Comment

Labour’s class war over Kwasi Kwarteng’s Budget is nowhere to be seen

The Chancellor’s economic plan full of tax cuts should be the perfect opportunity for Sir Keir Starmer to reinvent the party in opposition

That many of Sir Keir Starmer’s critics demand a return to the vision of his predecessor, Jeremy Corbyn, speaks of the lack of imagination within the Labour Party

The appropriate term, apparently, is “a swing and a miss”.

On Friday the opportunity was presented to the Labour Party finally to define some clear red water between itself and the Government: here was an administration that was shamelessly handing tax breaks to its rich friends in the City, while lifting nary a finger to help the poorest and most vulnerable. Was ever a political arena more suited to an opposition party for whom the class divide is its raison d’être?

The targets were numerous: the scrapping of the top rate of tax (making it the same as it was under the last Labour government), a freezing of corporation tax at the current levels, the reversal of the National Insurance rise… Add in the expected scrapping of the EU-imposed ceiling on bankers’ bonuses and you have the perfect Labour dystopian vision of a country run by the rich, for the rich.

And yet by the time Rachel Reeves, the shadow chancellor, had resumed her seat after offering the Commons her party’s official response to Kwasi Kwarteng’s mini-Budget, there was much scratching of heads on both sides of the chamber. 

She had certainly done a good job of lambasting the Government for its lack of fiscal discipline. But where was the traditional righteous anger at the sheer greed and selfishness of the wealthy, and the cynical negligence by ministers of the hard-working majority?

Rachel Reeves responds to Kwasi Kwarteng's new economic package Credit: JESSICA TAYLOR/AFP

This should be fertile ground for Labour, playing as it does into all the familiar tropes of traditional class warfare. Perhaps that’s why Reeves avoided it, aside from a passing reference to “trickle down” economics. After all, Labour has spent the last 30 years trying to avoid the traditional battleground of class politics. Is now, 18 months or so before a general election, the right time to move back onto that territory?

The party’s own Left would have no hesitation in answering with a loud “Yes!” It was left to John McDonnell, the former shadow chancellor, to say what Reeves would not say in the aftermath of Kwarteng’s “fiscal event”, describing it as “the most socially divisive budget in a generation”.

He may be referring to 1988, when Nigel Lawson, then chancellor, finally scrapped the 60 per cent top rate of tax on high earners, instituting the new 40 per cent rate which has existed ever since. McDonnell is right in that it was, at the time, socially divisive. I vividly recall discussing that Budget with Labour friends, all of whom were convinced that such egregious generosity to the wealthy would fall foul of the voters at the next general election.

So instead of focussing on the “unfairness” of tax cuts, Reeves thanked the Chancellor for his “comprehensive demolition of the record of the last 12 years”. It was a good line and recognised as such by both sides of the House because it was largely true. Liz Truss and Kwarteng have effectively binned the economic strategy of David Cameron, Theresa May and Boris Johnson. Everything that happens now will be either credited to her or blamed on her.

Time for a renewal

Hidden in plain sight in all of this is something akin to the alchemy of modern politics, an event often discussed and speculated upon but rarely, if ever, implemented: the renewal of a party while still in office.

Every government of significant length of tenure attempts it, usually by the limited tactic of changing the face at the top of the Government, then hoping the voters won’t notice that precious little else has changed. 

Its evasiveness is usually the reason why backbenchers who should know better are found having off-the-record discussions with journalists about how the party needs to lose an election so that it can renew itself in opposition - that process being impossible while in office.

Well, maybe those reckless MPs are right. Maybe renewal while holding the seals of office is nothing more than a legend, a Will o’ the Wisp that vanishes as soon as it is cornered. But given that the options facing this Government are severely restricted by economic circumstances, and given the polling deficit Truss inherited, can anyone suggest a better strategy than tearing up what’s gone before?

That this new direction of travel for the Government is a risk can hardly be denied. But history is littered with administrations who rejected the chance to reinvent themselves in office, subconsciously making the choice to delay such an event until it was safely back in opposition. For politicians, the familiar and the safe are always more attractive than the riskier road. You only had to look at the worried frowns dotted across the Government benches as Kwarteng resumed his seat to confirm this truth.

This presents a serious challenge, not only to the Conservatives but to Labour. If a government of 12 years standing can relaunch itself and change direction in such a radical way, why can’t an opposition party unburdened by the inertia of government do the same?

Setting aside the shadow chancellor’s reluctance to pounce on the obvious targets presented by a regressive financial package, Labour has proved, in opposition, immune to demands for a more radical approach. That many of Sir Keir Starmer’s critics demand a return to the vision of his predecessor, Jeremy Corbyn, speaks to the lack of imagination within the party: there is surely more to British social democracy than a choice between dull managerialism and demented statism.

Removing Boris Johnson was a modest challenge to Sir Keir, since he risked looking like an old, familiar, beloved but neglected teddy bear at the corner of the toy box, overlooked in favour of the new, blonde doll newly arrived from the shop. Now, Truss has added to his travails by presenting the Labour leader with a more urgent challenge. 

Will “steady as she goes” be enough for Labour in the next couple of years? Or do the times demand as radical a makeover for the opposition as they have for the Government?

And if Labour fails to meet that challenge, if it cannot reinvent itself in opposition, what hope for a future Labour administration in need of renewal?