What to expect from a Truss government... and how Labour should respond
Conservatism has changed: Liz Truss mimics Margaret Thatcher in style, but not substance. Labour needs to look beyond the fantasy sold to Tory members
It is easy to see Liz Truss’s flip-flopping over major policy issues such as Brexit, and indeed her own party affiliation, as evidence of a politician unfettered by a consistent worldview, content to ally herself to whatever political winds might lift her to the next rung on the ladder.
On the one hand, this flexibility might be exactly what the Conservative Party — engulfed in another economic crisis and increasingly unpopular — needs right now, as it seeks to solve a series of wicked policy problems while holding together a diverse electoral coalition.
On the other hand, however, I believe there is more consistency in Truss’s views than she has been given credit for. Truss’s seemingly eccentric policy preferences suggest a greater degree of comfort with state intervention in the economy than her mimicry of Margaret Thatcher would lead us to believe (albeit a certain type of strong-statism, arguably compatible with Milton Friedman’s misremembered account of neoliberal ideology).
Helpfully for the Conservative Party, embracing state largesse might provide a path to victory at the next election. Labour must not allow its poll lead, against a government in disarray, to breed complacency. The party’s kneejerk reaction to the emergence of ‘imprudent’ or ‘unorthodox’ economic policy must quickly give way to a real-world rather than textbook understanding of the appeal, and flaws, of Truss’s agenda.
More of the same
The most important thing to note about the next iteration of conservative statecraft is that it will not represent a radical break with the recent past, rather an acceleration of a well-established evolutionary journey.
It is possible to see this journey as one from right to left, as the ideological titans of ‘market’, ‘competition’ and ‘free trade’ are eschewed in favour of a more positive view of the state’s role in protecting, and indeed planning, the national economy. A recent Telegraph column by Nick Timothy (former Downing Street adviser, and current pseudo-intellectual) typifies this evolution:
“On the basis of existing trends, the Czech and Polish economies will catch up with ours within 12 to 15 years. Our infrastructure is rotting, our economy stagnating and, with the NHS in crisis and the police unwilling to police, our state services are hollowing out. This is not the result of Brexit or austerity, nor the mistakes of an individual politician or two. This is the culmination of the failure of a political consensus that prized wafer-thin efficiency over solid resilience, market ideology over state capacity, financial services over a balanced economy, imported good over domestic production, foreign ownership over strategic capabilities, and globalisation over the national interest… The financial crash, pandemic and energy crunch exposed our weaknesses, but the crises will keep coming. Geopolitical reality will keep testing us, and our social and economic weaknesses will mean we keep falling short. No politician, and no political party, is yet brave enough to admit it, but we are in a dangerous spiral. We need nothing less than a reimagined conception of state, society and market — and a plan to arrest decline.”
Conventional wisdom would suggest this journey began during the premiership of Timothy’s old boss, Theresa May, given the attempt in 2017 to establish a genuine industrial strategy. We can point also to measures such as the ‘dementia tax’. Although quickly abandoned, the notion that the state can essentially requisition housing wealth to pay for an expansion of public services crossed an ideological red line — and it is one which future Conservative governments are certain to revisit.
Boris Johnson’s programme was more of the same, albeit more surreptitiously. The central state would take responsibility for steering and financing technological development, as well as spending more on infrastructure and public services. It is easy to say that COVID-19 interrupted this programme, but the various, massive pandemic-related economic policy interventions (substituting for the private sector in terms of paying wages and creating credit) actually tell us a great deal about modern conservative statecraft. Crises may require exceptional measures, but they also reveal governments’ views on the legitimate scope of state action, and the response to COVID-19 of course built upon responses to the 2008 financial crisis and 2016 Brexit vote. There was no serious opposition from any part of the Conservative Party, as the libertarian wing concentrated in denouncing lockdowns rather than the furlough scheme and other forms of market interference.
I would also question the extent to which ‘austerity’ in the coalition era sits outside this picture. While associated with under-investment in infrastructure and public services — which has exacerbated many of the UK’s current afflictions — austerity was primarily an attempt to reset the relationship between state and citizen (albeit shrouded in daft, discredited economics). As I discussed in my book Austerity Politics and UK Economic Policy, austerity was not laissez-faire: it accommodated and boosted, for instance, economic planning in the property and finance sectors (both strategically significant to the UK economy).
