“The era of big government is over,” declared Bill Clinton in his 1996 State of the Union Address. Keir Starmer is not the kind of politician to make such sweeping pronouncements. But the conclusion that left and right alike have drawn from the King’s Speech is that big government is back.
It’s a reasonable one. As I write in my column in this week’s magazine, Starmer’s administration is perhaps the most interventionist since Harold Wilson’s. The 40 bills that comprise the King’s Speech (the highest number since 2005) include plans to renationalise the railways, expand workers’ rights, establish Great British Energy, protect renters and create an independent football regulator.
What’s behind this interventionist turn? It partly reflects a pre-existing domestic and global shift towards state activism. Ed Miliband, Jeremy Corbyn, Theresa May and Boris Johnson all – in different ways – championed intervention. The US, Europe and China have embraced a green industrial strategy. Starmer and Rachel Reeves’ view is that the UK can’t afford to stand apart.
But there are particular reasons why this government is an interventionist one. Labour’s central mission is to raise living standards (average real wages have only just returned to their 2008 level). In the absence of large tax and spending commitments, the active state becomes an even more crucial vehicle.
The Employment Rights Bill, for instance, is as much about growth as it is social justice. By banning zero-hour contracts and “fire and rehire”, ministers aim to force firms to invest more in technology and training rather than relying on cheap labour. The extension of full employment rights to workers from day one is designed to encourage more employees to switch jobs (wage rises are usually around three times higher for those who do).
On the green economy, the aim is for the state to act as a leading investor – in wind power, solar energy, gigafactories, hydrogen and steel – and encourage the private sector to follow in its wake. To boost growth, someone will need to spend but it won’t, in most cases, be the state (Labour aims to attract £3 of private investment for every £1 of government investment).
There is political logic to Starmer’s interventionism too – policies such as GB Energy (which will “develop, own and operate assets”) and rail renationalisation are overwhelmingly popular with the public. But there are risks too. Should energy bills and ticket prices continue their remorseless rise, the government will bear more of the blame. Across the economy, the expectation will be of state action where the market fails. It’s hard to be a little bit interventionist.
Should Labour’s big bet on growth fail, it will face a choice. Will the government stump up if businesses fall short? The King’s Speech answered the always erroneous charge that Labour lacks a plan. A shortage of policy has never been the party’s problem. The real question now is whether it will work.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.
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