Big spender Sunak leaves Labour with nowhere to go

Conservative backbenchers have become comfortable with the idea of inflating, rather than cutting, the country out of economic crisis. A Conservative Chancellor has paid the wages of a third of the country’s workforce since March, which is just one part of £190 billion in fiscal stimulus since the crisis began. And, as David Hirsch argues, the party’s stimulus efforts are focused on helping the poorest. This has left people asking: what is the point of the Labour Party?

The Shadow Chancellor, Anneliese Dodds, struggled to respond to Sunak’s summer statement yesterday, which announced another £30 billion in spending. The usual refrain for Labour is to ask for more investment, but that wouldn’t work this time.

Instead, we heard that “the government has failed to create a fully functioning test, track and isolate system.” It must have been a rollercoaster for observers, who excitedly watched Dishy Rishi pull out a series of rabbits in the form of “free cash” from his magic hat, before sitting through Dodds’s dreary denunciation of “the lack of timely information-sharing”.

Dodds, in all fairness, had pushed her party to go further than the Tories on taxation in the days leading up to the event. In a Marr interview on Sunday, she refused seven times to rule out supporting a wealth tax, adding that she believed the burden should fall on those with the “broadest shoulders”.

That position “evolved” by Tuesday, however, when she told the Commons: “I say to the government, if it does increase taxes during the recovery, and cuts back on the public services we all rely on, this will damage demand and inhibit the recovery.”

These were two opposite positions on taxation in as many days. What happened? A Labour source told Reaction “the right didn’t like it.”

The saga was reminiscent of the Miliband era, when the then Labour leader was so caught up in triangulating between the left and right of his party that he couldn’t develop a clear position on the most important problem of the day: the deficit. Within three months in 2014, Miliband went from omitting the word “deficit” from his conference speech to pledging to be “tough” and “cut the deficit every year”.

The public interpreted such flip-flopping as incompetence from a party they had already mistrusted on the economy. Labour’s own inquiry into 2015 election failings found that economic credibility was the main sticking point, with handling of the deficit repeatedly raised in focus groups.

Today, the party has to do three things: develop a clear economic plan, show that it is credible, and stick to it.

Developing the plan will, of course, be the trickiest part. After years of Corbynomics, the party’s economic credibility is in tatters. Starmer has already convinced some voters that he represents a break with the past, but this week’s contradictory positions on tax suggest he’s yet to develop the foundations of a long-term economic position.

Proving its credibility will be incredibly difficult against the charismatic Sunak – the shiny new Chancellor is smart, confident, and has the trust of the British public. If he says Labour’s plan doesn’t work, people will believe him.

And while sticking to the plan may seem the easiest part on paper, Starmer has in recent weeks displayed a propensity to flip-flop. The Labour leader has already changed his mind on reopening schools and the Black Lives Matter movement, which he was criticised for diminishing as a “Black Lives Matter moment”.

It isn’t at all clear what Starmer’s personal economic convictions are. The former shadow Brexit Secretary frequently mentioned the economy during Brexit negotiations but only in terms of the consequences of leaving the single market, rather than a future vision for the country.

In the Labour leadership election, he presented himself as Corbyn-lite and praised his predecessor’s radicalism, yet quickly sought to distance himself from Corbynomics once elected. This may make it easier for the opposition to manoeuvre as the coronavirus crisis evolves, but thus far it has meant ceding the ground to No11.

Clinton campaign chief James Carville famously said that elections come down to “the economy, stupid.” That is ever more so the case at times of economic turbulence. If Labour wants to be competitive in post-coronavirus elections, it can’t afford to take the backseat to a rockstar Conservative Chancellor.