What lucky Labour will do in government to boost growth
This is Iain Martin’s weekly newsletter, exclusively for Reaction subscribers.
Pity Sir Keir Starmer. If the opinion polls are correct, the poor guy is going to become Prime Minister later next year. There is widespread agreement he will inherit a mess. The economy is flatlining and the public finances appear, on certain readings, to be unsustainable.
Commentators compete to emphasise how bad it is going to be. I’ve seen it suggested in several places, by usually reasonable types, that this will be the worst inheritance in modern history. That is ahistorical rubbish. Things are tough now, but not tougher than they were for leaders in the mid-1970s, or 1979, or in the mid-1940s and early 1950s.
Even so, it is widely agreed Starmer is on course to take power in such unpropitious circumstances that it will be very difficult for him to get anything meaningful done to boost growth, which is what is really needed.
I’m not sure this reading is correct. An alternative scenario strikes me as much more plausible. Labour is likely to get lucky.
Absent a further major geopolitical shock in the next 18 months, such as a war over Taiwan triggering a downturn and a further round of central bank money-printing and after that more inflation, by the time of the next election, autumn 2024, conditions should have eased. There will be plenty of destruction ongoing in the economy, as businesses that borrowed too much go bang, but inflation should have returned to below 5%, or lower, and interest rates will have headed down from their peak. There is even a decent chance some moderate growth will have returned to the economy.
It is obvious what Starmer and Chancellor Rachel Reeves will do in such circumstances. Unless Starmer is gripped by caution and indecision, they will go for pro-growth policies on planning and building.
I expect a Labour government very early on – within weeks of winning – to announce radical planning reform and an epic house building programme, with some infrastructure on the side, to boost growth, which it will. The geographical details of this will be kept vague during the campaign, for a practical reason. Labour won’t want to give the Tories any opening to present their opponents as ready to concrete over large parts of southern England. Concreting over large parts of southern England to fix the housing crisis is what Labour will do, though, and why wouldn’t it?
Across that arc above London, and elsewhere in the south, there is huge unhappiness with the Tories, for all sorts of reasons. Voters are flirting with the Greens, the Lib-Dems and independents. After the general election, if Labour wins a majority, those voters will discover what it means when the government has little interest in the feelings of those in non-Labour seats.
The Oxford-Cambridge corridor development that was abandoned by the Tories, because they feared losing seats there, is bound to be reintroduced by Labour. There is huge scope for linking the two cities up with each other and with London, building many hundreds of thousands of homes, new transport routes and creating laboratory and hi-tech manufacturing capacity. Even though public money is tight, much of the building can come from private capital seeking a return, if planning rules are relaxed.
There is a glimpse of this in Michael Gove’s idea to expand Cambridge itself, floated this week. Labour is bound to go further. Why wouldn’t a Labour party seeking to win re-election from the rest of Britain, a country hungry for growth, do this?
On the fringes of an excellent conference I attended this week – The Great Stagnation, held by Civic Future, at Churchill College, Cambridge – there was much discussion about what an incoming Labour government might do, among all manner of other discussions on how to get innovation going.
The return of a little growth next year would open up another possibility, of course, namely that Rishi Sunak can say he got Britain through the storm. All the polling, so far, suggests this will only make a difference at the margins to the result, because the country has had enough after the May, Johnson, Truss rodeo.
Unfortunately, if Starmer wins there is likely to be a lot of other stuff done, to please the soft-left of his party, that will be anti-growth and displeasing. His instincts are properly left-wing, and I don’t mean that as a compliment. On taxation, Labour has so far pledged only modest if annoying raises. In office, it is likely the party will turn out to be more punitive on investment taxes and the City without realising that this is the opposite of what the country needs.
On women’s rights, under assault from the extremist end of the trans movement and radical activists who deny biological sex, Labour under Starmer has been worse than unreliable. There will be a lot more wokery and much higher taxes.
It will matter less, and make a Tory recovery very difficult indeed, if lucky Labour takes the green shoots of recovery next year and uses housebuilding and supply side reform to deliver growth. An economic recovery is what voters really want and from it might flow what we used to call, back in the day, the feel good factor. If this happens, the Tories really will be stuffed.
