It’s still the economy, stupid.

On Thursday, Sir Keir Starmer will finally do what many Labour Party commentators have been calling for and make a set piece strategic intervention, including — lucky us — a Zoom speech. Not only that, apparently this speech will focus upon the economy, which, as I have been arguing somewhat relentlessly over at least the last six months, is exactly the right topic for Starmer to place in the strategic shop front at this stage of his leadership. The purpose of this blog therefore — my first ever medium — is to explain at a length and crudity my usual editors would certainly not tolerate, exactly why that is; and why attempting to address Labour’s woeful ratings on economic credibility should be viewed as his most important political objective in the medium-term. I will conclude with a few cursory ideas about what the speech itself or the accompanying political follow-up should include, by way of trying to avoid the tiresome trap of moaning about vision or strategy without recommending any concrete solutions. Starmer has been receiving a lot of missives of that nature over the last few days and the best that can be said about them is that they are as helpful as they intend to be.


Crisis, what crisis?

Of course, this observation alludes to the context the speech lands in, which is the perception in Westminster that the Labour leader is having his first wobble. At face value, the flashpoint this time seems to be some absurd hyperventilating about patriotism, but as ever it is the underlying firewood that matters not the err red, white and blue touchpaper. The ‘how is Keir doing’ question is naturally a topic of some interest to anyone concerned with the Labour Party and divisions are not perfectly coextensive with the usual factional vortex either. Yet before I bang on about what he should do this week I should first declare my interest on this topic: I am firmly within what you could call the ‘Jim Callaghan’ camp (though of course Callaghan never actually said “crisis, what crisis”).

This feels to me to be the clear, evidence-based position. As an excellent Anthony Wells blog points out, Starmer’s polling fundamentals remain strong, with net positive ratings on important qualities (for Labour’s objectives this past year as well as in general) such as being “strong”, “likeable”, “decisive”, “competent” and even, contra his critics, “demonstrating a clear vision”. Perhaps overly formed by my experience in the 2015 general election, I also strongly believe that Prime Ministerial favourability ratings are a better long-term predictor of elections than voting intention, which tends to track the ebb and flow of Government activity, irrespective of anything the opposition does. This isn’t to entirely dismiss Starmer’s critics — the trend line on that metric is going in the wrong direction too — but it is a slightly better story for him.

More importantly, at least as far as a fair assessment of that ‘how is Keir doing’ question is concerned, his own favourability ratings are at least something he has a relative degree of agency over. This is one of the most frustrating aspects of opposition: everyone but everyone overestimates your ability to affect anything. Moreover, it is impossible to complain too much about this lest you reveal the truth, which is that you are not in fact doing anything. Opposition, certainly the policy or vision-setting aspects of it, are ultimately of very little consequence to the direction of the country. When journalists write articles that assess how the Government is doing, they can talk about what the Government is actually doing. For the opposition, on the other hand, the interminable focus on the horse-race aspects of politics is priced into any coverage due to the lack of a more substantive alternative assessment.

All of which is a long way of saying what I already said: voter intention polls primarily reflect the Government’s popularity or lack of it. To state the bleeding obvious, the Government has pulled ahead in recent weeks because it is running a patently successful vaccination campaign, which is something the public obviously cares about quite a lot. And frankly, if it performs as competently on all subsequent tasks for the next four years then it won’t matter if Keir Starmer transmogrifies into a perfectly calibrated blend of Blair, Bevan and Attlee: he’ll still get crushed.

To be fair, the charges made against Keir go much deeper than neurosis about the current polling situation. But still, pretty much all of them miss the central point that the Labour Party is simply not relevant to the public’s political concerns during a pandemic, whilst also hugely overestimating Starmer’s agency to do much about that. In fact, as this wonderful data from Theo Bertram shows, this is a structural fact of opposition outside of a pandemic too: the public basically only pay attention to opposition leaders a little at the start of their tenure and then a lot during a general election campaign. This probably puts the pointlessness of a long mid-term period a bit too firmly: in our era, where political actors leave indelible digital footprints, significant mid-term events, such as Jeremy Corbyn’s handling of the Salisbury poisoning, have an impact both at the time and later when people share that content during a high engagement moment or election. Nevertheless, this insight should still help to constrain the ‘how is Keir doing’ question to what is much more politically relevant, which in my view is the much narrower question of whether or not he used those initial three months wisely when introducing himself to the public as a potential Prime Minister.

