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LIVERPOOL, England — Keir Starmer is 17 points clear in the polls and seemingly cruising toward Downing Street. But it won’t be big spending pledges that get him over the line.
The Labour leader and his shadow chancellor, Rachel Reeves, have one job to do at their annual party conference this week: Persuade British voters the party is finally ready to govern after 13 years in the wilderness.
As Starmer edges closer to power, he is desperate not to put a foot wrong — and nowhere is this more obvious than in his approach to the country’s public finances.
His leadership so far has focused on removing Labour’s glaring electoral vulnerabilities, exerting a tighter grip on party structures and honing a message of fiscal discipline.
His strategy has been so deeply rooted in caution that anyone who shows a little verve, as Reeves did Monday, risks upstaging him — while questions about how Labour would mend Britain’s ailing public services without new spending remain unanswered.
“It’s ‘safety first’ from now on,” said one shadow Cabinet minister, granted anonymity to speak frankly about internal party discussions.
“The corresponding danger is people don’t have a compelling reason to get out and vote for us.”
‘There’s no money left’
Starmer and his team have spent the past year trying to establish a reputation for economic responsibility, after being gifted the disaster of Liz Truss’s short-lived Tory premiership.
Before Truss’ catastrophic mini-budget of September 2022, which spooked U.K. financial markets and preceded a sharp rise in the cost of mortgages, the Conservatives consistently polled above Labour as the party most trusted to run the British economy.
Senior Tories still clearly view the Labour Party as vulnerable to accusations of profligacy, with Tory Chairman Greg Hands attempting to revive a notorious note left by an outgoing Labour minister in 2010 which read: “I’m afraid there is no money.”
“It’s a reminder that when Labour run things, they run things badly,” said a Conservative Party aide, in response to eye-rolls from those who regard the note as a political ploy well past its sell-by date.
David Gauke, a former Tory MP and Treasury minister, says it’s not borrowing but taxes that are the key dividing line in 2023.
“The Conservatives will look to attack [Labour] for needing to put up taxes,” he said. “If they’re too loose in their language then that provides an opportunity for their opponents.”
Against this backdrop, Starmer is taking no chances. He has banned colleagues from making unfunded spending promises; ruled out any rise in income tax; and vowed not to unveil any new taxes at all before the next election.
Reeves hammered this message home Monday, declaring in her conference speech: “Change will be achieved only on the basis of iron discipline.”
Labour’s clapback
Now it seems Labour want to go further, arguing not only that they can be best trusted to run the economy but that the current custodians, the Conservatives, are now the ones who offer only chaos and irresponsibility.
“Be in no doubt,” Reeves told the Labour conference Monday. “The biggest risk to Britain’s economy is five more years of the Conservative Party.”
Reeves’ program included crowd-pleasing measures, notably a corruption commissioner to help recoup taxpayers’ money lost to waste and fraud during the pandemic, which set tongues wagging about her future leadership potential.
And Labour has already pledged to stop tax exemptions for non-domiciled persons, raise tax on private school fees and increase the windfall tax on oil and gas firms. But beyond that, spending calculations remain tight.
The party’s biggest spending commitment so far is £28 billion of capital investment each year to support the U.K.’s decarbonization. Only £20 billion of this is “additional” spending — above what the Conservatives have promised — and would still leave investment on a falling path over the next parliament.
The question of how Starmer will make good on his promise of “building a better Britain” therefore remains wide open.
“Pointing to an area that needs investment is much easier than coming up with a set of coherent plans to deliver that,” observed Ben Zaranko, of the Institute for Fiscal Studies think tank.
He cited recent headlines about faulty school buildings across England, arguing that while Labour has accused the government of under-investing in schools, they have not actually promised any extra investment to solve the problem.
A general secretary of a major trade union, granted anonymity to speak candidly, said they hoped the conversation on spending would change if Labour actually wins power.
“I don’t think Labour will have much of a honeymoon period. They’re going to take over a country that’s really badly damaged,” the union leader said.
Growing pains
While Starmer tries to dampen spending expectations, he is talking up the party’s ambitions for growth and making nice with the business sector.
This carries its own difficulties, according to Zaranko. “If the argument is, we can’t afford to make all these spending commitments until we’ve got growth — it isn’t something that’s going to yield results for a decade or more.”
A senior Labour Party official, not authorized to speak publicly, disputed this. They said some changes could be made — for example, to Britain’s notoriously prohibitive planning system — which will come to fruition sooner.
And, the same person stressed, the party is open about asking voters to make a longer-term bet on Labour. “We are being very straight with them in saying that the damage that’s been done over the last decade or so will take a long time to fix.”
Some question whether this guarded approach is going to cut it, especially if the polls narrow as expected closer to the election, which is expected in the fall of next year.
“The element that is missing, where they need to take a few more risks, is on how exactly they’re going to be able to deliver growth a Conservative government wouldn’t,” said Gauke.
A former Labour minister who is advising Reeves, but was not authorized to speak on the record, said the current holding pattern was “frustrating — we have a great opportunity to be more ambitious and credible.”
If Labour really can win power by playing it safe, Starmer may not care too much about his inspiration deficit. But making good on his promise to voters to fix the country could be another matter entirely.
Dan Bloom contributed reporting.
