Healthy politics and a healthy economy should Be Starmer’s priorities: A personal view from Professor Stephen Barber

elephant’s long-standing friend and consultant academic, Professor Stephen Barber, shares an independent personal viewpoint on the General Election and what may lie ahead.
July 7, 2024

Britain has a new prime min­is­ter, gov­ern­ment and par­lia­ment. There is a promise of a fresh start and an opti­mism that has been absent for some time.  But the chal­lenges remain and above all else, Keir Starmer’s new admin­is­tra­tion will be judged by its abil­i­ty to address two inter­linked fail­ings of the last gov­ern­ment. These are return­ing sta­bil­i­ty and pro­bity to pub­lic life and putting in place the con­di­tions where the econ­o­my can grow. 

Hav­ing suf­fered from eight years of chaos, insta­bil­i­ty, mis­man­age­ment and pop­ulism, trust in gov­ern­ment and its capac­i­ty to make life bet­ter has weak­ened.  Since the dis­as­ter of Brex­it, pol­i­tics has been depress­ing­ly self-indul­gent and the result has been insta­bil­i­ty and divi­sion insti­gat­ed all too often by gov­ern­ment itself. 

The sto­ry of elec­tion night itself is the rejec­tion, by what­ev­er means pos­si­ble, of the Con­ser­v­a­tives from office.  And that is a rejec­tion of not only the last 18-months of Rishi Sunak’s tenure in Num­ber 10, but also the short lived but cat­a­stroph­ic pre­mier­ship of Liz Truss togeth­er with the eco­nom­ic cri­sis of her mak­ing, and the calami­ty of Boris John­son rid­ing roughshod over the con­sti­tu­tion and pub­lic life for his own ego.

The restora­tion of polit­i­cal sta­bil­i­ty is a nec­es­sary pre­con­di­tion of address­ing the sec­ond chal­lenge.  But, alone, it will be insuf­fi­cient. Starmer must return the gov­ern­ment to a state of pro­bity, focus on pol­i­cy that pro­duces tan­gi­ble out­comes for cit­i­zens rather than as a means of divid­ing and cre­at­ing short-term polit­i­cal advan­tage and restore trust in pol­i­tics.  It should no longer be a game. 

Through­out the cam­paign, the asser­tion that his gov­ern­ment would grow the econ­o­my served as a use­ful if vague way of han­dling dif­fi­cult ques­tions about Labour’s eco­nom­ic strat­e­gy and like­li­hood of rais­ing tax­es. Starmer’s admin­is­tra­tion inher­its par­tic­u­lar­ly poor eco­nom­ic con­di­tions.  Debt is at a record high, bor­row­ing maxed out, and the tax bur­den the high­est in 75 years. While it is true that infla­tion has returned to tar­get mean­ing inter­est rates should ease by the end of the sum­mer, tack­ling a range of pub­lic pri­or­i­ties such as the NHS, schools, and trans­port would be so much eas­i­er if the econ­o­my were expanding.

Unfor­tu­nate­ly, growth has been anaemic for a decade-and-a-half mean­ing real earn­ings are much the same as where they were twen­ty years ago.  To put it in some per­spec­tive, the UK econ­o­my expand­ed by around 4.6% in the 16 years since the finan­cial cri­sis.  It grew ten times that rate in the pre­vi­ous 16 years.  And at the heart of the prob­lem is pro­duc­tiv­i­ty, the amount pro­duced by each work­er, where growth has long stalled and where Britain has fall­en behind its inter­na­tion­al com­peti­tors. Not only that but there is a world of dif­fer­ence between the econ­o­my in Lon­don and the expe­ri­ence in so many oth­er parts of the country.

Pro­duc­tiv­i­ty growth comes from busi­ness invest­ment, R&D, edu­ca­tion and train­ing, adop­tion of new tech­nolo­gies and a host of oth­er things.  But it has been elu­sive in the UK since the trau­ma of the finan­cial cri­sis. Starmer’s admin­is­tra­tion, with Rachel Reeves as the new Chan­cel­lor, needs to cre­ate an envi­ron­ment where busi­ness feels it can invest with­out being sab­o­taged by gov­ern­ment itself.  Mov­ing the UK econ­o­my back into the orbit of the EU will be a good start and so will a gen­uine desire to ‘lev­el up’ as a pol­i­cy agen­da not just a use­ful elec­tion slo­gan. It will require a gen­uine long-term eco­nom­ic strat­e­gy focused on attract­ing invest­ment and pro­vid­ing the skills demand­ed by an econ­o­my in the midst of a dig­i­tal rev­o­lu­tion.  It’s quite a tall order but it is inter­est­ing to wit­ness the con­fi­dence with which Starmer asserts it can be done. 
This elec­tion has rep­re­sent­ed a polit­i­cal earth­quake — the wip­ing away of a gen­er­a­tion of Con­ser­v­a­tive politi­cians who, quite objec­tive­ly, have caused more dam­age to Britain than good. Vot­ers have clin­i­cal­ly removed them from office and in doing so deliv­ered a huge major­i­ty to Keir Starmer who now becomes a prime min­is­ter of incred­i­ble author­i­ty, unchal­lenged by any seri­ous fig­ure with­in or out­side of his gov­ern­ment. Expec­ta­tions are high for what might now be achieved over this Par­lia­ment. But very lit­tle else is pos­si­ble unless there is a con­cert­ed eco­nom­ic strat­e­gy put in place to improve pro­duc­tiv­i­ty, liv­ing stan­dards, and opportunities.