Starmer won’t turn on spending taps

Don’t expect a Labour government to immediately splash the cash, was Keir Starmer’s clear message to voters today as he painted a stark picture of the economy he expects to inherit after the general election.

“Anyone who expects an incoming Labour government to quickly turn on the spending taps is going to be disappointed,” warned Starmer, who laid out his economic vision for Britain this afternoon at the Resolution Foundation’s Economy 2030 event.

This message won’t go down well with the Labour left, which is still reeling from Starmer’s praise of Margaret Thatcher in an article he wrote for the Sunday Telegraph. But managing expectations on spending was also a clear attempt to blame his Tory predecessors for any austerity measures enacted if – or indeed when – he enters office. 

Starmer stressed that he would be inheriting an economy worse than after the 2008 financial crash, which will place “huge constraints” on what a future Labour government can offer. He also highlighted research from the Resolution Foundation think tank which shows that living standards are falling this parliament for the first time in modern history. Households’ real disposable income will have dropped 3.1 per cent from December 2019 to January 2025. 

“Never before has a British government asked its people to pay so much, for so little,” said Starmer, pointing out that declining living standards come at a time when Brits are paying higher taxes than at any era since the war. 

The Labour leader was also keen to clarify that when he praised the Iron Lady over the weekend for setting loose Britain’s natural entrepreneurialism, he was simply making the point that her government had a sense of purpose. Something Sunak’s government seems to lack, he added. 

As for Starmer’s government-in-waiting, its primary sense of purpose appears to be the very same one expressed by the much-beleaguered Liz Truss.

Bolstering economic growth will be a Labour obsession, he declared It will be “the mission that stands above all others”. And he plans to achieve it through backing British business with a competitive tax regime, tackling restrictive planning laws to get Britain building again and investing in the future growth industries.

This final point is crucial because Starmer is relying on it to fend off criticism of his costly green package from Chancellor Jeremy Hunt. Hunt claims that Labour will fail to reduce debt as a share of the economy unless it scraps its plan to borrow up to £28 billion by the end of the parliament to invest in green infrastructure.

Yet Starmer insisted today that investing so heavily in the green energy transition will provide ample opportunities for growth, meaning the package will essentially end up paying for itself. 

This prediction will generate scepticism. That said, a new YouGov poll reported in the Telegraph indicates that Labour is more trusted than the Conservatives to grow the economy. One in four Brits think that Labour can find a remedy for stagnation, while only one in five said the Tories had the best policies for growth. 

Of course, some would argue that the more revealing finding from such a poll is the fact that large swathes of the public have very little faith in either party to deliver on their growth agendas. Meaning a Labour general election victory would perhaps be more indicative of the disappointment felt at the Tories’ failure to curb stagnation as opposed to any real conviction in Starmer’s economic vision. 

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