There were few spending cuts for the sake of spending cuts; indeed there was a great deal more public expenditure in areas like private pension subsidies — ‘automatic enrolment’ essentially constitutes another example of large-scale, centralised economic planning. Cuts were focused on local government (especially in the North), despite the commitment to spatial rebalancing (and the Northern Powerhouse). Boris Johnson’s ‘levelling up’ agenda has followed the same pattern: the local state being undermined in favour of centralisation (despite the proliferation of new elected positions), sweetened by a vague sense that affected areas can better themselves through co-operating with central government as a junior partner.
The coalition also cut working-age benefits — but cuts in entitlement did not result in significant cuts in actual spending. Although Rishi Sunak rather than Liz Truss is seen as the heir to David Cameron and George Osborne’s brand of conservatism, the deficit mattered far less to the coalition government than they told us it did. Tax cuts were prioritised over tax revenue. Furthermore, anti-immigration policies accelerated under the coalition. (Let’s not forget that the Lib Dems were on board for all of this — thereby undermining the notion that Truss’s previous party affiliation tells us very much about her politics.)
Quite obviously, the approach suggested by Timothy does not represent a left-wing policy agenda. It may challenge the market, but this only really means foreign companies operating in the UK, with ‘the market’ synonymous with ‘globalisation’ in this regard. When UK companies are at fault, the problem is one of public regulation, not private business. Timothy is accordingly highly critical of civil society institutions, immigration, and virtually all efforts to address climate change — Truss’s leadership campaign has swallowed much of this rhetoric whole. And while the new, more statist conservatism may claim the mantle of egalitarianism, it tends to identify the welfare state and human rights as barriers to individuals dragging themselves up to equality (again, this position has its roots in the coalition government).
Britannia unhinged
My argument here, essentially, is that the Truss premiership is likely to advance the Conservative Party’s embrace of ‘state capitalism’ (not to be confused with ‘socialism’). My recent paper with James Silverwood in Economy and Space charted the history of state capitalism in the UK, arguing that it has been a more significant feature of UK economic statecraft than we usually assume.
By state capitalism, I mean:
The use of state agency to (re)produce certain dominant modes of capital accumulation and social organization for the benefit of privileged interest and societal groups, taking place in conjunction with, or in subjugation of, economic agents in the private sector, and involving multi-scalar relations from the individual to the global.
In other words, state capitalism is not simply about the interaction of the state and capitalism in the abstract, it is about the co-constitution of political and economic forces which control both state institutions and the dominant forms of accumulation.
As such, it is possible to define the UK political economy as a state capitalist regime at different points of history — albeit a distinctive form of state capitalism, focused on financialisation rather than industrialisation.
Version 1.0 was 1821-1914: macroeconomic policy was the main tool of state capitalism, with the establishment of sterling as a global reserve currency, underpinning the City’s global status and imperial management (its overwhelming objective). British landed aristocracy and financiers were the principal beneficiaries, and were barely distinguishable from the political elite. In this period, UK economic statecraft was characterised by the internalisation of external economic space, that is, world financial markets and colonial territories.
Version 2.0 was 1958-2016, and was characterised instead by the externalisation of internal economic space, as the UK economy was reshaped to serve international capital, via the City, through a relaxation of corporate governance norms and reduction in employment protection and welfare provision.
The ‘interregnum’ period, between the world wars and the immediate postwar era, was characterised by nationalisation of some industries and a stronger commitment to industrial policy in the UK. Ironically, these would normally be seen as the hallmarks of state capitalism, but in a UK context actually signified a softening of the direct links between elected political leaders and economic elites.
Silverwood and I actually prophesised a new state capitalism emerging in the post-Brexit era: version 2.5 would be similar in form to the post-1958 regime, but centred around ‘Global Britain’ rather than EU membership, thereby invoking some of the imagery of the imperial era even if the UK was no longer in a position to internalise external economic spaces.
