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16 March 2023

The quiet consensus: how Labour and the Tories are converging

The Budget confirmed that the two main parties are closer on policy than at any time since 2008.

By George Eaton

British politics will soon enter election mode. All the talk will be of “big choices”, “forks in the road” and “dividing lines”. But as the rhetoric escalates, a more banal reality is revealing itself: convergence between the Conservatives and Labour.

Jeremy Hunt’s first Budget as Chancellor represented perhaps the clearest instance of this yet. Faced with a modest improvement in the economic outlook, Hunt did not choose to reduce the overall tax burden. Instead, he funded further state largesse: 30 hours a week of free childcare for one- and two-year-olds; a three-month extension of the £2,500 energy price guarantee (a policy dismissed by Hunt’s political patron David Cameron as “Marxist” when proposed by Ed Miliband).

As a consequence, the tax burden is set to reach a new postwar high of 37.7 per cent of GDP by 2027-28. Corporation tax, which was cut several times by the Cameron government, will rise from 19 per cent to 25 per cent, close to its pre-2010 level. After Liz Truss’s farcical premiership, the top rate of income tax is entrenched at 45p, a higher level than for all but one month of New Labour’s 13 years in office. Public spending, meanwhile, is forecast to settle at 43.4 per cent, the highest sustained level since the 1970s.

During the Blair-Clinton era it was routinely said that the age of big government and tax and spend was over. Both turn out to be very much alive – and under a Thatcherite prime minister and chancellor. Rishi Sunak, who once declared that “in normal times public spending should not exceed 37 per cent of GDP”, has collided with the reality that “normal times” are not returning. A new era of permanent crisis demands permanent intervention (and there are few votes in libertarianism). 

In his Budget response, Keir Starmer was left to complain that the Conservatives had stolen Labour’s policies: an energy price guarantee, an energy windfall tax, action on pre-payment meters. He could have added: “And you’ve turned our half-formed childcare policy into a real one.”

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Unlike some of its more consensual European neighbours, the UK tends to oscillate between periods of ideological divergence and convergence. Margaret Thatcher, Jeremy Corbyn and Liz Truss testify to the former; “Butskellism” (Rab Butler and Hugh Gaitskell) and “Blameron” testify to the latter. The free flow of policies between Starmer’s Labour and Sunak’s Conservatives signifies that we have entered a new era of consensus.

This is not only true of tax and spending. Both parties are committed to making Brexit “work” rather than reversing or radicalising it. Both favour higher defence spending, Trident retention and are almost indistinguishable on Ukraine policy. Both support tougher controls on illegal migration and – for economic purposes – loose controls on legal migration. Both are inclined towards authoritarianism on crime and civil liberties.

Every so often a genuine divide emerges. Labour would spend £28bn a year on green investment (more than Corbyn and John McDonnell pledged) and abolish the House of Lords. But these are largely exceptions that prove the rule.

Yes, at the next election Labour will commit to spend more and the Conservatives will commit to tax less. But both are wary of deviating from economic orthodoxy (Labour recalls the fate of Corbyn and McDonnell; the Conservatives the fate of Truss and Kwasi Kwarteng). Whichever party wins power, most of the pillars of the Thatcherite settlement will endure: privatised utilities, a flexible labour market, a financialised economy.

For some this represents progress: a domestic version of Barack Obama’s foreign policy maxim, “Don’t do stupid shit”. But it is often when bipartisan consensus is at its strongest that the greatest mistakes are made: witness the Iraq War 20 years ago this month or the pre-crash mania for financial deregulation. It is not only the sleep of reason that breeds monsters; it is also the sleep of dissent. 

[See also: Why Jeremy Hunt’s Budget welfare reforms won’t work]

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