Rishi Sunak’s sodden, tragi-comic, and surprise announcement of a UK general election was an amusing episode in a so far uneventful ‘year of democracy’.
The announcement was a boon to headline writers, who had fun with phrases like ‘Drowning St’. My attention was piqued by the background music ‘things can only get better’ (D:Ream), which added to the farce, but which British political aficionados will recognise as the song that was also used by Tony Blair’s New Labour party in their 1997 election campaign.
At the time, I was finishing my studies and happened to be in London on the day of the election, and vividly recall walking past Downing St, where the sense of a new era was palpable. Today, the challenge for Keir Starmer is whether he can spura new era of growth and renewal in the UK, or whether his party simply turns out to be ‘not the Tories’.
In the late 1990’s, Blair’s government, bolstered by a very strong front bench, had spent a long time preparing for government, and once in power made a series of dramatic policy moves (see our recent note ‘Does debt smother politics?). By comparison, the most important question for the July 4th election – with the Tories 21 points behind Labour in the polls and destined to be wiped out (some 100 sitting MP’s, mostly Tories, will not stand this time) is, how ready are Labour?
Whilst the election announcement has taken many Tory MPs by surprise, my sense is that Labour would also have much preferred a November election – they still must find candidates for over 80 seats and faces a few awkward spots such as Islington North where Jeremy Corbyn will stand as an independent. Indeed, the fact that both the Tories and Labour are logistically unprepared for a July election might benefit the Liberal Democrats, which opens up a small chance of a coalition government (importantly electoral reform would be the price of this).
To date, Keir Starmer’s Labour has given relatively few details on its program, partly to allow space for the Tories to slip up and partly not to skew the debate on the outlook for the economy. This will be Labour’s greatest challenge.
When Blair came to power in 1997 the British economy was bigger than that of China and India together, the world was under the steam of globalization and debt to GDP in the UK was close to 40%. Today, China regards Britain as a ‘little island’ (nothing wrong with little islands!), globalization has come asunder and debt to GDP is 100%.
I suspect that if there are early, dramatic wins for Starmer, they will be in tax (cutting back exemptions for the wealthy and potentially a wealth tax), corruption (standards in public life), and institutional reform (end of the House of Lords?).
Revitalising the economy will take longer, notably because Labour will initially stick to the UK’s fiscal rules and take pains to avoid any early volatility in the pound and gilt markets. In order to enact its plans for technology and ‘green energy’ investment Labour will most likely have to create partnership with international institutional investors.
Outside of these areas it is not clear to me how Labour can immediately reverse the damage done to educational, social services (NHS) and the fabric of small towns and cities, exacted by the Tories. It will require a level of imagination, funding and policy continuity not seen in British politics for decades.
In foreign policy, Labour’s approach will be a much less contentious one – relations with Ireland (which have deteriorated since Johnson) will be much warmer, and the approach to the EU will most likely be less confrontational and more collaborative. Whilst David Lammy (shadow foreign secretary) has spent a decent amount of time in the US, courting Republicans and Democrats, the scenario of a Trump presidency and a Labour government is a high probability one, but a configuration that would stretch the notion of a ‘special relationship’.
In defence I expect little headline level changes to Britain’s commitments, but the shadow defence minister John Healey will likely re-organise the military command and HQ, and importantly spend a good deal of time reorganising defence investment and procurement so that it gives ‘value for money’.
In the next few weeks, Labour faces twin, urgent challenges – mobilising the party across the UK, focusing on making inroads in the south and Scotland, and then preparing for government in the context of a gargantuan challenge.
The good news is that the summer holidays start just after the election which I suspect will mean that the effective policy launch of the new government will kick off in September.
Have a great week ahead,
Mike
The Levelling 