However, I am glad this prophecy did not make it into the published version of our paper! We were probably over-estimating the economic jolt of Brexit: while the process and outcome of EU departure has been highly damaging, I believe it was a near-inevitable part of the UK’s developmental journey over recent decades, rather than a critical juncture which establishes a new path.
As such, the version of state capitalism we are seeing emerge now is probably more of a 1.5 than a 2.5. The UK will no longer seek to serve international capital as in version 2.0. But nor is it in a position to command the global economy. Instead, it will turn inward, and adopt some of the classic features of conventional state capitalism (nationalisation, industrial policy, protectionism, etc.) in order to compensate for the UK economy’s lack of competitiveness internationally, which will continue to hold back productivity growth. The state will get bigger, but not as an expression of democratic control over the capitalist economy, but rather to both prop up and substitute for domestically-constituted capital.
Truss’s 2012 book Britannia Unchained (co-authored with Kwasi Kwarteng, Priti Patel, Dominic Raab, and Chris Skidmore) needs a closer, second reading in this regard. It is not the love letter to free markets that is generally assumed. Its debt to Thatcherism lies mainly in its assault on employment protections, which are apparently contributing to the idleness of UK workers. It does describe the state as ‘bloated’, but this is mainly about the regulatory burden apparently imposed by the state on the private sector, rather than as a criticism of the state as the ultimate provider of public services.
It was considered rather comical at the time that Truss et al. had mistaken countries with highly interventionist states as epitomising modern, liberal, high-productivity economies. As the Financial Times commented:
An irony of Britannia Unchained is that many of the countries it lauds, such as Singapore, Brazil and Israel, have states that are far more interventionist than Britain’s. Another lesson from the developing world could be that “state capitalism” works.
Similarly, praise for ‘risk-taking’ culture in the United States also seemingly neglected to note the role of the US government (often for military purposes) in underpinning innovation processes, and indeed the ability of tech giants to exploit public value for rent-seeking rather than enhancing productivity.
However, are we certain that Britannia Unchained erred? Its main agenda is dismantling citizenship, as embodied by the state, rather than dismantling the state per se. Both Kwarteng and Skidmore are advocates of an activist industrial policy. Clearly, if the book’s ambition to return the UK to ‘great power’ status was to be achieved, the state would not be standing by, but rather playing a role similar to that identified in my historical account. The state may indeed grow, to serve the economy (i.e. the owners and executives of large, domestic firms). This is what ‘sovereignty’ meant in a Brexit context: not of Parliament, and certainly not of the people, but of the fabled ‘Britannia’, the emblem of British economic might.
What does this mean for a government led by Truss in the present circumstances? There will be tax cuts, and an attack on workers’ rights. I am certain there will also be a state-led solution to high energy costs. There may even be more action on sewage being pumped into the sea, more money for the NHS, and a commitment to rebuild crumbling transport infrastructure. None of this will be done as a representation of popular sovereignty, but rather because the private sector needs these problems fixed too.
And we can expect to see regulators, trade unions and human rights — not business, not Brexit, and certainly not the Conservative government — identified as the cause of the problems which will require more state intervention.
I think there are three main policy approaches that will define Truss over the next few years: (1) expansive fiscal policy (and by implication, questions around central bank independence); (2) the coming energy bailouts; and (3) the advance of economic planning across various sectors. I will take each in turn in the proceeding sections, before ending by considering the implications for the Labour opposition.
Clearly, we cannot expect the Truss government to achieve all it hopes to achieve before the next election — and much of its character will be revealed as it responds to as-yet-unknown events. But the direction it intends to set is coming into view.
1. Fiscal (and monetary) policy
Truss’s promise to deliver tax cuts — at the very least, reversing Rishi Sunak’s recent tax rises — has been the centrepiece of her leadership campaign. If delivered, the promise is certain to increase the UK’s budget deficit. But this evidently no longer matters! The case for ignoring the deficit is being made publicly by the handful of right-wing, pro-Brexit economists who have endorsed Truss.
