Keir Starmer wants to set expectations early. Speaking at the Resolution Foundation’s economy conference later today, the opposition leader used his speech to emphasise just how little scope he’d have at the start of any Labour government to splash the cash. His party will not ‘turn on the spending taps’, he told an audience of economists and policy analysts. Anyone expecting them to do so is ‘going to be disappointed.’ The speech seemed to deliberately echo the infamous ‘I’m afraid there is no money’ note left for the incoming Tory government by a Labour minister.
Starmer responded to the spending trap laid out in the Autumn Statement last month: where Chancellor Jeremy Hunt used almost all his fiscal headroom to cut taxes rather than boost public sector spending. As a result, the Office for Budget Responsibility has forecast a £19 billion hole, as inflation has – and continues – to strip departments of their spending power.
The government’s defence of this spending hole is that it thinks it can be filled with productivity gains rather than additional cash, with Hunt promising back in October to aim for 0.5 per cent gains in the public sector, which would translate into billions of pounds saved. Starmer addressed this too, insisting that ‘raising Britain’s productivity growth’ would become ‘an obsession’ of his party.
‘Having wealth creation as your number one priority, that’s not always been the Labour party’s comfort zone’, he noted, in another bid to push Labour’s more moderate economic credentials. But productivity gains weren’t his only answer. He also had an accusation to dish out: that the Tory ‘record over the past 13 years will constrain what a future Labour government can do’.
In other words, any perceived austerity taking place under a Labour government, Starmer wants to pin on his predecessors.