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7 February 2024

Who runs Labour?

The party’s divisions over green investment have become a challenge to Keir Starmer’s authority.

By George Eaton

Who’s in charge? This is the question that has absorbed the Labour Party in recent weeks. Is it Keir Starmer? Is it Rachel Reeves? Is it Labour’s campaign director, Morgan McSweeney? Is it Starmer’s chief of staff, Sue Gray? The answer, one Labour MP said, has sometimes been “all of them and none of them”.

Such confusion stems from one of the most revealing episodes of Starmer’s four-year leadership: the internal splits over the party’s £28bn green investment pledge. As senior Labour politicians have defended or disowned the policy it has come to resemble Schrödinger’s cat: it is both dead and alive.

For months, key figures, including McSweeney and the party’s campaign coordinator, Pat McFadden, have pushed for the abandonment of a number that some regard as an “albatross around our neck”. In recent weeks, the Conservatives have delighted in referencing Labour’s “borrowing bombshell” – reprising an attack line that helped deliver them election victory in 1992 and 2015.

McSweeney, whose job is to defy Labour’s losing tradition, has long been alert to this danger. At a meeting of the party’s National Executive Committee in Glasgow last September, he cited a key insight from behavioural economics: that a loss is twice as psychologically painful as any equivalent gain. To rebut the Tories’ warning that “net zero will cost you”, Labour needed to emphasise that it would cut household bills, create jobs and provide energy security. This meant pivoting away from £28bn.

Labour’s shadow Treasury team has long regarded the number as a fiscal fiction. Ever since last June, the £28bn pledge has been subject to numerous caveats: that it must comply with the party’s fiscal rules (to avoid borrowing for day-to-day spending and to reduce debt as a share of GDP); that it will not be met until the second half of the next parliament; and that it includes existing government green investment (currently £8bn). On 1 February, Reeves refused ten times in an interview with Sky News to say that she backed the target.

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It was the shadow chancellor, in something of an irony, who first bound Labour to the number in her 2021 party conference speech, promising “an additional £28bn of capital investment in our country’s green transition for each and every year of this decade”. But Reeves is responding to a changed world. “I’d love to know who predicted war in Ukraine [and] the Middle East and the Tories crashing the economy,” an aide told me.

Economic modelling by the think tank Labour Together, shared with the shadow chancellor and Starmer, suggested that increasing borrowing by £28bn a year would likely breach the party’s fiscal rules unless circumstances changed (or the rules were loosened). On 2 February, Darren Jones, the shadow chief secretary to the Treasury, became the first frontbencher to state that the party was no longer targeting £28bn, remarking that “the number will move around just as a matter of fact”.

There is, however, one senior Labour politician who has so far not stopped using the £28bn figure: Keir Starmer. On 6 February, days after the media declared that the party had U-turned on green growth, Starmer told Times Radio: “We want to have clean power by 2030. We’re going to need investment. That’s where the £28bn comes in.”

Far from growing more cautious, Starmer has only become bolder in his defence of the policy this year: “It’s absolutely clear to me that the Tories are trying to weaponise this issue, the £28bn,” he told Sky News on 7 January. “This is a fight I want to have… If they want that fight on borrow-to-invest, I’m absolutely up for that.”

Labour history is replete with leaders clashing with their chancellors or shadow chancellors. After Tony Blair refused to resign as prime minister in 2004, Gordon Brown told him: “There is nothing that you could ever say to me now that I could ever believe.” The relationship between Ed Miliband and Ed Balls was less toxic but tense: Balls often doubted that Miliband could win a general election and believed Labour had become too anti-business. Tensions even intensified between Jeremy Corbyn and John McDonnell as their political project crumbled.

The rhetorical split between Starmer and Reeves has forced observers to ask a question that would previously have been unthinkable: have the pair fallen out? Insiders reject the idea. “I’ve worked in split teams, this is not a split team,” a senior aide told me. And Starmer and Reeves’ relationship has been free of the psychodrama that consumed others.

While New Labour was disfigured by the gang warfare between the Blairites and Brownites, Starmer and Reeves have shared a spin doctor: Ben Nunn, Reeves’s director of communications, previously held the same role in Starmer’s team. And far from viewing Reeves as a threat to his authority, Starmer values her grasp of economics and deep connections within the Labour movement (she joined the party aged 16). When the New Statesman’s “Left Power List” last year featured Reeves in first place and Starmer second, the pair exchanged good-humoured text messages about it. They are united by an intense desire to win.

