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20 July 2023

Will Labour dare embrace Tony Blair’s agenda?

Greater use of AI and the private sector would force Keir Starmer to slay more left taboos.

By David Gauke

The situation is grim but here is a plan to get us out of the mess. That was the principal message from the second annual conference held by the Tony Blair Institute (TBI) on Tuesday 18 July.

Blair himself wasted no time in setting out the national predicament. The UK has the highest tax burden since the 1940s. Spending is growing at a rate that is, in Blair’s words, “unsustainable” but our public services are delivering worse outcomes. “Palliative” spending, such as disability benefits, pensions and current expenditure on health and social care, is outstripping “productive” spending on transport investment, science and technology, and capital spending on health. And an ageing population is going to make many of these matters worse. Productivity growth is poor, pay is stagnant, and business investment has underperformed since the Brexit referendum.

What to do? A short-term plan was set out that, according to the TBI, should increase GDP by 1 per cent. This involves planning reform, the consolidation of pension funds, reopening the UK labour market for EU workers and aligning our goods regulations with Europe to remove trade frictions. In the longer term, the focus was on preventative measures to reduce obesity and, ultimately, demand on the health system, while also embracing technology – especially AI – in delivering public services. The presentations on how AI may assist teaching were extraordinary, showing how high-quality personalised teaching could be provided and the pressure on teachers reduced.

The day ended with a speech by Keir Starmer in which he stressed his three priorities – “growth, growth and growth” (do you see what he did there?) – before he and Blair had a friendly chat. (Blair tactfully did not press him on whether he would pursue the TBI’s Brexit policies.)

In contrast to last year’s conference, this felt much more like a Labour event. The assumption of everyone present (including, I suspect, a demob-happy Ben Wallace who gave a relaxed and engaging interview to the broadcaster Jon Sopel) was that Labour was heading for an election victory, and that the agenda that Blair and his team set out was designed for a Starmer government.

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[See also: Keir Starmer’s most dangerous months now lie ahead]

It is certainly true that many of the policies advocated are not going to be taken up by the Conservative Party anytime soon. Planning reform was once a cause favoured by many Tory ministers but has been abandoned. It was a Conservative chancellor – George Osborne – who introduced the soft drinks industry levy (the “sugar tax”) but further action here is dismissed as “nannying” by Tory MPs. As for trying to reverse the damage from EU withdrawal to our labour market and exporters, this would be viewed as a betrayal of Brexit by many Tories.

Of course, Blair has gone much further on the Europe question than Starmer has been prepared to. In time, I suspect that the former PM’s arguments will prevail but not this side of the general election. However, it is Blair’s case on reform of public services that is worth considering in greater detail.

If we accept Blair’s arguments that, 1) the trajectory of spending is unsustainable, and that 2) we need to focus on introducing new technology to reduce costs in the medium term, certain conclusions follow. First, we need to control expenditure on palliative items to free up resources to invest in productive areas. Second, we need to reform radically the way public services work so that new technology is adopted and implemented. Third, as this technology is implemented, we need to realise the savings this will bring.

A further theme of the conference was that public services were slow to adopt new technology and that the private sector was frequently more innovative. A place for the private sector in delivering public services, it therefore follows, is beneficial.

Take these observations together and one can start to see the Blair agenda as not just a list of constructive suggestions but also as something of a challenge to Labour. This was not a point that was ever explicitly acknowledged at the conference, but the technology agenda is one that requires Labour – in particular – to leave its comfort zone.

It requires tight spending restraint, it requires the imposition of reforms that will be strongly opposed by trade unions and, ultimately, it requires reductions in the public-sector workforce across many areas. As with Hollywood actors and screenwriters, teachers, for example, will fear that AI will take away jobs. If AI is going to deliver big savings to the taxpayer, those fears will be justified.

As for the role of the private sector, this is also uncomfortable territory for Labour. Starmer talked a lot about partnership, largely in the context of the state taking a bigger role in the economy, not the private sector taking a larger role in the delivery of public services. Wes Streeting, as shadow health secretary, does not appear to have ideological hang-ups but that battle is not yet won within the party.

The Blair analysis – both in terms of the scale of the challenge the country faces and his prescription for addressing it – is persuasive. Elements of the agenda are unacceptable to the Conservative Party in its current state.  But what is not clear, ultimately, is whether Labour could deliver it either.

[See also: How Labour can be radical for free]

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