Labour’s Slippery Manifesto Offers No End to Austerity

£20bn of cuts lie in wait.

by James Meadway

13 June 2024

Labour party leader Keir Starmer at the launch of Labour's manifesto in Manchester
Labour party leader Keir Starmer at the launch of Labour’s manifesto in Manchester, 13 June 2024. Photo: Reuters/Phil Noble

Labour’s manifesto has landed. Despite its length, it is a flimsy document, failing to meet either the challenges left by 14 years of Conservative-led governments, or those the country will face in the next decade. But it is also a slippery document, promising “no return to austerity” without ever stating how austerity will be ended.

This manifesto does not end austerity. A total increase in public service spending of £4.5bn is dwarfed by the £20bn of annual cuts currently scheduled for the next parliament. If implemented those £20bn of cuts will be easily equivalent to the austerity horrors inflicted by George Osborne and the Coalition government in the early 2010s. Worse, they will be cuts imposed on services already broken by the austerity years.

The comparison with other party manifestos tells its own story. Not only is Labour promising less spending than the party did in 2019 and 2017, it is promising less new spending than the Conservative party. Handwaving about “growth” doesn’t change those blunt figures.

There are some positives. Great British Energy survives as a publicly-owned generation company. The National Wealth Fund is still in there. Industrial strategy is placed centre-stage. There are promises to double onshore wind capacity, double solar installations, triple home insulation, even quadruple offshore wind capacity. The commitment to zero carbon electricity by 2030 remains in place. This isn’t a return to New Labour.

The manifesto makes some efforts to grapple with Britain’s post-Brexit role in the world. While in reality Brexit has left Britain clinging ever more tightly to Washington – witness David Lammy’s recent attempts to make nice with likely returning US president, Donald Trump – Labour also wants to maintain a working relationship with China and a “reset” of relations with the EU. These will be up for negotiation very shortly, as the UK’s current deal with the EU is due for review in 2025.

This programme lines up precisely with how the Labour leadership has developed over the last two years: promising a government that will deliver an industrial strategy, more government intervention, and some managerial reforms.

But in all cases, any ambition is smothered by the broader framework. The problem here is not the sacred “fiscal rules”. The problem is the failure to seriously address the funding challenges for our public services. This could be done through taxation on the richest, as everyone from the pro-austerity Institute for Fiscal Studies to Tax Justice UK are insisting should be done. VAT on private schools is to be welcomed, but it’s insubstantial. Most of the small amount of revenue raised in the manifesto comes from closing tax loopholes – same as the Conservatives. And none of this programme implies a shift in the balance of power in workplaces or the wider economy: if it is “pro-business and pro-worker”, “business” is underlined in heavy black ink. The “New Deal for Workers” has been watered down. There are “reviews” and “strategies” promised on almost every other page, but strikingly little on how to actually bring about any conclusions they might reach. An extra £2.5bn is earmarked for the NHS and healthcare: to put this in context, the repair bill alone for the NHS comes to £12bn.

The £8bn reserved for Great British Energy is not even close to enough for it to meet its various ambitions. There is a serious problem brewing here: GBE is expected to reduce energy bills and create jobs in renewables and meet ambitious decarbonisation targets. A better-funded institution might, perhaps, meet one or two of these goals. Starved of cash, GBE is unlikely to deliver – potentially creating a convenient scapegoat in a few years’ time for attacks from the right, both outside Labour and within the party. The immediate demand from the movements should be to fund GBE properly.

Hanging over every promise is the failure of the manifesto to address head-on what will be a defining issue of our next parliament, and beyond: the worsening effects of the climate and nature crises, already visible in the rising price of food and insurance costs. As climate change worsens, extreme weather will worsen; supply disruptions will worsen; the risk of financial crises will rise. A few vague promises on food prices and car insurance costs do not cover this.

These gaps and absences mean that what is not written in those 135 glossy pages is far more important than what is. If the Labour party in government actually commits to austerity, it will destroy itself faster than Boris Johnson’s Tories, with Labour’s broad but very shallow electoral support disintegrating under the strain. There would be a clear opening for forces to its right and left to build, were Labour to actually commit to this recklessness in government.

Pure survival logic suggests Labour will not do this. The obvious routes through the challenge lie in the political space the party leadership has left open to itself by refusing to answer questions directly. First, it could raise Capital Gains Tax, paid mostly by the very wealthy, which the party says it merely has “no plans” to raise; second, it could tweak the rules governing how much interest the Bank of England pays to the major banks that hold an account with it. This is a complex issue, but a section of elite opinion, from the Financial Times to senior former Bank of England staff, has come out in favour of changes. Changing these rules could deliver £23bn a year extra for the Treasury to spend – handily enough to cover those projected austerity spending cuts. Labour’s first budget in power, now expected in autumn, is likely to run along these lines.

But this is a failure of accountability. It amounts to asking us to trust the people running Labour, and the people running the country, to deliver this time round. But Britain’s problems are fundamentally institutional, and won’t be solved by rotating personnel: investment was too low under the Tories, and too concentrated in London, but the same can be said about Labour when it was in government last time. Yet the shadow chancellor wants to hand more power to those same institutions, including a bigger role for the Treasury. Labour’s leadership is motivated by the belief that if only the smart and sensible people are in charge, everything will work out fine. Perhaps the people running Labour are smarter and more sensible than those running the Tory party, but you can put a smart person in charge of a stupid institution if you want: you will still get stupid results. If the party cannot or will not address those institutional failings, even the large majority it is expected to win will not protect it.

James Meadway is an economist.

We’re up against huge power and influence. Our supporters keep us entirely free to access. We don’t have any ad partnerships or sponsored content.

Donate one hour’s wage per month—or whatever you can afford—today.

We’re up against huge power and influence. Our supporters keep us entirely free to access. We don’t have any ad partnerships or sponsored content.

Donate one hour’s wage per month—or whatever you can afford—today.