What, then, explains Starmer’s unremitting defence of £28bn? One popular theory in Labour circles is that he feels personally loyal to Ed Miliband. While it was Reeves who announced the green pledge, it is the much-maligned shadow climate change secretary who has been its most redoubtable defender. In Miliband’s view, it is a crucial political dividing line with the Tories and integral to the “decade of national renewal” Labour has promised.

As leader, Starmer has often been cast as holding a Damoclean sword above the head of Miliband, towards whom some on the party’s right are irrevocably hostile. But the pair have a far closer personal relationship than such commentary suggests.

Miliband was “instrumental”, MPs say, to Starmer’s adoption as the parliamentary candidate for Holborn and St Pancras in 2014. Indeed, the selection contest for the seat was delayed to ensure that the former director of public prosecutions had been a party member for the requisite 12 months. Starmer, in turn, restored his north London neighbour to the shadow cabinet in 2020 and later handed him ownership of one of the party’s five missions: making Britain a “clean energy superpower”.

Yet few doubt that Starmer, who is ruthless, would marginalise Miliband if politics demanded it. As Labour leader, he has demoted or sacked friends such as Nick Thomas-Symonds and Charlie Falconer. Why would Miliband be any exception?

Some therefore posit an alternative explanation: Starmer really believes in the £28bn. The Labour leader is sensitive to the charge that he is a “flip-flopper” who stands for nothing and the green prosperity plan is Labour’s defining growth policy. Sue Gray had warned Starmer that he risked appearing weak if he capitulated to demands for a public U-turn (though plenty still expect one to come).

The overriding explanation for the confusion is less important than the fact that Labour has been confused. For some, this has exposed a critical gap in the party’s operation. Former civil servant Gray is leading Labour’s preparations for government; McSweeney is leading its election campaign planning – both are admired for their professionalism and focus. But who is knitting politics and policy together in a way that tells a coherent story about Starmerism? No one, critics say.

When I spoke to Jonathan Powell, who served as No 10 chief of staff from 1997 to 2007, he emphasised the importance of political preparation for government. “You have to come up with a hundred-day plan and then you need a second hundred-day plan because the first one ends and then everyone’s exhausted, it’s the summer, and you run out of steam,” he said. “You have to demonstrate momentum.”

Is the Starmer team prepared for this challenge – in far more forbidding economic and political circumstances than Blair faced in 1997? “Who is thinking about what a Labour government does on its first day, its first hundred days and its first year?” a source said. “That is all political. Sue Gray, who’s not done politics for long? Morgan, who’s busy? The political stakes are massive. If that hire is not forthcoming but we still win the election then we’re f****d.

Labour, a quip has it, is now divided between those who fear defeat and those who fear victory. On one side of the shadow cabinet, insiders suggest, are the “Ming vasers” such as Reeves, McFadden, Jones and the shadow health secretary Wes Streeting – those who emphasise the importance of caution and “de-risking” Labour in advance of the election (Roy Jenkins likened Blair in opposition to “a man carrying a priceless Ming vase across a highly polished floor”). Capping corporation tax and vowing not to cap bankers’ bonuses is emblematic of this approach.

On the other side are the “front-footers”, such as Miliband, the deputy leader Angela Rayner and the shadow international development secretary Lisa Nandy, who believe that Labour should be bolder and make a confident case for policies such as borrowing to invest. This, they say, is essential if Labour is to secure a mandate to transform Britain.

Under Starmer’s leadership, the party is routinely accused of pursuing a “Ming vase strategy” on account of his repeated U-turns or ruthless pragmatism. But aides reject this charge. One cited Labour’s pledge last autumn to “bulldoze” the UK’s restrictive planning laws – made as it campaigned against pro-Nimby rivals in the Mid Bedfordshire by-election. While Blair boasted in 1997 that his government would “leave British law the most restrictive on trade unions in the Western world”, Starmer has vowed to “level up workers’ rights in a way that has not been attempted for decades”.

The Labour leader’s impassioned defence of borrowing to invest has cheered the front-footers. But over £28bn, there is only confusion. “You might be wondering what has been going on,” Harold Wilson, one of Starmer’s political heroes, remarked in the summer of 1968 amid a sea of party splits. “I’ll tell you what’s going on. I’m going on.”

To the question “who’s in charge?” Starmer must give a no less definitive answer: “I am.”

[See also: Cracks between Starmer and Reeves are starting to show]

Illustration by André Carrilho

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This article appears in the 07 Feb 2024 issue of the New Statesman, Who runs Labour?

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