Keir Starmer is no Blairite – or at least, he doesn’t want voters to think he is. In his speech on the Middle East last week, he condemned the “arguably [past] 20 years” of diplomacy on Gaza as “a dereliction of responsibility”. He cringes when journalists ask whether he takes advice from his predecessor, saying he’s “not taking advice from anyone in particular but everyone in general”. On the economy, he seems equally keen to keep New Labour at a distance. “We want growth across the whole of the country,” he said in October, “not just growth in London and the south-east, with ‘redistribution’ as a one-word plan for the rest of the country.”
This last point might prove the most important. It’s a poorly veiled criticism of New Labour’s economic model: pump the London and south-east economy, harvest the tax revenue, and then redistribute it through tax credits and more money for the NHS. Or in the words of the King’s College London economist Jonathan Portes: “Macroeconomic stability combined with fiscal redistribution and better funded public services.”
Labour’s concern is that this approach doesn’t produce the secure and stable prosperity that well-distributed economic growth does. Its plan is to spread green investment around the country (how much? Tbc) and devolve economic planning to local government, with the aim to get productivity growth in every region by the end of the next parliament. This connection between regional productivity growth and overall productivity is sound, according to a new report from Labour Together – a think tank-cum-political consultancy that is close to many senior Labour players.
Britain’s low regional productivity explains why it is lagging behind other countries, according to the report. Even though London and the south-east might be surging ahead, the British average is weighed down by low productivity elsewhere, which in turn is explained by low levels of investment outside the south-east. Between 2009 and 2019, for instance, the north got £349 per person for transport while London got £864 per person. In addition to weighing down productivity growth, regional inequality is associated with lower social mobility.
The report recommends Labour prioritises house-building, investment in the energy sector and building national infrastructure such as transport. Labour has made the first two central to its plans to grow the economy. Less so transport. Labour quietly let the question of funding HS2 slide. Angela Rayner – albeit relatively new to the shadow levelling-up role – has chosen to define levelling up in terms of higher pay and better housing. Transport seems to be the missing piece.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.
[See also: Keir Starmer is emerging as a national leader]