Threads is boring
This week, an alternative to Twitter was launched. If you’re not on social media at all, good for you for staying out of the toxic sewer, though an old friend who claims to have nothing to do with such modern, new fangled things as social media criticised a tweet I tweeted the other day on the pop band Wham! (the band’s exclamation mark, not mine.) How would he know what I said about Wham! there if he is not on social media? Anyway, the new documentary on the band captures the vivacity, optimism and style of the early 1980s. Highly recommended.
What I cannot highly recommend – yet – is Threads. Not Threads as in the mid-1980s post-nuclear attack apocalypse drama that terrified the British population when it was first shown. Rather, Threads the new social media service launched by Mark Zuckerberg and his assistant Nick Clegg, who was hired as an executive by Zuck after completing his work experience programme with the UK government.
Ian Leslie, on his Ruffian newsletter, said Threads may be too nice to succeed. He was responding to a post by the TV presenter Ben Fogle encouraging everyone to be kind and to generally be themselves in life and on Threads. No, said Ian Leslie, Twitter may be vile, but any useful discussion needs an edge. It can’t be too nice or it becomes boring.
So far, I tend to agree Twitter wins. Although I’ve signed up for Threads and I’m looking at it, when I want to check discussions or arguments running related to UK politics and economics, or the war in Ukraine, or any number of interesting topics, I still open Twitter to check. Let’s see who wins between the two services – or don’t see if you avoid social media, or pretend to avoid social media.
Northern Europe is cool
Having just returned from holiday, I apologise for having too much to say. There are a lot of items in this week’s newsletter and I’m trying to keep them as short as possible to spare loyal subscribers. You’ve got busy lives. It’s Saturday. The sun is sort of shining.
The sun is really shining in Italy, from where we’ve just returned. We were at our favourite place – the idyllic Palazzo Belmonte estate, a seaside home turned hotel, an hour or so below Salerno. And then we came home by rail, via a few days in the unsung Turin. Unlike Florence, glorious Torino has yet to be ruined by us tourist hordes.
When I say the sun is really shining in Italy, I mean the sun is shining too much. It was perfect during our stay – peaking in the low 30s, cool at night. There were several storms to freshen the air and it was tolerable visiting the temples at Paestum.
Thank goodness we went a few weeks ago, though. Southern Europe is now having another of its intense heat waves. Sixteen cities in Italy have issued red alert warnings of extreme heat. Tens of thousands of deaths are anticipated.
Sicily is heading for temperatures in the high 30s, and perhaps even into the high 40s. I’ve just checked the temperature, and it will be 32 degrees in Messina tomorrow morning – at breakfast time.
These are unpleasant temperatures in which it is impossible to do anything, certainly not if like many millions of us northern types (especially pasty Scots like me) you are pale and easily distressed at anything above 30 degrees.
This is not – repeat not – an item about climate change policy. Regular readers know my views about the implausibility of the net zero programme. What we’re doing on this – particularly in the UK – is completely nuts. All economic improvement and prosperity since the start of the industrial revolution has depended on access to cheap, affordable and plentiful energy. It is the key input. Today, all the main political parties are engaged in a mass delusion that this essential truth doesn’t apply now, pretending that renewables can provide enough of what we need.
There is a transition to cleaner energy underway. It will take many decades and depends on the development of new technologies – some of them not yet invented – requiring enormous amounts of rare earths, minerals and commodities that are messy to extract and often in the control of our enemies and opponents such as China.
As other countries acknowledge, we are going to need huge amounts of oil and gas in the interim, for decades, and a lot of nuclear power. This is the reality, unless we want high energy costs, which spell economic disaster and national impoverishment.
At some point it will become apparent that Britain’s current net zero policy is unwise and economically destructive. Probably when it fails and the lights go out. By which point everyone who imposed the unrealistic policy will be semi-retired and in the House of Lords, and there will have to be a public inquiry into why a cross-party consensus got it so wrong. Who could have guessed that a policy advocated so enthusiastically by Boris Johnson – hazy on the details, keen to please his eco friends and impress his environmentalist father – would turn out to be wrong?
