Labour’s Otherworldly Manifesto

“Stability is Change!” This seemingly paradoxical, almost Orwellian statement is the principal slogan of the Labour Party’s current parliamentary election campaign. Labour leader Keir Starmer used the slogan at the party’s manifesto launch, and it provides a key prism for understanding the manifesto and its weaknesses.

There is little doubt that the UK electorate is in the mood for change. The widespread, off-stated consensus in the country is that nothing works. The National Health Service is so chronically underfunded that doctor’s appointments are difficult to get and long waiting lists proliferate. The trains are shockingly expensive but utterly unreliable.

The list could go on and on, but the image most frequently used to sum up the situation comes from the failure of the privatized water services. A lack of investment in infrastructure accompanied by the looting of those companies for huge shareholder dividend payouts has led to the near constant release of untreated sewage into the UK’s river system. It flows from there onto our beaches. The British are quite literally swimming in shit!

These problems are identified quite clearly in the Labour Party manifesto, but the diagnosis of their causes and therefore their solutions proves much less convincing. Labour may have a plan to win in July, but how it will govern in the interests of its voters is anybody’s guess.

Scaling Back Ambitions

The document begins with a definition of change as stopping “the endless Conservative chaos” — that is how stability and change are rhetorically paired. The Conservative Party has been too ideological, the manifesto claims, and put “its own interests and obsessions above the issues that affect families”.

Labour promise a return to stability, competent management, and establishment orthodoxy. It is an argument that has some purchase. Brexit now feels to the majority like a self-inflicted harm produced by failed party management of a split internal to the Conservatives. Curiously, Labour now say they have no plans to address that harm, stating merely that they will “make Brexit work”.

The need for investment in the UK is huge. Both public and private investment in the country has collapsed since 2008.

Brexit, however, is just one of a cascade of chaotic events that have roiled the UK over the last two decades, most of which are not so easily blamed solely on the Conservatives. The great financial crisis of 2007–8 was followed by huge state bailouts of the financial sector leading to a situation by the 2010 election in which all the major parties agreed on the need for austerity. Economic stagnation and zero wage growth has persisted to this day.

Over the same period, the impacts of the climate crisis have become ever more dominant. The rapid increase in the frequency of extreme weather events has driven up inflation and overwhelmed our inadequate infrastructure. The sewage in our river systems is just one example of the latter. This is not a world of inherent stability obscured by poor management by the governing party — it is a world in which the dominant economic and political systems are fundamentally broken and unable to address the catastrophes engulfing us.

That is the backdrop against which any manifesto must be judged — and in this light, the paucity of Labour’s offer seems otherworldly. The totality of Labour’s spending pledges amounts to just 0.2 percent of GDP, smaller even than the Conservative pledges of 0.8 percent and dwarfed by the previous two Labour manifestos, which promised 2.1 percent and 3.2 percent respectively. Even the pro-market Institute for Fiscal Studies called Labour’s plans “tiny, going on trivial”.

These policies do not point to stability, not least because they do not address the 18 billion pounds of government spending cuts that the Conservatives have already baked into the government budget going forward. The effects of implementing such cuts on government services — which have already suffered so badly under 14 years of severe austerity — makes it hard to imagine that Labour will stick to this commitment. It seems likely that money will be found to prevent the worst of these cuts through technical changes in accounting between the government and the notionally independent Bank of England.

Beyond this paddling, however, the need for investment in the UK is huge. Both public and private investment in the country has collapsed since 2008. It has the lowest business investment in the G7 and ranks just twenty-eighth out of the 31 OECD countries. In the face of this, Labour, hamstrung by self-imposed fiscal rules on bringing down government debt and pledges not to raise the main forms of taxation, are promising so little investment that their plans seem unbelievable.

Which Side Are You On?

Manifestos provide important clues to the future direction of potential governments. They are also opportunities to build support for necessary changes (an opportunity squandered by Labour), but they do not wholly determine what a government will do. That depends on the prevailing balance of forces and the course of often-chaotic events.

Until last February, Labour was promising to immediately strengthen workers’ rights through a New Deal for Workers, and to spend 28 billion pounds per year to decarbonize the economy through its Green Prosperity Plan. The Labour Party’s current openness to corporate funding and lobbying, including the imposition of over 30 parliamentary candidates with corporate lobbying backgrounds, has led to a dramatic watering down of these pledges. The Green Prosperity Plan has been reduced to just 3.5 billion pounds, but the form that spending will take reveals another logic or worldview which may come to the fore as crises mount.

The word “securonomics”, an ugly portmanteau favoured by shadow chancellor Rachel Reeves, makes an appearance in the manifesto, introducing the idea that public investment should support and de-risk private investment in strategically key sectors. The chief vehicle for this will be a National Wealth Fund “capitalised with £7.3 billion over the course of the next parliament”. What precisely this will look like has yet to be determined, but The National Wealth Fund “will have a target of attracting three pounds of private investment for every one pound of public investment”. This is an explicit return to and acceleration of the kind of public-private partnerships that lost legitimacy in the UK during the fallout from the disastrous Public Finance Initiative under New Labour.

The Labour Party is likely to gain a large parliamentary majority, albeit based on only around 40 percent of the vote, and — paradoxically— with Starmer’s leadership already quite unpopular.

The manifesto aligns itself with an emerging macroeconomic regime that economist Daniela Gabor calls the “de-risking state”. It is most associated with President Biden’s Inflation Reduction Act, which saw a return to industrial policy with an active state intervening into the economy right down to the granular level of individual firms. Economic decisions are always politically structured, but in this regime, they are increasingly being re-politicized in a direct and overt manner.

So far, the meagre sums proposed has led economists Matthias Matthijs and Mark Blyth to term Labour’s plans “homeopathic Bidenomics”. However, the amounts could increase, and the approach is likely to form a major battleground during the next parliament. After all, such highly politicized procurement and resource allocation decisions can take either a democratic or a clientelist form.

A strong clue as to current Labour thinking, along with the current balance of forces, can be seen in Labour’s National Infrastructure Council tasked with designing “new models of collaboration between government and investors”. It is made up of some of the world’s most rapacious, rent-extracting firms, including Lloyds, HSBC, Santander UK, Phoenix, Fidelity, and US asset management company BlackRock.

The battle over whose interests will prevail will also be fought over whether Great British Energy, a proposed “publicly-owned clean power company”, will be an energy producer or merely a de-risking vehicle for private companies. It will also encompass the form to be adopted for the “public ownership” promised for British train companies as their contracts with private entities expire.

The Labour Party is likely to gain a large parliamentary majority, albeit based on only around 40 percent of the vote, and — paradoxically— with Starmer’s leadership already quite unpopular. This has led some to argue that we will see a wide but thin electoral coalition — a “sandcastle majority”, as political analyst James Kanagasooriam put it, ready to crumble as the tides turn.

The first major battle is likely to be around Thames Water, a privatized water company on the verge of bankruptcy. The water companies have been lobbying hard for what effectively would be a bailout for shareholders, but this will be hard sell to the public for such a catastrophically run sector. If consumers and citizens can organize to assert their interests, we might see Labour pinned down, forced to pick a side: democracy or clientelism.

That decision will be a better guide than their manifesto for how the plans of the forthcoming Labour government will play out in the real world.