What ever happened to the “strong state”? When the Labour Party won power last July, commentators announced the arrival of an “activist” and “interventionist” government, which would ditch the dogmas of laissez faire and confront the issues of the day: chronic stagnation, climate collapse, ragged public services. Rather than simply “correcting market failures”, the Financial Times predicted, Keir Starmer’s industrial strategy would reshape the economy in line with his political priorities: a historic shift in a country where the dominance of rentier capital is rarely disputed.
It did not take long for Labour to deflate these expectations. Its most ambitious policy – the Green Prosperity Plan, which had initially earmarked an annual £28bn for switching to clean energy – was downsized to the point of insignificance. In its place, Starmer has outlined a domestic agenda that is overwhelmingly reliant on big business: rip up planning laws to incentivise house-building; deregulate finance to encourage “risky” investments; line the pockets of asset managers under the guise of “public-private partnership”; and allow fossil fuel companies to plunder the North Sea.
If there was any lingering uncertainty about this direction of travel, it was dispelled last week, when Starmer announced that defence spending would rise to 2.5 per cent of GDP by 2027, with an ultimate target of 3 per cent. Meanwhile, billions would be slashed from the benefits bill, stripping sick and disabled people of their entitlements and forcing them into the labour market. Needless to say, all this is a far cry from socialism-for-the-21st century, let alone the blue-shaded Labourism that is supposedly this government’s new hue. It looks more like a scattered series of inducements to profiteers, offered on the assumption that their trickle-down effects will someday lead to growth.
Yet, despite this rigidly conventional outlook, Starmer’s approach to government aspires to be more than just continuity Toryism. It has its own historical occasion and character, one that can be best understood as an attempt to develop a more effective form of crisis management for a nation in decline. This starts from the reasonable premise that the Conservatives had, over the course of their tenure, become too corrupt and complacent to administer the state. By subordinating this task to that of enriching themselves and their cronies, they generated social chaos and perpetual scandal. Labour, by contrast, has promised a government that will “tread more lightly” on ordinary people’s lives. Free from ideological zeal or personal interest, it wants to make politics boring again: not by foregrounding the state, but by moving it to the background, where it can guarantee some semblance of stability.
This was the purpose of Rachel Reeves’s inaugural budget last autumn, which increased spending by the minimum amount necessary to maintain basic services and national infrastructure – both of which may have otherwise ceased to function – while taking cautious steps to raise revenue. It was also the reason for Labour’s concessions on public-sector pay, intended to stave off another round of disruptive strikes, and its gradual renationalisation of some railway lines. Such policies are essentially reactive: designed to prop up the creaking structure that is contemporary Britain, rather than rebuild it.
But with a net approval rating of -41 per cent, and a majority of Britons branding it “dishonest” and “incompetent”, the government must also manage another looming crisis – that of its own legitimacy. Aware that it is uniquely vulnerable to political challenges despite its supremacy in Parliament, it is now trying to mollify the two most potent forces of potential opposition.
The first is the market. Modest though it was, Reeves’s budget still elicited warnings from rating agencies and gilt investors, alarmed at any notional deviation from austerity. Since then, calls for “fiscal consolidation” – often conjuring the spectre of Liz Truss – have grown louder, and Labour has shown that it is listening. Every aspect of its programme, it asserts, is subject to “non-negotiable” constraints on spending and borrowing. The Treasury has demanded that departments make “ruthless” cuts, many of them to be announced in the forthcoming spring statement, while private companies will be allowed to devour even more of the NHS. As long as it demonstrates this twisted kind of credibility, the government believes it can stave off a rebellion of financiers.
A second pillar of opposition is the populist right. In the wake of the riots that swept the country last year, Reform has been leading in the polls, and is projected to win the upcoming by-election in Runcorn and Helsby. Labour’s response has been to accelerate its attacks on migrants in the hope of seducing would-be Faragists. Accusing the Tories of running an “open borders experiment”, it has established a new Border Security Command to crack down on small boats while broadcasting lurid videos of raids and deportations.
The problem, however, is that these crisis-management strategies – the first aiming to stop a vitiated state from breaking down, the second to pacify sources of resistance – threaten to conflict with one another. On the one hand, Labour wants to assert its difference from the Tories by minimising upheaval and ensuring that government runs smoothly. On the other, its plan to appease the market through “public-sector reform” will only deepen the disorders – state dysfunction, threadbare services, social decay – associated with ten years of Conservative misrule. The contradiction is just as stark when it comes to migration. The UK remains reliant on new arrivals to provide tax revenue and staff the service economy. A drop-off would, according to the Office for Budget Responsibility, make the deficit £13bn larger by the end of this parliament – straining the public finances and filleting sectors such as health and care, which are already suffering serious labour shortages. If Starmer pursues a hard-border policy, convulsions will ensue.
Faced with this predicament, the government offers little more than a fudge: enough public provision to avert disaster, but enough austerity to please investors; enough migration to prevent economic ruin, but enough gestural cruelty to retain at least some of the racist vote. Labour preaches fiscal credibility while promising to spare no expense when it comes to weapons of war. Is this balancing act sustainable? Probably not in the long run. The gap between what is necessary to maintain stability and what is demanded by the agents of reaction – the City and Farage – will only widen. If British people want Starmer to choose the former, they must assemble an opposition that can overpower the existing ones.
[See also: Can Starmer make Labour the security party?]
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