On this, there is a line of thought amongst his critics that he did not; that a more politically aggressive response to Johnson’s handling of the pandemic in that phase would have provided a better base for the long grind of opposition. I find that absolutely baffling on two counts — one objective; the other subjective. The first, returning to those favourability ratings, is that Starmer is viewed by the British people, pretty much objectively, as a more suitable Prime Minister candidate than any Labour leader since Tony Blair. The second more subjective response is that I cannot for the life of me fathom how people can think that a more politically contentious Labour Party — a Labour Party recently rejected by the public in part for its rectitude — would have been well received by the public whilst it was in the ‘rally round the flag’ phase of the country’s biggest crisis since the Second World War. It is, to my mind, an utter fantasy and the Labour leader’s more constructive approach is intimately linked to his decent favourability ratings. Not only that, the pandemic, whilst making it more difficult to cut through for Labour has been net beneficial in that it prevented the Tories negatively framing Starmer in the way they typically like to do with Labour leaders when they are fresh and the public are casting an eye over them. That was a good break for Starmer, but he used it well. The rest of the year — yes, it matters; yes, on occasion, I too have been frustrated by a sense of drift setting in. But in the grand scheme of things it doesn’t matter all that much when compared to those excellent first three months.

The hard yards

In truth, this rather meta caveat probably applies to all subsequent advice too. Yet Starmer can hardly go through four and half years without making any substantive intervention about the future (i.e. not about the latest urgent pandemic problem) of the country he aspires to lead (and no, a constitutional convention with Gordon Brown definitely does not count). The question is what, given the limited opportunities for cut-through, should he focus upon? It seems, better late than never, he has decided the economy. I think this is a smart choice for four reasons.

First, it will belatedly give his Shadow Chancellor a much-needed boost in political attention. This is important because so far she has demonstrated a sureness of touch, in terms of her pandemic policy instincts — most of her positioning lines have proved to be tactically ahead of the curve, better than her parliamentary opponent’s and, for the most part, vindicated by the trajectory of the virus itself. Unfortunately, due to a hard to discern mixture of either political callowness or the deliberate risk averseness of the party’s overall strategy (i.e. set by the Leader’s office) these instincts are currently underleveraged. Given the circuitous route this ‘blog’ is already taking, I won’t go into depth about what they could have done last year to better leverage these instincts here — this CapX article provides a flavour. Suffice to say, I think Dodds could, with a stronger political operation, have landed a bigger (if ultimately still small) blow on Sunak’s disastrous “winter economy plan” broadly equivalent to the blow Starmer landed on Johnson’s competence by getting a few weeks ahead of the curve on the “circuit break”. The point is, however, that the most effective aspect of any post-intervention follow-up is the Leader of the Opposition leading from the front. Him giving a speech on the economy shows to political correspondents that the economy matters to Labour and is therefore a signal dividing line in the wider political battle. Honestly, I cannot stress how important this is for Shadow Cabinet members’ ability to prosecute a politically effective argument. Even for the Shadow Chancellor.

Less operationally, I also have a hunch that, as in America, prioritising the economy could be an effective way to manage Labour’s factionalism — certainly it is one of the big issues where détente is possible. Though whether that détente aligns well with the test the electorate might set Labour remains to be seen. I do worry that the public might, irrationally, want Labour to demonstrate moves towards fiscal conservatism at the same time as they want the Government to do anything but.

Thirdly — and related to the above — I think a greater focus on economic issues will help Labour douse the flames of a culture war approach to politics that, at least in this country and its electoral system, has little to no benefit for progressive political parties. Yes, focusing on the economy cannot wish away the reality that politics is now — I would say always was — mediated through cultural issues and yes, this does represent a significant challenge to creating a voter coalition that might see Labour into government. Yet I do find it frustrating that this insight often leads some political commentators to juxtapose the economic and cultural frames for politics against each other, as if a choice needs to be made between them, or they have no interdependency at all. This is ridiculous way to think about the path to electoral success — a better way is to conceive of politics as a football team. In any football team you need defenders, midfielders and attackers and, if you want to win the Premier League, you have to be fairly decent in all phases. Yet if you really excel at attacking then that obviously gives you a better chance of winning the Premier League with a slightly creakier defence than your opponents. Winning elections is a bit like that.

