Keir Starmer is making it clear: A Labour government means austerity 2.0 – Stewart McDonald

In 1987, as a young Keir Starmer was sitting in an Oxford common room stapling together Trotskyist pamphlets, Diane Abbott was elected as this country’s first black female MP. I am sure the irony of being sacked for being too left-wing by the former editor of ‘Socialist Alternatives’ – the house magazine of the International Revolutionary Marxist Tendency – will not be lost on Abbott, who deserved far more dignity and respect from the party she devoted her life to.

Abbott and I have our political disagreements, not least on Russia’s invasion of Ukraine – in 2022 she said claims that Russia was the aggressor should be “treated with scepticism” – but her graceless defenestration serves as an apt metaphor for Starmer’s Labour party: an organisation willing to damage itself in its never-ending quest to exorcise the ghosts of Jeremy Corbyn and win internecine factional battles. There is nothing this country needs less than parties focusing on themselves.

We face a series of acute, interlocking crises: an ageing population, declining birth rates, economic stagnation, and climate change. These existential problems will reach a crescendo within our lifetimes, with dire consequences for public services and our way of life.

Keir Starmer and Rachel Reeves lack the ambition and courage to do more than rearrange the political deckchairs (Picture: Leon Neal/Getty Images)

An economic powerhouse in waiting

Instead of setting out solutions to them, Starmer and Rachel Reeves, like David Cameron and George Osborne before them, argue that their hands have been bound by the economic failures of the previous government. This pathology is particularly evident in Reeves, who spends her days tying herself up in a mesh of fiscal locks and chains that would make Harry Houdini blush. Between the two of them, it has been made abundantly clear that Labour’s time in government will not be spent building, but deciding where the axe will fall.

Scotland needs more than this. This country is an economic powerhouse in waiting, ready to be fired up. With an SNP government in Holyrood, Scotland is already home to stronger economic growth and higher productivity levels than the rest of the UK. After London, this country is already the most popular destination for foreign direct investment in the UK, with foreign investment projects up in Scotland (and rising year-on-year) even as they decline across the rest of the UK. Renewable technologies generate over 100 per cent of Scotland’s gross energy consumption, and we have the potential to harness so much more.

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Lack of ambition on climate

I could go on for several more paragraphs, but my point is not that Scotland has vast untapped economic potential – that should be obvious to all. We have tremendous amounts of inward capital, a highly educated workforce, vast amounts of land, and eye-watering potential in the renewable industries of the future. I want to ask what – beyond the usual “better together” bromides – a future Labour UK Government will do to unlock this, and how soon they can start.

But the UK’s economy is already on life support and, like some medieval doctor attaching more leeches to the anaemic patient blubbering below him, both Westminster parties seemed wedded to the idea that one more round of cuts will bring it back to health. Neither party comes close to showing the level of ambition needed to bring this country back from the brink and meet the climate crisis head-on.

A large part of the reason that the UK finds itself stuck in the economic doldrums is that for too long politicians have sought to shrink the political space for debates about the economy and, like Reeves, avoid active debates about tax and spending. Successive Chancellors have sought instead to replace such discussions with pronouncements handed down on tablets of stone from economic technocrats on high which dub their policies as “fiscally responsible”.

I do not want to criticise those bodies like the Office for Budget Responsibility which are responsible for issuing such pronouncements – they simply follow the rules set out for them by the government of the day. (And there are a lot of them – the UK Government designs the metrics against which it asks to be assessed, and implemented and withdrew 20 different fiscal rules between 2010 and 2019.)

Inescapably political decisions

But I did raise an eyebrow when, after Reeves added a fiscal lock onto her fiscal rules, Ben Zaranko, senior research economist at the Institute for Fiscal Studies, took to the pages of the Times this week to push gently back. “The OBR has brought discipline and transparency to the fiscal policymaking process, but it is possible to have too much of a good thing,” he wrote. “Choices over how much to tax, spend and borrow are not narrow, technical questions. They are inescapably political. Elected politicians should be responsible for making them.”

I could not agree more. I have suggested previously that UK politicians must look at the US Inflation Reduction Act or the European Union’s Green New Deal for inspiration on how to create jobs and tackle the climate crisis in one fell swoop. The ugly truth, however, is that these innovative programmes would not make it past Reeves’ fiscal rules. (Indeed, OBR economists may well go into meltdown if asked to cast an eye over the balance sheet of the richest country on Earth, which also breaks their fiscal rules on public debt.)

Scotland needs a compelling vision backed by ambition and political courage, not a timid rearranging of the deckchairs in SW1. We cannot afford to sleepwalk into the future, led by a Labour government which prioritises austerity 2.0 over investment in our people, industries, and planet.

The great challenges before us demand great responses – a new economic paradigm that unlocks our potential and tackles the climate crisis. I will not hold my breath for Starmer and Reeves to deliver such a response. If the events of the past week are anything to go by, it seems that the only thing Starmer fears more than an original policy idea are backbenchers who dare to think for themselves.

Stewart McDonald is SNP MP for Glasgow South