There is a profound yet simple question about investment in our economy that all politicians should be forced to face: who benefits? At this week’s International Investment Summit in London, Keir Starmer offered a worrying answer. He is pledging to “rip out” bureaucracy” and to make his deregulatory agenda a “cross-government priority”. He proceeded to lead a back-slapping discussion with Google’s former boss Eric Schmidt, who joshed that Starmer should appoint a “minister for anti-regulation”.
He also sent a warning shot across the bows of the Competition and Markets Authority (CMA), whose mission is to protect the British public against scams and abuses by monopolists and other nasty global forces. “We will make sure that every regulator in the country, especially our economic and competition regulators, take growth as seriously as this room does.” Taking sides with the monopolists in the room – and against his own regulator. It’s not a good sign.
All this comes in a wider context of sucking up to the City of London, while ignoring the policy preferences of much of the public. Starmer has rowed back on pledges to cap banker bonuses and tax windfall bank profits; he has watered down a £28bn green investment plan and now threatens to defenestrate the CMA.
This is Tony Blair’s old playbook. For foreign investors, the former Labour leader managed expectations upwards, while managing them downwards for the home audience. But the Blairite economic package was ultimately about transferring resources away from consumers, workers and ordinary taxpayers, and towards the (mostly non-resident) shareholders of large global multinationals – in the hope that some of it would trickle back down.
It is telling that Starmer’s investment summit was held not in Newcastle or Manchester, but at the Guildhall, home of the City of London Corporation, Britain’s foremost finance lobbyist. Blair’s pro-finance agenda helped usher in the global financial crisis, which evaporated trillions of pounds’ worth of economic activity, and in which Britain played a central, deregulatory role. Now, urged on by the Tony Blair Institute, Starmer risks stripping away protections and potentially ushering in different crises, not least a rise in what the academic Isabella Weber calls “sellers’ inflation”, where companies jack up prices far above the costs of production, levying what are in effect private taxes for the benefit of a class of investors based in wealthy parts of London, overseas and offshore. The CMA’s job is to stop this, and Starmer seems to want to stop the CMA.
Britain’s politicians have long genuflected to the City, but they increasingly doff caps to big tech now too. Last year, according to Open Democracy, Labour ditched its proposals to levy a digital services tax on the tech giants – a day after senior Labour figures received thousands of pounds’ worth of Glastonbury freebies, as guests of Google’s YouTube. Starmer seems to be taking the side of global monopoly power over the people of Britain. But if his goal is to make the UK safe for American or Chinese multinationals, then who runs Britain?
And what is the red tape to be cut? There are of course always rules that hold parts of the economy back. But most of these rules are intended to save people and the planet from unjust exploitation. As the late President John F Kennedy once said, referencing GK Chesterton: “Don’t ever take a fence down until you know the reason why it was put up.”
The assumption underpinning Labour’s worldview is that there is a trade-off to be had between regulation and growth. But it’s the other way around, especially when it comes to tackling excessive corporate power. Make no mistake: monopolists kill innovation and they kill growth. Pandering to them is anti-business.
Voters don’t want deregulation, either. The latest polling by Unchecked found that 79% of Britons support strong regulation for a “strong economy and stable society”. If Labour sticks to this course of using tax cuts and pro-monopoly deregulation to transfer resources away from people and businesses in the UK and towards globally mobile giant firms with mostly foreign shareholders – in the hope that somehow wealth will trickle back down – Starmer’s popularity is likely to mirror that of the embattled French president Emmanuel Macron, facing a surge in support for the far left and the far right. It could be worse still: the ensuing public anger may unleash forces that would see the final implosion of the Labour party itself.
Nicholas Shaxson is co-founder of the Balanced Economy Project, an anti-monopoly NGO
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