My point on the weather today is simply that the extreme warming in southern Europe in the high summer months is going to change habits. Greater numbers of people will avoid that part of the world in July and August, when it is better there in May, June, September and even October. Hanging out in cooler northern Europe in high summer will make sense. The Swedes with their summer houses know what they’re doing. Germany has much to offer. And Britain is not bad either.
Here is the news
I have almost nothing to say about Huw Edwards, beyond the obvious and all that has already been said endlessly in recent days. What a dreadful mess it is, with two families stuck having to deal with the fallout.
As a colleague put it this week, the responses to the scandal demonstrated once again that everything in the contemporary public sphere is viewed through the prism of politics.
On Twitter, Britain’s leading smug liberals decided within hours of Huw Edwards being named that this was an entirely private matter and, because no laws had been broken, anyone criticising him or asking questions must be motivated by dislike of the BBC.
On the other side of the fence, the view was different.
If the presenter was a famous name from, say, GB News, the positions (in a manner of speaking) would be reversed.
How we respond to a given story or row depends on our political views. It was probably ever thus, but even more so now in the era of Twitter, talk radio, WhatsApp and, perhaps, Threads.
What I’m reading
Con Coughlin’s gripping new book – Assad: the Triumph of Tyranny. What a disaster Western policy turned out to be, with inaction facilitating brutal Russian involvement and emboldening Putin. Like many people who had been in favour of the Iraq War, I was moderately sceptical, or unsure, on Syria, on the basis that our most recent interventions had not worked out well.
David Cameron and the then Foreign Secretary William Hague, who wanted intervention and airstrikes against Assad in 2013, turned out to have been right. It will be ten years next month since Cameron as Prime Minister lost the infamous Commons vote in a defeat engineered by Ed Miliband, then Labour leader. The consequences were grim. That vote was the excuse President Obama needed to back away from action on Syria. Two years later, Cameron won a vote in favour of airstrikes against Assad, by which point it was too late.
Obama was a dire foreign policy President who after Syria declined to support Ukraine with weapons, regarding it as being within Russia’s sphere of influence. In 2014 his response to the Russian invasion of Crimea was weak. From that appeasement and weakness flows much of what has gone wrong since.
What I’m watching: the dial of density
This item contains mild spoilers. If you haven’t yet seen the latest and final (surely) film in the Indiana Jones series, please look away now, or be prepared for pointers to the plot.
Ignore the snooty critics, it is a triumph, the most wonderful nonsense. The final five minutes are poignant and moving. Could I have imagined when seeing the original Raiders of the Lost Ark (1981), with my parents and younger brother, in the cinema in Greenock, that more than forty years later an elderly Harrison Ford would still be up there on the big screen being brilliant? And that four decades later we would be sitting in a cinema watching him with our son.
Of course, the new film, the Dial of Density, sorry Dial of Destiny, also features the excessively pleased with herself Phoebe Waller-Bridge. This was a worrying prospect, but no. She plays her role well and manages to not be too annoying.
The producers have thrown the lot at it. There is a fight on a train with Nazis seeking relics from which Hitler, losing the War, hopes to draw magical power. There is an ancient device, the dial, that has been split in two. There is a shipwreck, time travel and wise-cracking dialogue in this exploration of ageing and what in the end really matters.
Towards the end, even for this fan, it becomes too much. The film crosses the line of silliness and becomes unintentionally comedic. The Nazis stumble into the middle of a battle between the Romans and the Greeks. Indiana Jones, the elderly archeologist at the end of his career, is witnessing the history he has studied and sought throughout his life. Archimedes is involved.
This, I thought, resembles that mass fight scene in Blazing Saddles, the Mel Brooks classic spoof western, when the warring cowboys smash through their Hollywood set and break the fourth wall, rampaging across a Busby Berkley musical, into the studio canteen for a pie fight, out of the Warner Brothers lot, and into a street in LA in 1974.
Even then, this element of the Dial of Destiny is redeemed by the writers avoiding the obvious ending. Five stars from me.