Labour and the Tories seem stuck in a big state echo chamber

In Downing Street, they talk about the narrow “landing strip” on to which Rishi Sunak might steer his party to victory at the next election. Millions of undecided voters, they hope, will have appreciated Jeremy Hunt’s assured performance at this week’s Budget, and Sunak’s deals on Northern Ireland with the EU, and on submarines with the US and Australia. “Let me keep delivering,” Sunak will plead with voters in 2024, while Sir Keir Starmer urges “it’s time for change”.

After the malign chaos of Boris Johnson, it’s a huge relief that both main parties are now run by grown-ups, with impressive finance chiefs at their sides. Hunt’s Budget was politically disciplined as were the responses of Starmer and Rachel Reeves. But should we be comforted or worried, I wonder, that the two parties seem quite similar?

Starmer and Sunak both have five-point plans which are hard to remember (except for Sunak’s pledge to stop small boats crossing the channel; a big concern of undecided voters, according to internal Conservative polling). Both believe in supporting Ukraine, devolving power from Westminster, achieving net zero and building more homes. Neither will say that the UK should rejoin the EU single market, though each will inch towards rapprochement. Neither has any detailed programme of public service reform. And neither seriously questions the size of the state.

The Conservatives’ energy price guarantee to all households is expensive. Only falling gas prices have saved the Treasury from a cost that the Institute for Fiscal Studies originally predicted could dwarf the Covid-19 furlough scheme. Anyone serious about green policy, as both main parties claim to be, would have means-tested it, encouraging the better-off to insulate their homes. Instead, the Tories have extended the guarantee again, including to the richest people in the biggest homes, without a murmur from Labour.

The dominant narrative in politics is that the government must solve all our ills — but the price tag is high. Public spending is at its highest sustained level since the 1970s, with taxes set to hit a postwar high of 38 per cent of GDP in 2027. Income tax thresholds are frozen until 2028, bringing millions more people into higher bands while inflation soars. Starmer has lamented the tax burden but given no clear indication of what, if anything, he would do about it.

In extending subsidies for childcare — a signature policy which would have been Labour’s too — Hunt has addressed a manifest challenge for families. But again, a blinkered statism prevails. The offer of more free hours is likely to be undermined by labour shortages, making it impossible to staff the extra provision. That should have led to more imaginative thinking: why not let grandparents access the same funds, or mothers who want to stay home and look after their own nine-month-olds? I know the Treasury wants to jack up the headline employment figures — but I bet giving families the cash was never even considered.

A similarly siloed debate applies to the post-Budget commentary. Hunt has been criticised for prioritising motorists over nurses, teachers and doctors, as if nurses, teachers and doctors don’t drive. No one has asked why we can’t simplify the monstrously complicated tax system.

There are some differences, of course. Labour opposes the hardline government stance on illegal immigration. In office it would be likely to pursue green policies more wholeheartedly than the Tories, skew some welfare benefits towards the young and put VAT on private schools. But so far, in the absence of a manifesto, Starmer often seems to be saying that Labour would do similar things to Sunak, but more competently. That is quite possible. On housebuilding, Labour is less hamstrung by elderly voters who oppose lifting of planning controls. On the NHS, I suspect that only Labour would be trusted enough to deliver radical reform — though its policies are still evolving.

After 13 years of Conservative or Conservative-led government, it may simply be enough for Labour to argue that they deserve a turn and have more effectively quelled their lunatic fringe. Johnson’s misrule was an utter disgrace and the Tory right may yet resurface — although Sunak and Hunt have faced down internal opposition which only a few months ago looked like it could derail them.

Pragmatism is usually a better bet than ideology. But when the country is crying out for consistency and certainty, it is frustrating that Labour is still developing its philosophy, and the Tories are mightily confused. As a former Remainer, Hunt had the grace to look slightly sheepish when he declared in his Budget speech that Brexit “was a decision by the British people to change our economic model”: from one “based on unlimited low-skilled migration to one based on high wages and high skills”. He emphasised that Conservatives value work, and believe it is a route to better mental health and out of poverty.

The problem for the chancellor is that the pandemic has reversed some of the advances made since 2010 in getting people back into work. The Tories used to accuse big business and Labour of importing skills, leaving UK citizens stranded on benefits. Now they are doing the same. The Office for Budget Responsibility estimates that the Budget measures may bring 110,000 more people into work — and that we will rely on even more overseas workers than it thought four months ago.

It’s a relief that politics seems kinder and less nerve-racking these days. It’s enjoyable that Starmer and Sunak are not egomaniacs. But we can still regret the lack of a bigger conversation.

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