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.