To govern is to choose

The coming Budget will set the course for Britain's Labour government

To follow the political commentary surrounding Keir Starmer’s first months in office is to conclude that Britain’s Labour government is already on the rocks. Misstep has been followed by blunder, swerve by collision. How could the nation have handed a colossal parliamentary majority to a politician who does not pay for his own suits? The clock, the ever breathless critique runs, is fast ticking towards the next general election. Yes, that’s the election scheduled for 2029.

Reality is more prosaic. There have been slip ups. I count myself among those who think Starmer would have been wiser to buy his own designer spectacles. These are squalls not storms. The excitable Westminster media has still to shake-off their experience of the Conservatives. The premierships of Boris Johnson, Liz Truss and Rishi Sunak turned politics into psychodrama. The fourth estate has yet to adjust to a governing party that is not forever at war with itself and to a prime ministerial tenure that no longer bears comparison with the shelf-life of a supermarket lettuce.

The serious interim judgment on Starmer’s administration is that it has not yet told the nation what it wants to be. Its prospectus at the election was left in the eye of the beholder. Many, perhaps the majority, who voted Labour were backing a party that promised to be serious, competent and fair. After the Tory horrors - Brexit, Johnson’s compulsive lying, Truss’s flights of ideological fancy and Sunak’s palpable weakness - that seemed a pretty compelling reason to give Starmer the benefit of the doubt. 

Others, though, saw opportunity behind the Labour leader’s carefully calibrated pre-election caution. Yes, Labour would need to demonstrate that it would not embark on a spending and borrowing binge. And yes, it would be bound by promises not to put up tax rates for “working people”. But there would still be room enough to strike out in a new direction - enough leeway in the borrowing and tax calculations to invest in the nation’s future and begin to refurbish a crumbling public realm. What united the two groups, course, was a loathing for the Conservatives.

Three months in Downing Street, Starmer has yet to signal a definitive preference. Is this to be a make-do-and-mend government, kinder to the less advantaged, friendlier to Europe but essentially unwilling to take risks? The temptation is there. The Tory leadership contest has provided ample proof that Conservatives have not learnt the lesson of their defeat. Labour needs to do not very much to see off a party led by Kemi Badenoch or Robert Jenrick. But perhaps the prime minister meant it when he promised caution would be the prelude to a decade of sustained reform? No-one expects overnight change. But the choice cannot be much longer delayed.

The Budget on October 30 will give an important part of the answer. Mostly, these annual events are much like a fireworks display. For an instant the chancellor’s array of tax and spending decisions light up the sky. And then the moment is forgotten. There are very occasional exceptions. Geoffrey Howe’s 1979 Budget set in train the economic upheaval that would bear the name Thatcherism. Mostly, though, these grand statements merge into a shapeless grey.

The Treasury’s advice to the chancellor Rachel Reeves will be that that’s for the best. The organising mission of the officials who manage the government’s finances is to make the numbers add up. They are indoctrinated from the moment they cross the Treasury threshold to believe that government is bad and the market good. The only future they can imagine is one in which the state is held firmly in check. 

The official ideal is a Budget “scorecard” that shows any spending commitment (and the fewer the better) matched by a corresponding measure to increase revenue. Borrowing and debt are ever the enemy. Anyone interested in why the nation’s hospitals and schools are falling down, why roads and railways are in chronic disrepair, and city and town centres are falling to decay, need only look at the axe the Treasury took to public investment during the Conservative years.

The government, of course, cannot just shrug off the borrowing and debt restraints inherited from the Tories. What it can do - and this will be the test for both Starmer and Reeves - is to rewrite the narrative around Britain’s economic fortunes. Austerity is a vice not a virtue. Economic growth is the goal. Making the numbers add up might keep the Treasury ideologues happy, but it will not reverse Britain’s long slide into low investment, low productivity decline. Nor will it persuade voters that they have elected a government that is on the side of expanding and widening economic opportunity.

The Budget, in other words, is the chance to strike out in the direction of investment-led growth. Yes, it will take time to deliver results. But Reeves can shape the Budget as a first instalment to send a powerful signal about the direction of travel. She should pay heed to financial markets, but not be imprisoned by them. Investors are far more interested in whether the government creates a credible framework for higher productivity and growth than in the detail of this or that debt rule.

Doubtless some voters will find parts of the Budget painful. Some will resent the necessary restraint on day-to-day spending, others the tax rises implicit in any attempt to rebalance the economy. The super-rich, hopefully, will find cause to squeal. But the judgment that will matter is whether the Budget sets a clear course, albeit a long one, for Britain to rebuild its economic strength and flourish as a society rooted in a sense of fairness. To govern is to choose runs the famous aphorism of former French prime minister Pierre Mendes‐France. All the rest is political noise.