Since the first polls of the official election campaign came out earlier this month, there has been talk of Labour repeating its 1997 landslide.
And now we have Labour’s 2024 manifesto, further similarities are in evidence. Like Tony Blair’s 1997 New Labour manifesto, Keir Starmer’s document makes education and health the central policy priorities. Both manifestos promise to be tough on crime, abolish hereditary peers in the House of Lords and devolve more powers to the regions.
There are also some important differences. Chief among these is that 2024 Labour is promising less spending than 1997 Labour, and yet more state intervention. This divergence shows a significant development in the party’s approach to economic growth. It is a welcome departure from the Conservative and New Labour, market-led, neoliberal consensus on economic growth.
Both manifestos promise to improve the quality of education for school children, expand pre-school learning, expand lifelong education, improve pupil-teacher ratios and reform tertiary education. However, Blair promised, in nominal terms, twice as much spending in education in 1997 than Starmer is promising in 2024 (£3 billion against £1.5bn).
Both manifestos promise to invest in the NHS and to cut waiting lists. Both manifestos promise to introduce a living wage. The minimum wage was a Labour electoral promise and they introduced it in 1999. In 2024 Labour is promising to legislate a minimum wage that is a real living wage.
Both manifestos state that Labour are not big spenders, but wise spenders. In both manifestos, the party is very careful to distance itself from its “tax and spend” image.
In both manifestos, the party promises not to raise income tax. As in 1997, the party defends this choice on the grounds that average working families already face a high tax burden. Here, one might also find a similarity between 1997 and 2024 in what the manifestos do not explicitly say.
In 1997, the Labour manifesto attacked the Conservatives for cutting capital gains tax, without making a specific pledge in either direction. In 2024 Starmer and his future chancellor of the exchequer haven’t promised they won’t raise capital gains tax.
Spotting the change
So, in many ways, Starmer has taken Labour back to Tony Blair’s third way social democracy. This is not surprising as he, like his predecessor, is trying to build the winning middle and upper middle class coalition that will bring the party to power.
But I believe the 2024 manifesto does actually contain some radical policy proposals. Blair and New Labour were very much tied to the neoliberal dogma of free markets, where economic growth is primarily driven by the private sector. Housebuilders and investors were facilitated with predictable and favourable tax policies while the government helped them further with its own investments in human capital (education and health).
Starmer’s Labour party goes further. The 2024 Labour manifesto promises to create Great British Energy, a state owned energy company that will invest in green energy. This is a significant departure from providing incentives to private companies; it is a recognition that the state has a significant, independent role to play in energy transition.
It also promises to create a national wealth fund that will invest in public infrastructure, such as ports and hydrogen technology. Once more, this is a considerably more statist approach to public investment than we have seen in the UK. Both these policy promises depart significantly from the 1997 New Labour manifesto and economic growth plan. They are bolder at endorsing state-led growth initiatives.
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Why is it here that divergence with New Labour becomes apparent? There are probably a few reasons, including the failure of the private sector to invest in infrastructure and increase productivity.
But the 2024 Labour manifesto should primarily be understood as representing Labour’s electoral coalition – of working and middle class voters. Yet, unlike in 1997, it is not a coalition solely bound by cheap credit and ever rising asset and property price rises, but by a need for the state to intervene to bring back growth via a centrally planned industrial strategy.
Since the early 1980s and Thather’s right to buy scheme, Conservative and Labour governments, alike, have deregulated the banking and financial sector making mortgages more accessible and cheaper. This credit-led, house price inflation benefits landlords and the better-off middle class and widens inequality.
The unaffordability of housing feeds political polarisation making New Labour’s 1997 coalition hard to repeat. Starmer and Labour are being called upon to offer a new working and middle class coalition that cannot be driven by consumption. It can only be driven by investment, higher skills and higher wages.
It is the ultimate case of a “supply-side” social democratic strategy that aims to reconcile two things – the demand for higher wages and quality of life among the working and middle classes and the fiscal frugality demanded by capital holders and higher income earners.
As political scientist Carles Boix argued in his seminal work, this coalition is best forged through wise investment in human and physical capital and macroeconomic stability. The key questions for Starmer at this stage are whether this coalition is a lasting one, and whether his team can achieve the much sought-after economic growth that will bring this plan to realisation.
Despina Alexiadou does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
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