The focus on growth to ease the UK’s economic ills will not be nearly enough, but there is a way to raise the sums needed
Never let your opponents define the terms of a debate. All too often, Labour has allowed the Conservatives and the billionaire press to demonise the notion of “tax and spend”. It went to great lengths before the election to assure voters it had no such intention. Now it drives home the message: instead, our needs will be met by “growth, growth, growth”. But tax and spend is the foundation of a civilised society.
Few of the changes this country requires can be achieved while adhering to the “tough spending rules” the new government has imposed on itself. We urgently need massive public investment in the NHS, social care, schools, environmental protection, social housing, local authorities, water, railways, the justice system and virtually all functions of government. We need a genuine levelling up, across regions and across classes. The austerity inflicted on us by the Conservatives was unnecessary and self-defeating and Labour has no good reason to sustain it.
The new government insists it is ending austerity. It isn’t. As the Institute for Fiscal Studies (IFS) pointed out in June, Labour’s plans mean that public services are “likely to be seriously squeezed, facing real-terms cuts”. Similarly, the Resolution Foundation has warned that, with current spending projections, the government will need to make £19bn of annual cuts by 2028-29. However you dress it up, this is austerity.
We are constantly told: “There’s no money.” But there is plenty of money. It’s just not in the hands of the government. The wealth of billionaires in the UK has risen by 1,000% since 1990. The richest 1% possess more wealth than the poorest 70%. Why do they have so much? Because the state does not; they have not been sufficiently taxed.
At the end of last year, the UK was officially in recession. The economy shrank by 0.3% between October and December 2023, after a previous contraction between July and September.
New figures for January 2024 show a slight improvement. But there is nothing to indicate that the UK has made meaningful progress when it comes to productivity growth – and how the UK needs to produce more goods and services if living standards and wages are to improve.
Productivity growth in the UK has been virtually non-existent since the financial crisis of 2008. It lags significantly behind countries like Germany and France, and even further behind the US.
Growing productivity is not easy. Having researched this area of the economy extensively, I’m acutely aware of the the challenges facing firms which are trying to be more productive. They include everything from investment levels and access to research and development to regional inequality and a shortage of skills.
But there are some things that could be done to improve the situation. And two of the most important ones are greater investment, and a more localised approach to the national economy.
For example, one major problem in the UK is that its labour market prioritises what economists call “flexibility” – allowing firms to hire and fire employees fairly easily (compared say with France, where it is more difficult) – and getting people into entry-level jobs. It is much less focused on training and development.
Major investment in training at all levels, from basic skills through to high-level technical and managerial skills, would make workers more productive. It would allow greater job mobility, which in turn leads to a better match between demand and supply.
The UK also needs to invest in what’s known as “capital equipment” – the stuff that businesses use to produce things. For a building company this might mean buying a JCB digger instead of shovels, or for a dressmaker it could be buying a sewing machine. Put simply, if UK industries had more kit, productivity would improve.
A recent change to capital allowances which allows firms to offset investment against tax is welcome. But companies need to know that this will stay, and not be subject to political changes and inconsistent economic policy.
Freedom to grow
So money needs to be spent, and investments need to be made. But another crucial element is that the money needs to be invested locally, in the places where people actually live and work.
To be truly beneficial, this needs close collaboration between local authorities, education providers and the private sector. Local knowledge about where certain sectors are being held back, what skills are required and where they are needed, is fundamental.
Local authorities should be able to address these issues, rather than having to constantly defer to London. This means doing two more things (neither of which have ever had national government support).
The first is simplifying the workings of local government, which is notoriously complex and a constant drag on regional productivity.
And the second is helping those local governments financially, not just in terms of the current funding crisis, but also by allowing then to plan investments in skills and infrastructure over the long term, rather than having to bid piecemeal for short term funding.
It is clear to me from the work I have done in the West Midlands area of England that the UK economy is far too centralised. Everything from access to finance and venture capital, to investment in skills and infrastructure is heavily skewed towards the south east.
Away from that region, the UK has a low level of what economists call “aglomeration economies”, where a particular industry is concentrated within a geographical area, and supported by decent infrastructure and a good supply of skilled workers.
Compared to Germany or France, public transport in the UK is expensive and patchy, meaning people in towns often can’t access employment opportunities in cities which are relatively close by. This means that we see high levels of inequality over short distances, where poverty exists close by to great wealth.
This kind of imbalance could be addressed by combining increased investment (both public and private) with a much greater willingness to understand the various British regions which make up a currently disunited kingdom. These two steps would make the whole economic system more resilient, and in the long term, more productive.