To be clear, the economists in question — Patrick Minford, Gerard Lyons, and Julian Jessop — were not deficit deniers in the coalition era. But they have generally always advocated significant tax cuts, irrespective of the impact on the public finances. They typify the understanding of austerity offered above: content to use state power to support the private economy, but not when it comes to protecting citizens from economic hardship.
Tax cuts will be presented as mainly benefiting ‘hardworking families’, but even if this were the case — for the most part, it is not — we most definitely must look a gift horse in the mouth. As with the coalition’s tax cuts, the danger here is that the link between paying tax and citizenship is being knowingly weakened. If we don’t owe the state anything, then the state doesn’t owe us anything in return. We are, primarily, servants of capitalism, not citizens of a democracy.
This time around, tax cuts will not be paid for by spending cuts, even ostensibly. Rising interest rates make borrowing more expensive too. Many commentators suspect therefore our long experiment with quantitative easing (QE) is about to morph into a fully-fledged ‘modern monetary theory’ (MMT) programme. MMT emphasises the state’s role in creating money independently of its ability to levy taxes or borrow from households and the private sector.
A left-wing version of MMT would employ tax rises (on the wealthy) not for revenue, but to control inflation. Since this has been ruled out by Truss, despite very high inflation at present, we can expect the Bank of England’s mandate and independence to become increasingly threatened. (QE had already effectively ended the Bank’s monetary policy autonomy.) There is little point in using tax cuts to stimulate the economy if central bankers are determined to curb inflation by quashing demand. And the Truss government is likely to ask the Bank to increase ‘monetary financing’ — another MMT-like instrument — more than its current leaders would be comfortable with.
We can expect the Office for Budget Responsibility (OBR) — the deficit watchdog — to be marginalised too, as more fiscal policy announcements are made outside the OBR’s reporting schedule. Sunak, as Chancellor, made a habit of this in exceptional times, and it will be normalised by Truss’s government.
2. Energy bailout
Truss has ruled out helping households directly with the rising cost of domestic energy. As discussed above, although direct support would be excruciatingly expensive, her reticence is unlikely to driven by concerns about the public finances.
Instead, it is more likely to arise from a reluctance to establish new entitlements to state support for citizens. Truss is likely to prefer a ‘corporate welfare’ approach where government funds energy companies to reduce their prices, whether through grants or loans. This will be equally expensive, and will amount to nationalisation-in-all-but-name. But it will be done.
Lowering bills, rather than helping households to pay higher bills, also has the benefit of reducing inflation in a statistical sense, thereby diluting the Bank of England’s justification for potentially undermining the Truss government’s fiscal innovations through continued monetary tightening. Indeed, the Bank may be called upon to operationalise whatever solution the Truss government devises, with monetary financing certain to be preferred to further taxes (on profits, in this case).
Again, these policies may be presented as exceptional measures for unprecedented circumstances. But we should not be so sure that Truss is uncomfortable with exercising state power in relation to the energy sector. The wider context here is climate scepticism, specifically Truss’s apparent distaste for renewable energy sources and the wider decarbonisation agenda, which has become a major ‘culture war’ staple on the right.
An aversion to ‘net zero’ is perhaps the key discontinuity from Johnson to Truss, or perhaps more accurately Sunak to Truss. But if the UK is not going to embrace renewable energy, then it is going to have to adopt a sustained, long-term agenda for securing (affordable) energy supplies, involving other sources of fossil fuel energy (namely, fracking), a decades-long commitment to nuclear power, and crucially, a decoupling from price-setting global energy markets. In short, whatever blurred configuration of public and private institutions is permitted to exist as the immediate crisis passes, bureaucrats are going to be planning the UK energy sector for the foreseeable future.
3. Economic planning
Planning is unlikely to be restricted to energy. Expect central government to become more involved in strategic decisions and resource allocation at the sectoral and even organisational level throughout the economy.
This is partly a story of protectionism. One of the main discontinuities from the coalition to Truss governments is likely to be a much stronger commitment to preventing foreign companies and investors from taking control of UK firms and infrastructure. (Cameron, Osborne and Clegg represented cosmopolitan cronyism, with links to US-centred finance and tech elites. But the economic elites around Johnson and Truss are more UK-centred, albeit with links to Russian and Middle Eastern oligarchs.)
