and climate, among other challenges that have arisen, in part, to poor government policy in the past.

I told an audience in London a few weeks ago that I considered the ‘institutions’ that had been created in the late C19 and into the C20 to give political voice to the working class had past their use-by date and were no longer fit for purpose.

The British Labour Party is one such institution and it has been so captured by ‘conservatism’ of the worst type (sound finance etc) that it no longer is capable of delivering sustainable prosperity.

That is enough for today!

(c) Copyright 2024 William Mitchell. All Rights Reserved.

This Post Has 8 Comments

  1. I enjoyed the discussion in London last month and I enjoyed my brief trip to London where I studied in the ’60s. If you found London run down perhaps you should get out of town because the rest of the country is a health risk. I won’t go into details because there are too many but the differences between London and the rest of the country are just as stark now as when they urged Dick Whittington to walk from near where I live to the city with streets paved with gold many hundreds of years ago. Keep up the good work Bill.

  2. @Rod White you’re right that a visitor’s view of London doesn’t reveal the extent to which the country has declined, but the contrasts in wealth and poverty are possibly most stark there. One problem is that the wealthy are so insulated in kilometres of wealthy streets and affluent parents’ schools and monster cars, that the nearest they come to seeing poverty is stepping over a homeless person or two on the way to the opera or Waitrose (though they more likely have home delivery to avoid this inconvenience). While Dick Whittington was, contrary to myth, from a wealthy Gloucestershire family and a money lender to the King (thus setting a bad precedent) as well as merchant, he did at least donate lots of money to good projects such as a public toilet seating 128 that was cleansed by the Thames at high tide. The dirth of public toilets nowadays is a clear sign of a country that has lost the plot.

  3. I must take the place of the “lawyer of the devil” about the new version of Blairite British Labour.
    The fact is that they are not promising the yellow brick road to their constituencies and that’s not a bad thing.
    Right now, In Portugal, and amidst a electoral campaign for executive power, every party is promising big money to everyone.
    So much so, that the mouth piece of the ECB just came to the fore to warn those parties that there is no other way than that taken by the diseased government and imposed by the ECB or the european comission or whoever runs the european aberration, called the EU.
    You can say, as one might suspect, that Keir “Blair” Stramer is just doing his best to not win any election.
    I guess that one can be very happy, while sitting in the oposition chair for a long time.

  4. Patrick B – yes, I realise that Dick Whittington is a myth, presumably to encourage the poor that there is a way to the top. It’s clear that the way is now barred by the Labour Party. I resigned the moment Starmer was elected leader and had I not done so I would have been ejected by now. There has to be a realignment of the left in due course but it won’t be soon. I shall probably not vote in the next GE although the Labour candidate is good and has a low opinion of the leadership. I shall be interested in what Corbyn does. If he stands as an Independent I expect him to draw huge crowds. We’ll see. All the while Climate Change will wait for no one. At 79 I’ve lived a wonderful life. My granddaughters will lead an interesting and challenging one. One is reading Environmental Science at University, the other intends to read Law.

  5. Why don’t we just get on with it and call Starmer’s “Labour” what it is — capitulation.

  6. Starmer, Reeves, and Streeting are like three bouncers, blocking the emergency exit of a burning building.

    We are all going to have to push past them if we want to get out alive.

  7. Dear Rod
    Unlike you I stayed a Labour member because I enjoyed being part of some good national groups for which you had to be a member: Labour CND and Campaign for Labour Party Democracy. I also enjoyed campaigning/being subversive at Labour conferences (now persona non grata).
    You have to do something to get kicked out of Starmer’s Labour, i.e. stand for a position which requires them to scrape your social media in order to find an ‘offence’. It’s amusing to see the regret that this never applied to rightwingers.
    Difficult to understand why anyone with a conscience is still a member now.

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