The Labour Manifesto

Good morning from New Economy Brief.

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Manifesto launches are often a time for surprises. A chance to grab headlines and get voters talking about bold new policies. But at Labour’s manifesto launch last week, Keir Starmer made it clear that there would be no “rabbit out of the hat”. 

Labour’s ‘Ming vase’ strategy has been well documented: don’t get drawn into debates about the detail and don’t do anything to rock the boat (and the party’s massive polling lead). But a lack of surprises doesn’t necessarily equate to lack of vision. The manifesto’s title is ‘Change’ – but what sort of change does Labour want, and how does it plan to make it happen?

This week, we explore the key arguments and themes of Labour’s manifesto, as well as outlining some of its key challenges.

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Growth, growth, growth.

Economic growth is central to Labour’s manifesto. The document mentions the economy over 200 times, far more than any other issue. Rachel Reeves, the Shadow Chancellor, says the UK’s lack of economic growth is at the root of many of the problems Britons face: stagnant pay, high prices, poor public services and low investment. For Reeves, growth is the magic pill for fixing these ailments without tax rises. She argues that if the UK economy had grown at the OECD average since 2010, there would be “around £55bn in additional tax revenues every year to resource our public services, without the need for tax increases”.

The plan is to be “the party of wealth creation” without breaking “tough spending rules”. For many, this promise seems too good to be true. If the plan is to fix our broken economy once growth is achieved, then where’s the growth coming from?

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Investment.

Labour’s proposed £7.3 billion National Wealth Fund promises to attract £3 of private investment for every £1 of public money. It includes £1.8 billion to upgrade ports and build supply chains across the UK, £1.5 billion for new gigafactories, £2.5 billion to rebuild the steel industry, £1 billion to accelerate the deployment of carbon capture and £500 million to support green hydrogen manufacture. Along with Great British Energy, a new publicly-owned company aimed at boosting investment in home-grown clean energy, the Fund is a survivor of Labour’s £28 billion climate pledge U-turn earlier this year and remains one of the party’s flagship policies. GB Energy also aims to ‘crowd-in’ private investment, and would see the government partnering with private companies to co-invest in new technologies and to scale up existing technologies (for more on this, see our Digest from earlier this month).

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Planning reform.

Keir Starmer has said that the manifesto is a “total rejection” of the idea that “it’s not about how you create wealth, but how you tax it, how you spend it, how you slice the cake”. Instead, he argues that the way we now create wealth is broken, and that there is huge potential to unlock long-term growth if you “transform the nature of the jobs market… transform the infrastructure that supports investment in our economy… reform the planning regime”. In other words, planning reform is central to Labour’s proposals to grow the economy while staying within its strict fiscal rules. These changes would include restoring mandatory housing targets, funding additional planning officers, giving Combined Authorities new planning powers and building on a new class of the “grey belt”  – that is, low-quality “green belt” land.

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Devolution

Further devolution in England is also central to Labour’s growth plan, giving local authorities new powers over transport, adult education and skills, housing and planning, and employment support. All combined authorities and counties with devolution deals will have a "statutory obligation" to develop a "Local Growth Plan".

Is it enough? The Institute for Government (IfG) has said that the plans are a step in the right direction, but that the “the narrow economic focus of devolution means there is little apparent appetite for wider public service devolution” – something many Metro Mayors have called for. The IfG also says that more needs to be done to “complete the job of English devolution” and that there are few plans for devolution outside of England.

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Workers' rights

A further key flank of Labour’s growth plan is its proposed New Deal for Working People. It promises to ban exploitative zero-hours contracts, ensure that the minimum wage is a “genuine living wage”, end fire and rehire, and introduce basic rights on parental leave, sick pay, and protection from unfair dismissal. It would also create a Single Enforcement Body to ensure employment rights are upheld. The plan is not without its controversy, however, with Unite the Union refusing to endorse Labour’s manifesto, based on concerns that it does not go far enough on fire and rehire practices and zero-hours contracts.

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What are the challenges?

As the polls are now indicating a strong likelihood that Labour will form the next government, media scrutiny is ramping up. The question that journalists keep asking is: how will you pay for it? One of the Conservatives’ main messages to voters is that Labour will put up your taxes. But again and again, Labour has ruled out raising taxes from income tax, national insurance and VAT (except on private school fees) to council tax and capital gains. Meanwhile, Starmer has also said there will be “no return to austerity”. But with nearly £142 billion per year needed by 2030 just to maintain public services at their current (already deeply struggling) levels, many are worried that without action on tax or a new approach to fiscal rules, spending cuts will be inevitable. Earlier this month we took a deep dive into possible ways for the next government to raise revenue without taxing ‘working people’; these range from equalising capital gains tax to raising taxes on wealth.

Cost of living and poverty. The cost of living remains a top issue for voters. Meanwhile, destitution is growing, with seven million low-income families going without essentials like food, adequate clothing or hot showers, according to the Joseph Rowntree Foundation (JRF). While Labour has promised a child poverty strategy, JRF has said that “missing details” urgently need filling in, such as how Universal Credit could be used to tackle poverty. And then of course there is Labour’s commitment to maintaining the two-child benefit cap, which has been met with widespread criticism.

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Is this really a ‘change’ manifesto? 

The IPPR’s George Dibb argues that if Labour had released the above policies as manifesto surprises, they would “be being talked about as an attempt to import strategic-state Bidenomics to the UK”. Perhaps the ‘Ming vase’ strategy is masking what is, rhetorically at least, a bold commitment to a new, strategic role for the state and a rejection of trickle-down economics. But with public services and personal finances in such dire straits across the UK, the question remains whether, without some serious changes to fiscal policy, Labour can deliver the change it promises fast enough for people to feel it.

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