Many other countries of course seek to protect strategically significant assets, as a matter of routine. And Truss seems keen to advance the ‘reshoring’ of the manufacturing sector to reduce dependence on imports. But whether she is able to enact genuine change in this regard will be a major test of how far the Conservative Party has travelled. Theresa May made similar noises, before allowing chip designer ARM to be acquired by Japanese finance company SoftBank (albeit after demanding ‘post-offer undertakings’ to protect ARM’s strategically important presence in the UK tech sector), and failing to prevent the hollowing-out of UK steel production.
Clearly, if Truss is to succeed where her predecessors have not, it will not happen smoothly. Depriving the economy of investment and imports will manifest as a (self-inflicted) shock unless the response is centrally co-ordinated over many years — that is, the kind of approach May lacked the political capital to embed.
Irrespective of this agenda, the new conservatism’s willingness to embrace planning extends much further, including to sectors with little overseas presence.
Housing is perhaps the best example. Expect the Truss government to persist with and augment the subsidies for mortgages and house-building established by the coalition — not to ensure affordable homes for all, but to maintain the steady accumulation of housing wealth, and to influence how and where new homes are built.
Expect more use of the British Business Bank and UK Infrastructure Bank to funnel public funds to SMEs and venture capitalists — with greater central direction on investment priorities. Expect sectors like higher education to undergo top-down reforms. Expect pension funds to have less autonomy around investment decisions, as the government finally admits defeat regarding efforts to persuade funds to align with politically-determined investment strategies.
Finally, we should perhaps also expect the public sector to do a little less under a Truss government in some respects. Expect the private sector to become more involved in the NHS and primary and secondary education. State capitalism in this context involves the public and private sector becoming intertwined, allowing the latter to extract value from the former over a sustained period. The state will plan rather than provide.
The challenge for Labour
While state capitalism is not synonymous with socialism, it is not incidental that much of the agenda that the Truss government will now embrace echoes a series of left-wing challenges to the failings of neoliberalism.
The left has asked for more sophisticated fiscal rules that recognise the value of publicly-held assets, and the economic benefits of public investment. Many on the left have advocated public ownership, reform of the Bank of England’s mandate, and MMT in some form. Similarly, a more activist industrial policy, controls on foreign capital, and the reform of market-based regulation of utility companies, have long been popular on the left.
This leaves the current Labour leadership in a difficult position. It needs to oppose Truss’s agenda as a matter of principle: the left may be naturally inclined towards a positive conception of state action, but the new conservative interventionism will not be guided by progressive objectives. In doing so, however, there is a danger of Labour closing down the political space it needs to construct, and win support for, its own programme for government.
Labour must not expect its significant lead in the polls to last, as the general public becomes more acquainted with the new Prime Minister, and as its alternative policies come under greater scrutiny. The party needs to grasp what this moment — i.e. the continuing ascendance of a new breed of conservative leaders, amid an escalating series of economic crises — represents in the development of British politics. I would point to four main priorities for the Labour Party, in terms of both policy and narrative: state capacity, fiscal policy, climate change, and democracy.
State capacity
Labour has tied itself in knots recently regarding its support for public ownership in sectors such as rail and energy, worried about an association between nationalisation and ‘Old Labour’. But there is little evidence that the public shares this concern, no matter how the issue is framed by the media. Where privatised industries are clearly seen to be failing, voters favour (re)nationalisation (and this was already the case, pre-pandemic).
Above all, they want to see that the government is taking responsibility for delivering decent public services, irrespective of the branding. This is why ‘an extra £350 million a week for the NHS’ was so effective during the 2016 referendum. The austerity narrative had told us that there were limits to the state’s responsibility, even as the coalition government increased spending in practice (albeit far less than was necessary). Labour failed to challenge this framing under Ed Miliband, so the populist right filled the gap.
