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LIVERPOOL, England — Keir Starmer is trying to tread carefully.
The Labour leader and his Shadow Chancellor, Rachel Reeves, are in Liverpool for party conference this week with one job: persuading voters the party is ready to govern after 13 years in the U.K. political 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.
But this caution carries its own risks. Labour will spend this week’s conference asking voters to trust an untested leader to mend Britain’s ailing public services — without always reaching for the checkbook.
“It’s ‘safety first’ from now on,” one shadow cabinet minister, granted anonymity to speak frankly about internal party discussions, said. “The corresponding danger is people don’t have a compelling reason to get out and vote for us.”
‘There is no money’
Before last year and Liz Truss’s disastrous mini-budget, which spooked 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 U.K. economy.
Whatever dramas might afflict the Tory party, Conservative MPs could usually comfort themselves that when push came to shove, voters would prefer to see them holding the purse strings.
That sentiment has plagued Labour since they lost power in 2010. That’s when the Tories began brandishing a note left by the outgoing Labour Treasury minister Liam Byrne for his Conservative successor which read: “I’m afraid there is no money.”
The note has been thrust center-stage again in recent months by Conservative Party chairman Greg Hands, who regularly posts it on social media and has taken to carrying a copy about his person as he travels the country.
The tactic draws eye-rolls from MPs and commentators who regard it as hopelessly out of date — but Tory party insiders insist it’s still relevant.
“It’s a reminder that when Labour run things, they run things badly,” said a Conservative Party aide.
Whether voters are swayed or not, the continued deployment of the note shows that the Conservatives still regard profligate public spending as an Achilles heel for Labour.
Rishi Sunak’s decision last week to ax the northern leg of the costly High Speed 2 rail project, and instead put £36 billion into other transport projects, sets another trap for Labour. A Tory spokesman openly admitted: “If it puts [Labour] in a difficult position then that’s obviously nice.”
Starmer told ITV last week Labour would continue with the projects announced, locking himself in to a plan not of his making.
Holding the line
Against this backdrop, Starmer is taking no other chances. His party has spent the last year trying to hammer home a message of fiscal discipline — even if big question marks remain over key aspects of its plan for government.
Reeves, who would be the top finance minister in a Starmer government, issued an edict to the shadow cabinet against unfunded spending promises. And Starmer recently ruled out a rise in income tax.
David Gauke, a former Tory MP and Treasury minister, says Labour’s caution is justified: “The Conservatives will look to attack them for needing to put up taxes … if they’re too loose in their language then that provides an opportunity for their opponents.”
Labour has 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 as things stand it’s not clear where further revenue will come from.
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,” observes Ben Zaranko of the Institute for Fiscal Studies.
He cites the recent headline-grabbing example of faulty school buildings across the country, arguing that while Labour has accused the government of under-investing in schools, they have not promised any extra investment themselves.
A general secretary of a major trade union, granted anonymity to speak candidly, said they hoped the conversation on spending would change if Labour 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,” they said.
Growing pains
While Starmer tries to tamp down spending expectations, he is talking up the party’s ambitions for growth and making nice with the business sector.
One of his five “missions for a better Britain” is to secure the highest sustained growth in the G7 — a theme expected to feature heavily in Starmer and Reeves’ conference speeches.
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, in 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.
“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,” says Gauke.
A former 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 much about an inspiration deficit.
Dan Bloom contributed reporting.
