UK
We Need Public Investment, Not Cuts- Andrew Fisher
By Andrew Fisher
When Keir Starmer announced his “mission” for the UK to achieve “the highest sustained growth in the G7”, the cornerstone policy was “a Green Prosperity Plan that will provide the catalytic investment needed to become a clean energy superpower”.
At Conference in 2023, Starmer assured delegates he would “speed ahead” with green investment, lambasting Rishi Sunak for rowing back on his commitments. Labour’s Green Prosperity Plan had been launched at Conference in 2021, promising an “additional £28bn of capital investment in our country’s green transition for each and every year of this decade”, funding new energy infrastructure, green transport, and better home insulation.
But in February this year, the plan was decimated and funding stripped out. And when the manifesto was published the plan was left with just an extra £4.7bn investment. The Institute for Public Policy Research (IPPR) think-tank said it means “both the Conservatives and Labour plan to reduce government investment over the Question marks over Labour’s economics next parliamentary term.”
‘Growth’ and ‘change’
‘Growth’ was the buzzword of Labour’s election campaign. That and ‘change’. It would certainly be a change to have some decent economic growth. Since the banking crash, the UK economy has grown by only 1% a year on average – the worst period for growth since before the Second World War.
But with only a threadbare green investment plan, does Labour have a plan for growth? Its mission remains the highest sustained growth in the G7. Its argument rests on two claims: (1) the mere fact of having some stable government after years of Tory chaos; and (2) some liberalisation of planning laws (especially around housing and energy infrastructure) which will trigger greater private investment and therefore create jobs.
This might work. Whether it’s enough to generate “the highest sustained growth in the G7” is less certain. However, two prerequisites for sustained stable growth remain unresolved in Labour’s plans: rising investment and rising wages.
The lack of public investment…
The UK has long lagged behind other nations in terms of public investment. Labour’s diluted investment plans are now focused on levering in extra private investment, but that is always the way: where public investment leads, the private sector follows. So it becomes a question of scale: is what Labour is proposing sufficient to stimulate sustained higher growth?
…And low wages
Real wages fell under the last Government. In an economy that is 80% service sector, if people don’t have much spare money in their pockets they can’t spend it and the economy doesn’t grow. Businesses large and small tighten their belts and cut costs rather than invest. That is a big part of the problem. Without boosting wages or social security benefits (there is no money allocated in Labour’s ‘fully costed’ manifesto to do so), or significantly boosting public investment, it’s hard to confidently predict sustained higher growth.
Likewise, the lack of available public services means more people who could be in work are trapped on NHS waiting lists, and due to the lack of social care many people are being forced to reduce hours or give up work entirely to care for loved ones. Investing in public services could also stimulate growth – skills training needs a massive boost after the huge cuts of the Tory years. Labour’s plans, as spelled out in the manifesto, mean more austerity for public services, which depresses growth.
Taking a punt on planning laws
Labour is ultimately taking a punt on the liberalisation of planning laws. That assumes it can overcome local opposition to building on green belt land, and deliver onshore wind and other infrastructure – and that private investors have the labour force to deliver it. With Labour allocating no extra resources to skills training and promising to cut immigration, it’s not obvious that the capacity to expand significantly actually exists. All in all, there are huge question marks about Labour’s strategy for growth.
- You can follow Andrew Fisher on Twitter here.
- This article was originally published in CLPD’s Campaign Briefing Newsletter. Read it in full here.
- You can also read Labour Outlook’s 2024 Autumn Conference bulletin here.
No comments:
Post a Comment