Of course, at the moment, Labour doesn’t really excel in either the economic or cultural phases of politics, in fact arguably it is more competitive on the latter. But if you take the view that a certain degree of cultural dissonance between it and some of the voters it might want to attract in crucial swing seats is structural — and I probably do (probably because Labour can and should take its time on deciding its most likely voter coalition) — it seems obvious that having a compelling economic offer would be one way of trying to mitigate that.

However, the fourth and most important reason why Starmer should prioritise the economy is also the most obvious: being trusted on it is absolutely pivotal to any election victory and Labour’s current ratings are abysmal. Think of it like this: whilst there are many strategic imponderables about the next four years, when you strip it back there are probably only three things Labour will need to have in place by the time the general election campaign starts and the public switch on:

1. It will need a central message/argument that shapes the campaign itself (which must sound authentic in the sense that it connects with perceptions of Starmer’s leadership).

2. Starmer will need to be perceived as a credible Prime Minister.

3. They will need to be trusted on the economy, or at least close to being as trusted as the Tories.

On task 1 Labour should take all the time it needs — honestly, they can leave it right to the end of the Parliament if that’s how long it takes (though that will make the authenticity bit more challenging). I mean, we have just been through an election won by a slogan — “Get Brexit done” — that could only have been dreamt up weeks before the short campaign began (though the Labour Party itself put a great deal of time into the sotto voce addition “and keep Jeremy Corbyn out”). Organise the seminars, try out the options, do the whole Ed Miliband first three years again — it is all fine because none of it particularly matters. Yet.

Task two, I have discussed at length above. For now, Starmer’s main goal here is merely about maintaining the steady impression he has already made.

Therefore, it strikes me that task three should be the main area of energy and concern for Labour’s strategists. Concerning because, absent a major crisis of confidence in the Government’s ability to manage the economy, there is no game-changing equivalent of Starmer replacing Corbyn as leader. Or to put it another way, on all manner of Labour’s perceived flaws under Corbyn, Starmer is an immediate and quite effective rebuttal, yet on the economy he is not because Corbyn was not the problem. The problem is in fact New Labour, or more specifically the way New Labour left office, which confirmed the deeply held suspicions of the public that ultimately Labour governments, even the good ones, eventually crash the economy and run out of money to spend. Changing this sticky perception is going to be very difficult — the old trick of benchmarking against Tory spending plans probably won’t work, not least because the Tories are themselves going to spend billions upon billions. Nevertheless, Labour must surely try and must also try to nibble away at Rishi Sunak’s currently very favourable ratings, which are also problematic (though I expect they may get some help from across the aisle here!). It is very much a game that will be defined by little victories and hard yards — and it is that game which, disappointingly, the Labour leadership has seemed less inclined to play so far.

Getting on the pitch

But rejoice — the battle for those hard yards appears to begin this week. Which finally brings me to the more speculative aspect of this essay-rant where, in sympathy with my former life as a frustrated adviser, I attempt to actually follow through some broad-brush moaning with some practical suggestions (trust me, nothing is worse than reading articles, even ones much better than this, which view the end of the last section as the final word!) This of course is largely too late for Starmer’s speech this week, which we expect in little more than 24 hours. But he can still follow through on some of this assorted advice in the following days and beyond:

