New shadow transport secretary Mary Creagh. Photograph: Getty Images.
Show Hide image

Labour sends Cameron another warning over HS2

New shadow transport secretary Mary Creagh echoes Ed Balls's argument that the £50bn for the project could potentially be better spent elsewhere.

Labour aides were keen to emphasise yesterday that the departure of Maria Eagle, a committed supporter of High Speed 2, as shadow transport secretary did not signal any change in the party's position on the project. But it's worth flagging up the first statement from her replacement Mary Creagh

After the Treasury select committee warned that there were "serious shortcomings" in the economic case for HS2 and called for the project to be suspended until they had been addressed, Creagh said: 

Labour supports the idea of a new North-South rail link, but under this Government HS2 has been totally mismanaged and the costs have shot up to £50 billion.

David Cameron and George Osborne have made clear they will go full steam ahead with this project whatever the cost. Labour will not take this irresponsible approach. There will be no blank cheque for this project or for any project, because we need to ensure it is the best way to spend £50 billion for the future of our country.

The significance of this response is that Creagh has echoed Ed Balls's argument that the funds for the project could potentially be better spent elsewhere. When Balls first made those remarks in his speech to the Labour conference ("the question is – not just whether a new high-speed line is a good idea or a bad idea, but whether it is the best way to spend £50bn for the future of our country"), some in the party suggested that he had overstepped the mark (with Maria Eagle doing her best to distance herself from Balls in her speech), but his words have now been adopted as party policy. 

For Balls, the main attraction of a U-turn on HS2 is that would allow Labour to outspend the Tories in politically vital areas ("building new homes or new schools or new hospitals") while remaining within George Osborne's fiscal envelope. Unless the coalition can significantly reduce the projected cost of the project (as Andrew Adonis has urged it to do), it does now seem a question of when, not if, Labour withdraws its support. 

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

Leader: Theresa May and the resurgence of the state

More than any of her recent predecessors, the Prime Minister seems willing to challenge the economic and political orthodoxies of the past 35 years.

Theresa May entered office in more tumultuous circumstances than any other prime minister since 1945. The UK’s vote to leave the European Union was a remarkable rebuke to the political and business establishment and an outcome for which few had prepared. Mrs May recognised that the result was more than a revolt against Brussels. It reflected a deeper alienation and discontent. Britain’s inequalities of wealth and opportunity, its regional imbalances and its distrusted political class all contributed to the Remain campaign’s ­defeat. As she said in her speech in Birmingham on 11 July: “Make no mistake, the referendum was a vote to leave the European Union, but it was also a vote for serious change.”

When the financial crisis struck in 2007-2008, David Cameron, then leader of the opposition, was caught out. His optimistic, liberal Conservative vision, predicated on permanent economic growth, was ill-suited to recession and his embrace of austerity tainted his “modernising” project. From that moment, the purpose of his premiership was never clear. At times, austerity was presented as an act of pragmatic bookkeeping; at others, as a quest to shrink the state permanently.

By contrast, although Mrs May cautiously supported Remain, the Leave vote reinforced, rather than contradicted, her world-view. As long ago as March 2013, in the speech that signalled her leadership ambitions, she spoke of the need to confront “vested interests in the private sector” and embrace “a more strategic role” for the state. Mrs May has long insisted on the need to limit free movement of people within the ­European Union, and anticipated the causes of the Leave vote. The referendum result made the national reckoning that she had desired inevitable.

More than any of her recent predecessors, the Prime Minister seems willing to challenge the economic and political orthodoxies of the past 35 years. She has promised worker representation on company boards, binding shareholder votes on executive pay, improved corporate governance and stricter controls on foreign takeovers.

The shadow chancellor, John McDonnell, has set the ­Labour Party on a similar course, stating in his conference speech that the “winds of globalisation” are “blowing against the belief in the free market and in favour of intervention”. He pointedly criticised governments which did not try to save their domestic steel industries as China dumped cheap steel on to global markets.

We welcome this new mood in politics. As John Gray wrote in our “New Times” special issue last week, by reasserting the role of the state as the final guarantor of social ­cohesion, Mrs May “has broken with the neoliberal model that has ruled British politics since the 1980s”.

The Prime Minister has avoided the hyperactive style of many new leaders, but she has deviated from David Cameron’s agenda in several crucial respects. The target of a national Budget surplus by 2020 was rightly jettisoned (although Mrs May has emphasised her commitment to “living within our means”). Chancellor Philip Hammond’s Autumn Statement on 23 November will be the first test of the government’s ­fiscal boldness. Historically low borrowing costs have strengthened the pre-existing case for infrastructure investment to support growth and spread prosperity.

The greatest political ­challenge facing Mrs May is to manage the divisions within her party. She and her government must maintain adequate access to the European single market, while also gaining meaningful control of immigration. Her statist economic leanings are already being resisted by the free-market fundamentalists on her benches. Like all prime ministers, Mrs May must balance the desire for clarity with the need for unity.

“Brexit means Brexit,” she has repeatedly stated, underlining her commitment to end the UK’s 43-year European
affair. If Mrs May is to be a successful and even transformative prime minister, she must also prove that “serious change” means serious change and a determination to create a society that does not only benefit the fortunate few. 

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories