Labour insiders fear Keir Starmer overdid the gloom in first major speech | The New Statesman

there is a budget coming in October and it's going to be painful we have no other choice given the situation that we're in those with the broadest shoulders should bear the heavier burden things are worse than we ever imagined in the first few weeks we discovered a 22 billion pound black hole in the public finances the OB did not know about it and they didn't know because the last government hid it and frankly things will get worse before they get better I won't shy away from making unpopular decisions now if it's the right thing for the country in the long term we've done more in 7 weeks than the last government did in seven years George the key message of this speech was K stama saying things will get worse before they get better what did you make of that as his first kind of big state of thetion address I think the speech overall was consistent with the strategy labor have had since entering power which is we've inherited uh a terrible mess from the conservatives that strategy is very much influenced by the messaging David Cameron and George Osborne used after 2010 when they really pinned the blame for the financial crisis on overspending by labor suggested that the austerity they were introducing was unavoidable because of the mess they inherited and this is a a classic narrative device throughout political history you know Margaret fch often invokes the winter of discontent and if you successfully entrench that narrative it's an incredibly useful uh device because it means your opponents are always on the back foot because they can't change the past and history is written by The Victors and that's what labor is trying to do at the moment but the line um you pull out I think was and interesting one because there are certainly some in Labor uh even some inside number 10 who think that kiss tharma might have overdone the Gloom it's one thing to say things are going to be tough and clearly starma hinted at uh tax Rises and cuts to come in the budgets on October the 30th uh it's another thing to say things are actually going to get worse under us before they get better and that message seems slightly at odds with another line in his speech which which was you know we've achieved more in seven weeks than the conservatives have in seven years yeah I wanted to bring out that line as well because uh I was somewhat surprised by that and I'm not saying that the labor government hasn't had some big achievements in in seven weeks I mean they clearly had a plan for getting into government hit the ground running loads of really interesting cabinet and ministerial appointments that we've talked about um very quick pay deal with uh the junior doctor Union and again on on trains and uh taking charge of the prison crisis with a with a move to move to early release of prisoners which is obviously very controversial but at least it's doing something to to solve this crisis and lots of announcements on things like GB energy but I mean s years ago was 2017 that was uh four conservative Prime Ministers AG that was Theresa May um do you do you really think that it Stacks up that they've done more in seven weeks than in the last seven years I think what you can say is that this has been um the most active government with the with the clearest strategy throughout um that period um I think all of the other Prime Ministers were to different degrees you distracted by brexit or in some way its Legacy um whereas I think this government's coming with a much bigger majority than any of those governments had uh a much more united party and a very developed agenda in terms of the King speech had 40 bills in it I think that was the highest number since 2005 some of those are bills for largely political purposes but as you say there is there is a clear agenda here in terms of great St State intervention uh expanding workers rights um increasing uh climate Investments increasing on onshore wind and so on so I think you can make a plausible argument that this labor government is a lot more active than its predecessor and in some ways that that's what you'd expect you know labor governments like to do things they have a more interventionist view of the states I think in some way the bigger challenge uh as I write in my column this week is what do all of these policies collectively amount to what is a Kama government for now the slogan in blazing on his Leone was fixing their foundations which is the same frame that uh richel Reeves has been using which again gestures towards the crisis they've inherited NHS social care housing and so on but people are going to demand what's the sort positive difference you're you're you're going to make and you know there is a risk that labor appear you know the prisoners of of of conservative austerity as if the ghosts of the last conservative governments are haunting them to the extent that they're finding it hard to to break fre of that I think that's the challenge because I don't think there's any doubt that people were incredibly tired of the conservatives that's why they did so badly at the last election but they voted labor to make a difference so it's a thin it's a fine line between saying we've inherited a mess and saying we really can't do that much about it yeah I sort of felt watching it that okay they're they're really hammering home that it's all the conservatives fault you know fine that's very much what you'd expect and it's their right to do that but as you say they were voted in to make things better that was that was why a lot of people voted labor because they they understood that the conservatives had messed things up and they wanted an improvement um and I was waiting for the the turn as it were the kind of optimism coming at the end and it it didn't really I thought kissama did a good job of the way in which he invoked the riots and the disorder that we saw this summer uh and wo that into his narrative about something being broken at the heart of British society and there was a line in there where he talked about the writers um and the cracks in society after 14 years of failure uh that's what we've inherited not just an economic black hole but a societal black hole and I thought that was actually really powerful evocative language to be able to look at the sense of alienation and disillusionment and frustration that led to those horrific scenes and weave it in with a sense of lawlessness not enough police a low trust Society uh economic struggles uh a sense that the the government's not working for you all of that and I was like great more of that please but I didn't quite feel that there were there was a solution offer yes I think you're I think you're absolutely right to um reference that section of the speech I thought it was uh many anyways the strongest section when he ju supposed the riers with you know the Ordinary Decent people who got on with the the cleanup the next day and it was a sort of classic British coming together and it's interesting those are lines that Su in labor really thought starma should have used earlier after the riots that he should have made a state of the nation intervention of that kind uh sooner because it clearly was a big moment it's it's it's one historians will be writing about for years now the RS in a strange way feel quite distant and there was this vacuum that emerged that was filled with you Rous over cronyism inside number 10 Rouse over mean testing of winter fuel payments and it felt as if labor had treated the rights very much as uh LA and Order issue and now it was um time to uh move on um so K was right I think to bring the narrative back to the to the riots but the speech ended up being defined by the things will get worse line and I think then his uh reference to a painful budget to come um no I think labor Labour's intent was clearly to soften up public expectation for tax Rises because I think they are worried um the conservatives the media will try to run with the line that look labors betrayed you they didn't tell us about any of these tax Rises during the election um they're they're trying to Hoodwink you Labor's aim is to really establish this narrative that look these are tough decisions but we really had uh no choice uh because of the mess we've inherited yeah and he did a good job I thought of uh flagging rather than trying to shy away from two controversial unpopular decisions they have already made one is on the winter fuel allowance stopping it from being a universal benefit that goes to all pensioners and giving it only to the people receiving pension credit so those who are the the poorest in society that's uh already caused lots of controversy although as I've said on this podcast economically I think that makes a lot of logical sense you know other views are available um and then the early release of prisoners who have uh served around half of their sentence um which is necessary because the prisons are just full and there's dangerous overcrowding in them already and if you want to have a very Swift Law and Order response to the riots and have people arrested charged uh and and up before a judge uh within days which is what they did you need someone to put them you need prison places but obviously um K dama who I'm not sure if you remember George but he was uh director of public prosecutions at some point in the past um but you know takes quite a tough line on Law and Order he was very very clear in both the speech and the questions afterwards that he didn't want to let anyone out early and this is a necessity because as he said you can't you can't build a prison in 24 hours and it's the failure of the conservative governments over the years to build more prisons and have enough prison places while extending sentences that has led to that crisis so you've got the justification for the controversial decisions already made uh and I thought that was quite a convincing argument we didn't want to do this here's the situation so we have doesn't it get a lot harder though when it comes to the budget at the end of October when uh you know labor were very clear that in the in the manifesto and sense that they are not going to increase income tax National Insurance or vat but there are that that means that there's space of tinkering around the edges for raising revenue and those taxes that they might be able to raise bring in less money and therefore have a have a sort of more distortive effect and could prove more controversial is it enough to just go we didn't know about any of this so here's a whole lad of controversial stuff we're going to do at the end of autumn I think the public are expecting tax Rises and you the economic situation was known about um before the election and I think the public have a a weary sense of realism about this which is that yes we know they're not telling us all the tax Rises they'll make now but we know they'll have to make them not least if you want public services to improve I think a few challenges for labor on tax one is that basic political issue around trust um you're already seeing this uh in relation to win a fuel payments people saying look that was in the manifesto the other is that as you say if you're not raising one of the big taxes then you're raising often you're often relying on smaller Revenue raising measures those can get you into trouble you know it's one reason George osor got us into trouble with the Omni shambles budget is that it was the py tax it was the granny tax it was the church tax so they'll need to be quite careful um on the taxes they choose and then the exact thresholds and so on it's it's pretty clear they're going to do something on capital gains tax it's pretty clear they'll do something perhaps around inheritance tax loopholes they might look at higher council tax banss these are all tax Rises that are going to predominantly Target the wealthiest you saw that with K's reference to people with the the broadest shoulders um so I think they'll be okay on that front as long as as long as they stick to the letter of their of their pledges not to raise um you know taxes on on um direct taxes on workers the other problem though is that these as you suggest only raise you a few billion here a few billion there a few labor grandees who have asked about this say they will find ways to to raise money um but if you want to do something big like sorting out the social care system if you really want to build a lot more social housing say you really need to raise one of the big big taxes it just constrains your fiscal space particularly if growth is not as high as you hope you know at the moment the economy growing at it at its fastest rate for several years but there's no there's no guarantee that we'll last and that things will get get better as quickly as as as labor hopes things such as planning reform do take time to have an effect on economic growth I've heard some grumblings that um if they just didn't stick with the 2p C National Insurance that Jeremy Hunt announced in his last budget before the election that would raise a huge amount of Revenue or if you look at it the other way that tax cut was hugely costly uh and was uh based on figures for departmental spending that the obr described is essentially being fiction um and yes at the time in March La said the conserv are going to do this and will match it but wouldn't there have been an opportunity over the summer with the look at the black hole look at the the OB saying there's been more um5 billion pounds more borrowing than expected look at the diate of the public finances you know the conservatives couldn't afford to do this and you know we would have liked to have done it too but we can't afford to do it either and we're going to put that money straight back into public services would that not have been a feasible way to to sort of get one of those taxes uh raised without it looking like breaking a Manifesto commitment there's some close to labor who think they should have made this argument before the election that they could have got away with that and there's some who think they could still get away with it now my sense is that you know Labor's Neurosis about uh tax Rises run so deep that they won't they won't touch that um but as you said I think there is a there is a plausible argument I think it's a difficult one for labor to make when they've drawn so much attention to the cost of living crisis um and when they've talked about how economic conditions are are still tough for working people but it's worth um because the George oddborne comparison is is is is made a lot I think it's worth so digging into some of the differences as well as some of the similarities I think there are a lot of rhetorical similarities in the language Rach and K are using but I think this Labor budget will still feel quite different to conservative ones in that they're clearly going to rely a lot more on tax Rises uh than Cuts because there isn't that much left to cut and they're also making different choices in terms of the uh elect all groups they prioritize you know Osborne protected all pensioner benefits and froze public sector pay Rachel re has essentially done the reverse which is giving public St workers real terms increases and and uh cutting winter fuel payments uh you might note that obviously um Labor uh is much less popular among pensioners uh than the conservatives are much more popular among public sector workers so they'll be making political choices I think that reflect a very different increasingly different voter base to the conservatives so we've mentioned the more in seven weeks than in seven years and one of the big claims from the St speech was that he's ended the national strikes that have crippled our country for years um obviously pay deal with the junior doctors and pay deal with the train drivers although uh pretty much as soon as as that was announced the Union athlet announced further walkouts uh after after a pay deal do you think he was jumping the gun by claiming victory for that you know is is the issue of unions and public sector pay going going to carry on haunting a labor government I think the issue of um pay will continue to be uh a divisive one because obviously although labors uh giv them real terms increases some have still had real terms pay cuts compared to to 2010 obviously a lot of hinges on what happens with inflation um on the on the rail strike so this this this a asle dispute was a sort of separate one over over working conditions and