This is why ‘state capacity’ needs to be a core focus for Labour. Increasing state capacity will often be about public ownership, but there are many other ways to deliver the same objective. The principle at stake is not really ownership at all, but rather democracy: does the elected government have the power and resources it needs to do the things the public wants from government? Truss may have the wrong plan for state capacity — i.e. public sector financing for services delivered by private sector monopolies — but it is, nevertheless, a plan. She has an answer to the question. Labour cannot point out the answer’s inadequacy unless its own alternative is clear. If Truss is left unopposed to blame the culture of regulation and quasi-markets for higher prices and lower quality, she will be firmly parked in a policy space that Labour needs to own.
Tax, spending and redistribution
I highlighted in a recent post Labour’s support for post-pandemic fiscal conservatism (as documented in a paper by James Wood, Valentina Ausserladscheider and Matthew Sparkes), typified by Keir Starmer’s use of the ‘magic money tree’ trope.
Labour’s determination to be seen as trustworthy stewards of the public finances is understandable. But it is not 1997 anymore. It isn’t even 2010. There is little evidence that the public is concerned about the prospects of a budget deficit today, assuming it ever really was. Again, Labour needs to be careful not to allow its narrative to be derailed by lazy media framings. If the question about any given Labour proposal is ‘what does this mean for the deficit?’, then ignore it. Tell us what it means for our economy, our communities, our standard of living. The slightest hesitation immediately puts the conversation on a terrain that the Conservative Party will always occupy — a position which ironically means it is free to ignore the health of the public finances in practice, without serious scrutiny.
There were signs a few months ago that Labour gets this. Labour generally opposed Rishi Sunak’s post-pandemic tax rises, despite their presentation as a fiscally sustainable way to fund public services investment. More recently, however, Labour has offered its tacit support to Sunak’s doomed leadership campaign, by accusing Truss of being reckless with the public finances in promising tax cuts.
Frankly, Labour has got itself into a mess on tax. It is opposing both Sunak’s tax rises, and Truss’s tax cuts, while using the same arguments as Truss to promise its own tax cuts. Each individual position may make sense on its terms, but the overall narrative is, at best, unclear. If you are criticising Truss as reckless for cutting taxes, then it will be difficult to avoid the same accusation when similar policies are offered. Moreover, if Truss’s tax cuts do succeed in providing a very short-term boost to economic growth in advance of the next election (which is not unlikely) then Labour needs a clear explanation of why this is, in fact, a bad thing — also difficult to do when you have the same position.
Labour needs to turn the tax question into one of fairness, not deficit reduction. This is not to say it is unaware of the fairness imperative already, insofar as it has advocated higher taxes on profit windfalls and unproductive activities. But this needs to the first line of attack on Truss’s tax agenda, identifying the extent to which the already-wealthy will benefit at the expense of the worst-off. There is of course a solid economic rationale for Labour’s proposed tax rises — in terms of both controlling inflation, and incentivising productive economic activity — but Labour first needs to win an audience to make this case. If Truss’s approach is seen to have been successful, Labour needs to be able to demonstrate its damaging implications. Ambivalence over whether or not the party actually supports the same approach is an unnecessary barrier to doing so.
Climate change
I think opposition to decarbonisation represents Truss’s most significant policy mis-step. It may be a position she has been forced into by the dynamics of the Tory leadership contest, but nevertheless, it will now be a difficult one to wriggle out of.
Climate change is no longer a marginal issue: it matters to most voters. Labour has a serious plan to reorient the economy towards addressing climate change (even if limited in some regards). It is of course rather similar to Jeremy Corbyn’s plan. But the current leadership has been wary of adopting the same leftish language as Corbyn to describe its agenda (‘green new deal’, and all that), and more generally of being seen as putting a very long-term policy programme ahead of more pressing, everyday concerns in its ‘retail offer’ to voters.
But climate change is here, now. And the economic benefits of decarbonisation mean Labour’s approach is a genuine plan for growth, as well as planetary salvation. The opportunity for Labour to contrast its agenda with Truss’s anachronistic climate scepticism must not be forsaken.
Democracy
Finally, there are a set of issues which relate to the ability of people and communities to ‘take back control’ of their own economic fate. A generational failure within the Labour Party to recognise the onset of political disenchantment, especially among its own traditional support base, means the party has vacated this discursive space for the populist right.