British Prime Minister Keir Starmer is seen at the NATO 75th anniversary summit in Washington, D.C., on July 10, 2024. (Photo: Ludovic Marin/AFP via Getty Images)
“We are asking this government for leadership and to take a just decision, for the sake of Palestinians in Gaza who are living through ‘hell on Earth,'” said six rights groups.
A week after the British Labour Party won control of the United Kingdom’s government, six rights organizations called on Prime Minister Keir Starmer to bring the country “back from the brink” and restore its “credibility on the international stage” by ending its military support for Israel.
“The Labour Party now has the chance to start restoring some credibility by ensuring the U.K. abides by international law, thereby extricating the U.K. from the indelible stain of complicity in Israeli crimes that deeply shock the conscience of humanity,” wrote the British Global Legal Action Network (GLAN) and Al-Haq, based in Palestine.
The groups wrote the letter with the support of the International Center of Justice for Palestinians, War on Want, the Campaign Against Arms Trade (CAAT), and the Palestine Solidarity Campaign.
Addressing Starmer along with newly appointed Foreign Secretary David Lammy and Secretary of State for Business and Trade Jonathan Reynolds, the groups reminded the prime minister that following his election, he promised Britons that the “sunlight of hope was shining once again” after 14 years of Conservative rule, and called Israeli Prime Minister Benjamin Netanyahu to say there is a “clear and urgent need for a cease-fire.”
“Calls for a cease-fire are evidently not enough, in particular when the U.K. is arming one party to the conflict,” wrote the groups, pointing out that earlier this week Palestinians in northern Gaza reported that recent bombing there has “matched October 2023 in its intensity—with levels of destruction not witnessed since World War II, nearly all civilian infrastructure is completely destroyed.”
“We are asking this government for leadership and to take a just decision, for the sake of Palestinians in Gaza who are living through ‘hell on Earth,'” they wrote. “The world should have put an end to their unimaginable suffering a long time ago. Labour must suspend, revoke, and refuse all arms licenses for Israel now.”
The U.K. licensed about £859,381 ($1.09 million) of weapons to Israel in the last three months of 2023, as the Israel Defense Forces relentlessly attacked Gaza and blocked nearly all humanitarian aid, leading to what 10 independent United Nations experts this week said is now famine across the enclave.
“The new Labour government’s calls for a cease-fire are meaningless while it continues to arm Israel. British weapons have killed too many Palestinians,” said GLAN lawyer Charlotte Andrews-Briscoe. “This government knows that the only lawful and moral decision is to stop arming Israel. Britons have voted for change: This government must deliver that change.”
On social media, GLAN amplified a video posted by Starmer on Sunday in which he pledged to “restore politics as a force for good.”
“We are calling on Keir Starmer to put these words into action,” said the legal group.
— GLAN | Global Legal Action Network (@GLAN_LAW) July 12, 2024
When the war on Gaza’s population of 2.3 million people ends, said the groups, Starmer’s government must expect that there will be “a reckoning in which Israel will be found to have committed mass atrocities.”
But the organizations called on Starmer—who, months before he called on Netanyahu to agree to a cease-fire, said Israel had “the right” to withhold power and water from Gaza—to see that ending military support for Israel “is not only the legal obligation of the U.K., it is a moral obligation.”
“Schoolchildren will learn about this period for years to come, just as we have all learned about past genocides and wondered how they could be allowed to happen,” reads the letter. “Will they read about a new Labour government that acted with respect for the sanctity of all human life?”
Zionist Keir Starmer is quoted “I support Zionism without qualification.” He’s asked whether that means that he supports Zionism under all circumstances, whatever Zionists do.
Rupert Murdoch supports the Red Tories (UK Labour Party) and needs his nappy changed.Zionist Keir Starmer is quoted “I support Zionism without qualification.” He’s asked whether that means that he supports Zionism under all circumstances, whatever Zionists do.
PRESSURE piled on Labour to scrap the government’s cruel “sibling penalty” today as campaigners warned it’s set to push the majority of large families below the poverty line by the end of this parliament.
The two-child benefit limit, introduced in 2017, stops parents from claiming universal credit or child tax credit for more than two children.
But figures from the Department for Work and Pensions show 1.6 million children are now affected by the policy, rising by 100,000 in a year.
The Resolution Foundation warned the policy will push most large families below the breadline by the end of the parliament and said abolishing it would lift 490,000 children out of poverty.
Sir Keir Starmer pledged to reduce child poverty at Labour’s manifesto launch, but failed to commit to scrapping the cap.
