What can Labour offer in 2024? How could a Labour government change the UK?
A frequent attack line of the UK Labour Party is to portray the Tories as the Party who ‘devasted the economy’. In truth The Gordon Brown Labour government had to deal with the banking crisis, and it took a great deal of money, and since then we have had global problems, covid, war and so on. It all affects how we can live.
The big issue is probably inflation and cost of living ‘crisis’. Inflation is especially bad for the less well-off. As a result interest rates are going to remain ‘high’ for quite some time in to 2024. The Bank of England kept rates at 5.25 per cent pausing 14 straight increases from a historic low of 0.1 per cent. The problems that any UK government is going to face in the medium term are higher energy prices, supply-chain issues, the impact of higher wages – yes wage increases especially in the public sector do affect inflation – and an uncertain jobs market all mean that times are going to continue to be tough no matter who occupies Downing Street.
Inflation this week is around 6.5 per cent down from 11.1 per cent; however the events I have just described could easily push those figures slightly upwards again and well above the Bank of England’s 2 per cent target, risking even a further rise in interest rates.
The conflict in Israel – that is the latest set of escalatory events – mean that the longer it goes on or the more widespread it becomes will lead to matters getting even worse. UK gas prices have risen nearly 50 per cent since 5th October! Israel has asked Chevron to close its Tamar gas field which is exported via Egypt, as a security measure. The Balticonnector has a leak, allegedly due to sabotage, and needs closure for repairing; which has been highlighted by the Finnish government. A reduction in supplies directly leads to increased prices, shortages and inflation.
On top of all that the price of oil has hit $90 per barrel and can be expected to reach £100. That is a 5 per cent increase in a week.
If I sound as if I am trying to dampen expectations for the future, I am; but not dampen enthusiasm. UK Labour have currently announced they would intend to borrow £28billion on todays figures. We are already paying over £100billion per year in debt interest alone on our national debt. There is a limit.
The next government will be faced early on in taking some very difficult decisions. Any attempt to borrow our way out of the situation has been shown to never work. In fact the public finances, especially against the background of the global economy and events, may mean that tax rises or public spending cuts will be required or a combination of the two. A new Labour government will see a new set of faces around the table but with exactly the same issues to contend with. There will be little room to move. There will be the possibility of re-arranging priorities but much of what current opposition spokespersons criticise about life in UK, they will not be able to fix quickly. Priorities will be everything.
I expect there will be tax rises and I expect there will be public spending constraints and cuts in some areas. The public largely see the cost of living and the NHS as priorities. Whether we need to press ahead so quickly with some capital intensive projects like more warships is debatable. They might be desirable, but affordable? The Russians are not going to invade NATO western Europe and a new warship or two in some distant years will not defend us from current increased Chinese cyber-attacks. It will be all about ‘priorities’. That is why I say the decisions required will be very tough and lots of people, especially Labour political activists, are going to be disappointed. One shining light in the current Labour front bench team is Rachel Reeves the Shadow Chancellor. Rachel is a woman of considerable intellect, ability and experience. Labour in government are going to have to trust her. To not do so will end in the historic financial mess that has preceded the end of previous Labour terms in office and written notes from a Labour Minister saying “there’s no money left’.
So if that sounds bleaker than I would wish, I am sorry. However, it is better to know what one is voting for or, of course, simply staying-at-home for at election time.