1) Be focused and narrow on vision…

I recant. There is something more annoying than solution-free essays. That is solution-free essays that assert the need for a “clear vision” in the bit where more constructive suggestions should go. Carping about a lack of vision is the perennial whinge of Labour politics and the important thing to remember is that it comes entirely from hyper-engaged political nerds or insiders — which is to say, most of the Labour membership. I tend to spend a lot of time arguing against the need to set out vision, but at Stephen Bush rightly argues here, sometimes you do need to manage the nerd/insider/commentariat tendency, lest they derail the wider project. This is particularly difficult for Starmer too, because I suspect the vision of Britain the public wants can currently be summed up as ‘a Britain where I can see my extended family’. What they are probably not hankering for is the wonk-land obsession (I plead guilty) for viewing the pandemic as an ‘opportunity’ to correct every systemic flaw that existed in British society circa January 2020 or, alternatively, to help predict every new problem the pandemic will create for January circa 2025. This is though, I suspect, roughly where a lot of the progressive commentariat and Labour membership are too and possibly speaks to a potential future divide between how Labour’s hyper-engaged supporters and Labour’s voters view the pandemic. This is bad news because it’s a hard party management task — to my eyes so much of the Government’s failings in the last twelve months appear to have been driven by a similar dynamic with regard to lockdown and other restrictions. Worse still, even if there were a partial return to the “build back better” solidarity we saw early on in the pandemic — which I think there may be as we open up — Labour will struggle to affect or profit from it. This goes back to my earlier point about agency — only the Government could harness it effectively and I think we can safely predict that even if there is a mild ‘1945 moment’ it will certainly have dissipated by 2024.

In short, Starmer should categorically not do a big vision of Britain speech. However, he will need to show some leg to the commentariat, not least because too workmanlike a performance will see the moaning totally overwhelm any more politically useful objectives. The key is to find a focused but narrow argument on an issue that is both relevant to peoples’ lives now and might credibly be a contender for Labour’s ‘big theme’ in 2024 (see above). It doesn’t have to be the big theme, just a plausible contender.

My suggestion on this would be to use the collective human experience of the furlough scheme as a jumping off point for an argument about how the pandemic (and a Labour Britain) requires a different relationship between state and business; about how in countries that are more used to crisis (i.e. Germany) a closer partnership between the state, workers and employers is beneficial for all parties; and that we will need a stronger safety net — for businesses, as well as individuals — if we are to honour the sacrifice businesses have made to save lives during the pandemic.

I think this is right because, well, I think it is right. I also think calling for “stakeholder capitalism” — to put it into wonk-speak — connects quite well with both the incoming Biden agenda and the ‘lost’ pre-1997 agenda of New Labour, both of which will give the scribes plenty to write about that isn’t totally negative (it’s also, not unhelpfully, a sometimes obsession of the Financial Times). But more importantly, I also think that small business support — and specifically how many small businesses go bankrupt — may be the most important variable the public uses to assess Tory economic competence when managing the pandemic aftershock. Indeed, I am not sure they realise it yet, but if the Tories think they can countenance not bailing out hairdressers, small retailers, theatres, gig venues, restaurants, travel agents, charities, pubs etc. when there is a very powerful folk memory of banks being bailed out to the tune of billions, then they are in for one hell of a political firestorm in the coming years. So much of where Labour is now, is merely trying to get on the political pitch. For me, this is the pitch to get on urgently.

2) …but detailed with one central policy idea.

Worryingly, the Guardian reports that Starmer intends to launch a “policy blitz”. Please, please — do not do that. It is a colossal waste of energy and in the long run will likely only disappoint the many stakeholders that will engage in good faith if and when the 2021 policy agenda necessarily disappears before the election. Outside of government(!), policy is the most instrumental of all political activities — it should only really be used if it is assisting a more important political objective.

Therefore, I would recommend three policies in the short-term, with only the first being required for the speech itself:

· Re-announce Dodds’s “smart furlough extension” with extra detail on the ‘something for something’ ask.

· Call on the Government to ‘match’ a Labour promise for no new taxes during the recovery phase of the pandemic.

· Call for the Shared Prosperity Fund to be brought forward and targeted towards to businesses and community projects adversely affected by the pandemic.

Each of these policy announcements would aim at a different instrumental objective. The last is the most basic and pure tactics — this is essentially a recognition of nothing more than the fact Labour needs something to put on council election leaflets quickly. It is generic ask that can be adapted by savvy local agents to imply that an entirely hypothetical Labour Government might be better placed to save the local businesses and charities being decimated by the pandemic. Beyond that, with a bit of thought perhaps it could be sketched out in more detail and used as a way of launching ‘hard hat’ visits (the Government isn’t planning to bring the fund in until 2023 at the earliest) and encouraging the massed ranks of Labour councillors to adopt a more constructive and pragmatic tone towards Brexit, given it is the domestic replacement of EU structural funds. But perhaps that it is pushing it a bit far.

