Progressive economic policies are back on the agenda â time for Starmer to catch up
S ometimes political parties hit a sweet spot and their opponents struggle to lay a glove on them. Rapid non-inflationary growth meant Margaret Thatcher was invulnerable at the 1987 election. Tony Blair was unbeatable in the mid-1990s when Britain was bored with a tired, discredited and sleazy Tory government.
Boris Johnson has arrived at his own political state of grace this spring. Everything has come together: the NHS has played a blinder with the vaccine programme; record peacetime spending has anaesthetised the pain of lockdown; a weary population is grateful to be allowed to hug and go to the pub again.
These sweet spots donât last for ever and can often be brief. It is possible that the variant of the coronavirus first detected in India will pose no significant threat to the UK and a blossoming economy will continue to give Johnson a non-stick quality. If the new variant takes hold and causes a delay in lifting restrictions, or even the re-imposition of tougher controls, the day the prime minister ambled round Hartlepool on his post-byelection victory march may go down as peak Johnson.
The thought that periods of untouchability are rare and generally fleeting should come as some comfort to the Labour party, although so deep is the current gloom that it probably wonât. The fear is not just a fifth straight general election defeat but that Labour could be following the French socialist party into political irrelevance.
But this may be pushing the panic button too soon. As some commentators have pointed out, Labour did fine in the recent elections in Wales and Manchester, where it enjoyed the same incumbency factor that delivered for Johnson elsewhere.
Itâs also worth pointing out that, despite the travails of the Labour party, progressive politics seems to be in pretty good health. The idea of a self-regulating, self-stabilising free market received a fatal wound in the financial crisis of 2008, but somehow lived on for another miserable, wasted decade.
Obsessing about the budget deficit was on its way out even before the pandemic struck and the current crisis has moved the dial further to the left. In part, thatâs because governments have adopted a spend, spend, spend approach. In part, too, itâs because â as shown by this weekâs National Audit Office report â the pandemic has exposed how threadbare the state has become.
But itâs also the case that once unfashionable ideas have become part of the mainstream. Activist tax-and-spending policies by finance ministries are back in vogue, with independent central banks taking a back seat. Furlough schemes are a form of basic income. Joe Biden has showered money on American citizens with no heed for the US budget deficit. The deglobalisation that began with Donald Trumpâs trade wars has accelerated as countries have tried to make themselves less vulnerable to long supply chains.
Robert Skidelsky, in a chapter of a new book, The Return of the State, sketched out some ideas for what the UK government should do, including taking responsibility for all procurement affecting the health of the nation; a public sector job guarantee for the unemployed; ensuring sufficient demand through redistribution rather than relying on personal debt; and capital controls to reduce government dependence on international credit markets. In the current climate, none sound nearly as unfeasible as they would have done five years ago.
Nor is there any real likelihood of a return to a world of minimal state interference in the running of the economy. A report by the Resolution Foundation and the London School of Economics this week identified five big challenges over the next decade: Covid, Brexit, net zero, automation and an ageing population. The UK, it said, was neither prepared nor used to the change that would be necessary to meet these challenges. The government has plenty of slogans, such as âbuild back betterâ and âlevelling upâ; what it doesnât have is a workable plan. The sting in the tail was the Resolution Foundation and the LSE donât think any other party has either.
Writing in the New Statesman this month, Tony Blair said: âEverything about the world we live in, and still more the one we are about to live in, cries out for a progressive response,â and he was right. One of Labourâs frustrations is that a party of the right has been entrusted to do the things that a party of the left would feel more comfortable doing.
To an extent, Starmer has brought that on himself by getting sidetracked by social and cultural issues. There was, perhaps, a rationale for this while free-market ideas were pre-eminent, because, having lost the economic argument, the left sought to move the debate into areas where it felt more comfortable. There is no such excuse today. The economic argument is there to be won, and Labour can take some comfort from the fact it has done so before.
It is almost eight decades since the Beveridge report identified five giants barring the way to progress: want, ignorance, disease, idleness, squalor. Labour turned the giants into five policy objectives: tackling poverty, improving schools, creating the NHS, ensuring full employment, building houses. The world has changed and the fourth industrial revolution is upon us, but those are still things voters want. Labour could do worse than to return to first principles and to the sentiment that carried it to victory in 1945: never again.
Larry Elliott is the Guardianâs economics editor