Starmer’s high-stakes speech will mark a shift in strategy towards business

Sir Keir Starmer is set to give a major speech on the economy tomorrow. According to Labour insiders, the speech will be the first salvo in a policy blitz by the party. It will also mark the start of Starmer’s new, more aggressive approach, one more vocally critical of the government.

The planned speech will let Starmer stake out his economic vision for the country ahead of Rishi Sunak’s budget, due on 4 March, which by custom he, not Shadow Chancellor Anneliese Dodds, will reply to.  Starmer has so far positioned himself as being broadly supportive of government measures – merely criticising it for being too slow and ineffectual. Now he has an opportunity to build his own brand beyond an image of sensible – some would say “dull” – competence.

In this vein, the speech is probably also an attempt to quiet grumblings in his party that Starmer has not done enough to hold the government to account and build up an alternative vision for the country even as he waged war on the left. An article in The Guardian by Tom Kibasi, a former ally who helped run Starmer’s leadership campaign, which declared “The country cannot afford for Starmer to waste another year being hard on Labour and soft on the Tories” was a telling sign of how deep the discontent runs.

So, with these two aims in mind we can expect something bold tomorrow but precisely what is unclear.

Big ticket spending is the go-to announcement for a Labour leader. The enormous spending and infrastructure plans designed to speed up post-pandemic economic recovery currently being floated in the US might provide some inspiration. Starmer’s team makes no secret of its admiration for Biden whose winning back of the Midwest partly by promising good jobs in green industries is seen as a potential model for the quest to rebuild the “Red Wall”.

The only problem is that Boris Johnson’s government has already promised exactly this. His slogan, “Build back better”, is identical to the one adopted by the Biden administration and talk of a “Green Industrial Revolution” is not a million miles from ideas of “Green New Deal”. The key for Starmer will be to come up with a proposal which sounds distinctive – not just promising more of what the government says it is already planning to do.

Still, if the Tories are parking tanks on Labour’s lawn Starmer has the opportunity to return the favour. Sir Keir has reportedly been taking strategy tips from Peter Mandelson, New Labour’s eminence grise who famously proclaimed himself “intensely relaxed about people getting filthy rich as long as they pay their taxes”.

A leaked email last week from Starmer’s director of policy declared that Labour had to become “unashamedly pro-business” in order to regain the trust of working people. As such, in addition to potential catchy new ideas Starmer could use the opportunity to bring renewed attention to Dodds’ call to make the terms on emergency loans given to businesses during the pandemic easier – e.g. by letting them defer payment until profits return – which could well be popular among many Tory leaning small business owners.

Tax is another potential line of attack. Just last week Starmer said the government should not strangle the recovery by raising taxes. The speech could be a good opportunity to expand on this theme – and pile pressure on the deficit-conscious Rishi Sunak who is apparently planning a £6 billion raid on personal tax allowances in an attempt to reduce the deficit.

Boris’ embrace of higher spending also presents an opportunity for Starmer because it has shifted the terms of the debate. Not so long ago, calling for more spending without taking the political risk of pairing this with planned tax rises would have seen Labour savaged as fiscally irresponsible. However, Boris’ pointed abandonment of austerity has taken the wind out of debates about the deficit – even if Sunak remains personally hawkish.

Meanwhile, the consensus among economists has also shifted dramatically. A sense of crisis plus ultra-low interest rates mean that Ken Rogoff of all people – whose work convinced George Osborne of the need for austerity – now finds himself agreeing with arch-Keynesian Paul Krugman about the government’s need to spend freely without worrying too much about debt.

The speech is a tight-rope for Starmer. The need for eye-catching policies to calm his party needs to be balanced against the risks of making too many big promises to seem credible which undermined Corbyn’s 2019 manifesto. However, with the usual concerns about debt and spending limits more muted than they have been in a decade and governments across the world taking a more active role in the economy than at any point since World War Two, he also has a real opportunity to make a bold case. The trick will be striking the balance between boldness and credibility.