I think that shows you uh a challenge that maybe there'll be fewer strikes over pay but there may be more strikes over reform because you know so far labor are just uh trying to carry out a bit of a charm offensive with public sector workers Civil Service international Partners actually and say we're we're we're much more uh conciliatory than the last slot uh it's a bit of a they're trying to have a bit of a a honeymoon period and really change the whole mood music around uh government's relations with with with with key groups you but if you listen quietly they are still talking about public sector reform they recognize that you're not simply going to be able to improve Services by pouring more money in not least because there's less money around than they would like and so there will have to be you know they Lou hag's team are quite clear um they want reform of the of the railers they want to do it in consultation with with the workforce and have a a proper agreement but there will need to be change similar West streeting uh has been L clear about the reforms he wants to see in the NHS this is something you saw under the last Labor government too when particularly when Tony Blair embarked on quite bold public sector reforms U this can cause discontent uh among the workforce you know particularly if people still feel they're being underpaid for their job so I think that's something to watch I want to talk very quickly about the sort of reaction that we had to the speech um obviously I reacted on the new Statesman website and my verdict was bit bit Bleak bit gloomy um unsurprisingly the conservatives not fans who could have possibly guessed that Richie sunak haven't heard about him for a while um but he said the speech was the clearest indication of what labor has been planning all along raise your taxes KY Bok said he was taking the British public for fools uh he campaigned on promises he couldn't deliver and now he's being found out and James cleverly accused the labor government of Waging War on pensioners and said stum is now rolling out a series of dishonest policies for which he has no Democratic mandate for which my response is that's kind of what you'd expect them to say in in the midst of a Tory leadership Contest no surprise there that they don't like it what I did think was more interesting was uh kadia the greens co-leader uh saying that enduring more economic pain and hardship isn't what people voted for Labour needs to be honest about the fact that they could choose to make things better for everyone if they were Bolder and braver so pretty tough critique there from the left uh Ed Davy on the other hand liberal Democrats was kind of broadly supportive basically saying the Tor left things and such a mess kind of what do you expect um and I I kind of think those Dynamics are interesting because youd expect the conservatives to go as hard as possible on labor betrayal that's what they're going to do but the difference in language from the greens and the lids uh challenging or being a little bit more sympathetic to to labor from the left how much of a of an issue do you think those responses are what do they tell us yes I think there is going to be space to uh challenge labor from the left they're not going to be as bold on on taxation as some would like although I think there may end up being more more tax Rises than than than than some on the left expect at the moment we are just getting that summer Osborn esque narrative on on on economic pain but once you get to the to to the budget um it labor may be come come to be seen is quite a redistributive Administration you essentially are taxing uh wealthier voters giving money to uh public sector workers um they will try and dismiss the greens by saying that they're living in an economic Fantasy Land and um their their their spending commitments wouldn't add up you can't just tax your way to to growth we've got to grow the economy I think that's going to continue to be a key message for labor they know there are voters who have this negative perception that labor will just tax and spend they're not interested in in in in in wealth creation um know it's a good it's it it it's a strong political line the challenges can labor actually deliver on it with the liberal Democrats I think Ed dve is going to take a more cautious approach because their new electoral hotlines are the are are the blue wo full of lots of former conservative voters who are probably you know a bit a bit more fiscally conservative um but who do want um Public Services repaired the lib Dam's big issues are NHS social care um and sewage actually and all of these do require more interventionist uh government but you're not going to really see the libdems outflanking labor particularly from the left although they do oppose measures such as the two child limit on on benefits so I think you're right to say look the budget isn't just the moment of decision for labor it's also the moment when you know the liberal Democrats who obviously now have over 70 MPS decide on their political strategy for this for this Parliament this this this budget is going to be well perhaps the most significant since George Osborne's in in 2010 unless you include obviously quasi quangs which was uh politically consequential for quite different reasons yes I think the the less we say about that probably the better um George fascinating stuff and we will bring you lots more analysis of all of Labour's policies in the two months leading up to the budget and Beyond