The second one is a calculated risk and aimed largely at building better relations with business and their representatives and/or causing a bit of parliamentary discomfort for the Chancellor. It sounds like Labour is edging towards this position already, but its tactical utility relies on the Rishi Sunak that wants to begin fiscal consolidation now turning up to the 3rd March budget, rather than a Rishi Sunak who has been told by Boris Johnson not to begin fiscal consolidation under any circumstances. Either way, it has a sound economic logic, but it may ruffle a few internal feathers, especially if it de facto commits Labour to setting its face against tax rises popular with progressives (e.g. green taxes) the Chancellor may introduce (though I would still argue that this counter-intuitive positioning might help Labour in the long-term — for another time that one). Labour could attempt to elevate it the status of a time-limited or growth-pegged fiscal rule if they really wanted to go for it, but I think that would be overreach — the loss of wriggle-room would probably not be worth the bigger splash and follow-up. The objective is merely to embolden Tory and right-wing press infighting over the issue of tax rises now, whilst beginning to build business relations. And within this, Labour should give a special shout out to the importance of preventing tax rises on the self-employed — a general stakeholder engagement drive with that group of business owners could be particularly fruitful, given how badly the Government has dropped the ball on them.

However, it is the first one that is most immediately important as that is what you might call the ‘vision policy’. When I worked in education policy, it used to frustrate me how obsessed the commentariat were with free schools — there were only about 200 of them and over 2000 converter academies, which got almost no equivalent attention. The reason for this is that free schools were a good example of a ‘vision policy’ — a policy which comes with a self-contained argument for a wider system design or societal vision. With free schools, the fact parents and non-state organisations could set them up, married with the idea this free-for-all on provision would unleash market-based competition to drive up standards, contained a fully realised vision of a Tory education system and thus proved to be commentariat cat-nip. Starmer could try to do something similar for the ‘stakeholder capitalism’ argument I loosely sketched above, by setting out in much more detail Anneliese Dodds’s call for a long-term furlough scheme, as currently exists in France and sort of always does in Germany’s Kurzarbeit sytem. In such a scheme, firms can volunteer for long-term wage subsidies for their employees, as long as they meet certain ‘something for something’ conditions (in France, for example, it requires a collective agreement struck with unions). Alongside the wider political argument, Starmer could set out some of those conditions to give that policy a much greater airing.

Full disclosure: the programme I lead at the RSA has called for those conditions to be the setting up of works councils, the growth of which I think would be a fantastic move for British capitalism, democracy and its labour movement. But politically, this is far too wonkish — Starmer should instead suggest that generous long-term support would depend on fair tax contributions or even — so long as he has a lot of businesses already lined-up ready to bat for him on this point — be exchanged for state equity in the businesses. Of course, what might constitute “fair tax contributions” is, legally, very difficult to pin down, but he should not unduly worry about detail like that right now. In fact, I would deliberately leave it a bit vague so hostile news sources and stakeholder organisations pull at that very thread to argue, hopefully ad infinitum, that Labour’s plans are unworkable…

3) Most of all: follow-through.

…which brings me to my final point about political follow-through. The reason for providing extra policy detail is often to provoke a fight, as much as it is to garner support or look credible. This is where Labour’s risk aversion holds them back — if you don’t try to wind up the Daily Telegraph to give you free coverage for a popular ‘pay your taxes’ message whilst they think they are monstering you for the unworkability of your plans, it won’t happen. It is obviously very difficult in a pandemic — visits are off and bandwith is in even shorter supply than usual in opposition. But Labour has to do so much more in following-up any intervention it makes. For example, there is reams and reams of ONS and HMRC data on the furlough schemes — mine it for day two national angles and hammer the local data cuts: it really doesn’t take much to get a GNS round if you’re leader of the Labour Party! Have surprising endorsers lined up for day three — get them to write a letter of support. Provoke more fights. Whatever.

Basically, get on the pitch and stay there. Because on the economy, Labour cannot afford the luxury of risk aversion. It’s too important and they are currently way too far behind to have a realistic shot of government.