We know that this trend lies behind support for Brexit. It should not have taken Labour this long to accept it. Instead, after the partial (or accidental) success of Corbyn’s strategic fence-sitting on EU withdrawal, it chose as his successor the most ‘FBPE’ candidate on the ballot paper. Starmer has of course now surrendered to Boris Johnson’s ‘hard Brexit’ outcome, since his determination to resist the referendum result means Labour’s centrists failed to develop their own, alternative approach to delivering EU withdrawal.
Of course, now that it is starting to do the economic damage that remainers rightly warned of, the public is finally turning against Brexit. But this does not mean they will turn against Brexit as a political identifier. The public gave Johnson a majority in 2019 not because they trusted him to ‘get Brexit done’ in a satisfactory way, but rather because he could credibly claim to understand why they voted for Brexit in the first place. By forcing Corbyn into a firmer ‘soft Brexit’ or even ‘rejoiner’ offer, Starmer helped to undo one of Labour’s most electorally advantageous positions.
In case it is not clear, my heart is with the rejoiners, and I think the 2016 referendum could have been ‘won’ had Corbyn used his platform as Labour leader to make the case for remain more strongly. Alas, it should be obvious that the first step back into the European Union, in any capacity, is to demonstrate an understanding of why a large chunk of the UK electorate wanted to leave.
Beyond Brexit, I think Labour needs to start making the case for electoral and parliamentary reform. The details of what this might entail do not need to be rehearsed here — mainly because Labour itself does not need to offer a detailed proposal to the electorate in this area. In contrast with economic policy, where Labour needs an alternative platform from which to oppose Truss proposals, the government offers only silence on the health of the UK’s democratic process.
This silence exists because things like the selection of House of Lords peers, and party financing rules, have no reasonable justification. Labour’s first priority in this regard is to draw attention to this. Perhaps the electoral gains of doing so will be limited — such issues are never going to be hugely salient to most voters — but at the same time, the political costs will be negligible or non-existent.
‘Levelling up’ is worth discussing in this context. Alongside the economic dimension, it perhaps represents Johnson’s singular attempt to present his governing project as one of democratisation, insofar as it encompasses the ongoing devolution of some policy powers to local and regional authorities.
The fact that Truss appears content to abandon levelling up — whether in style or substance, or both — could be seen as an opportunity for Labour to regain what should be its own natural political territory. But I am sceptical, I’m afraid. Again, my heart is with devolution: it should be a Labour policy because it is the right policy, with few electoral downsides.
But there are also few electoral upsides. People care about the places they live in. But not so much about an agenda to improve all places, all at once (the Tories found this out during recent by-election defeats, when levelling up was a source of resentment for some voters). Labour needs to tell people that they can take back control locally not by emphasising a generic devolution or rebalancing programme, but by telling specific places what voting Labour will mean for these specific places.
Irrespective of policy, Labour’s best asset at the next election may in fact be Liz Truss. Her polling will naturally improve, but how much it improves will depend on perceptions of her own performance. Truss is a bit May, a bit Boris, and a bit bonkers; not entirely crap, but not entirely not crap. We can be certain that she will make mistakes. The Tory benches have run out of talent to form a fully-functioning government, but there are few signs that Truss recognises this.
Truss is also unlucky. She is taking the top job at the end of a long stint in government for the Conservative Party — with almost nothing to show for it. It would indeed be incredible if record drops in real earnings were not to result in a change of government at the earliest opportunity. And whatever the merits of Liz Truss, voters may have simply run out of patience with the Tories after they made such terrible choices for the last two Prime Ministers. (I suspect this is why MPs overwhelmingly preferred Rishi Sunak as next leader, despite doubts about his orthodox policy agenda — he would have been easier to market as a safe pair of hands.)
So, Starmer may well win the next election by default, even if he does not produce compelling answers to the four questions I outline above. But if this is how Labour wins, there is a danger that the Conservative Party will be well-placed to revive their electoral prospect after a brief period in opposition, insofar as they currently have more persuasive arguments around the most salient political issues. Having dispensed with Truss, in this scenario, they are likely to turn to either Ben Wallace or Penny Mordaunt as their next leader. Both are popular with MPs and party members, and I suspect either would prove more popular with the public than Truss.