A hefty shock awaits those who see little difference between Starmer and Sunak

Those to the right of Rishi Sunak like to dismiss the prime minister as a “Consocialist”. Others talk of “Heevesism”, an amalgam of the surnames of the chancellor Jeremy Hunt and his Labour shadow Rachel Reeves. These ugly and surely ephemeral appellations point to a simple argument, that the UK has stumbled into a period of economic consensus forged around a more interventionist state and a high tax burden.

The case is easy to make and suits many groups. The Conservatives preside over a historically high tax burden, having plundered both business and individuals. Public spending grows as the populace increasingly looks to the state as the answer to every problem. Look no further than the expansion of state support for childcare announced in last week’s Budget. What was once a headline Labour policy is now a Tory programme. From this, to burgeoning in-work subsidies to the creation of a new football regulator, Tories seem to have succumbed to a big-state agenda.

A broader analysis might be that the post-Brexit consensus is one of economic intervention and social conservatism. Just as Boris Johnson embraced the former, so Labour leader Sir Keir Starmer has had to recognise the power of the latter — and accept that Brexit can only be modified, not reversed.

This may seriously underestimate Starmer’s radicalism. Ahead of an election to be fought essentially on who is more likely to deliver the airy dreams of Johnson’s 2019 manifesto, the parties see advantages in tussling over similar territory. Hardline opponents to right and left of both leaders also have tactical reasons to depict Sunak as a social democrat or Starmer as a soft Tory (though it helps Starmer’s efforts to de-risk Labour).

But a cursory study of Labour’s plans should be enough to disabuse voters of any notion that the two are cut from the same cloth. Even before policy, there is a crucial difference in values. These matter most because so many of the major decisions which confront a leader are not planned for but demand a rapid, instinctive response.

True, the tax burden under Sunak and Hunt is at its highest level since the 1950s but a key difference between them and the opposition is that they are deeply unhappy about it. While both men recognise the need for the state, especially after two huge crises, neither are instinctive interventionists. Hunt’s plans to reduce spending post-election are intentionally woolly but the intent is there. Sunak, meanwhile, shrinks even from the term “industrial strategy”. He is, in reality, a small state Conservative trapped in a large state moment.

By contrast, Labour looks to the state as a first instinct rather than a last resort. It sees the need not to get tagged as a high tax, high spending party but it is not instinctively uneasy at the thought. Nor does Starmer recoil from state intervention. In the words of one ally: “Keir is not a Blairite”.

Campaign pressures may temporarily shade such differences but the parties’ political centres of gravity will pull them apart post-election. For all the current caution, most Labour MPs want higher taxes on the wealthy, partnership with unions, extra regulation and more funds for public services. Sunak, in contrast, is temporarily holding the line against a party which wants retrenchment and tax cuts. In opposition, or even if they cling to power, the Tories will default to their small state instincts.

Once you examine Labour’s policies the gap is obvious. Its net zero programme, costing £28bn a year, is an industrial strategy under another guise and includes plans for the government to take stakes in new green industries. Broader and more costly than Tory policies, it is a big bet on the green agenda to drive economic reform.

At work, Labour is committed to a raft of new employment rights and the repeal of the last two trade union acts, both designed to limit strike action. It wants major constitutional reform, significant new social housing and rail renationalisation as franchises expire.

Then there is wealth inequality. Reeves, the shadow chancellor, is obsessively cautious on commitments. The only promised tax increases are limited and carefully targeted on non-domiciled residents and private schools. Yet it is inconceivable that the party will not find other unannounced taxes for the better off. One of Gordon Brown’s first acts as chancellor in 1997 was a wholly unexpected pension raid on tax credits for dividend payments. It raised more than £100bn over 15 years.

Wealth tax ideas now mooted by some Labour MPs include extending national insurance to investment incomes, raising capital gains tax to the level of income tax, land value taxes, reforming inheritance tax or reducing pension tax relief for upper rate taxpayers. None of these are current party policy and perhaps none will be. But it is delusional to believe that a Starmer government will not look at them.

This is not only because the issue of inequality runs deep in the party’s psyche — the upgrade in public services Labour promises will not be achieved without extra spending.

I make these points neutrally. Many will view Labour’s ideas as long overdue. Others will be horrified. But the conclusion is simple. The similarities of today are shallow and temporary. The Tories will soon revert to type. And anyone voting for Starmer expecting only a gentle course correction, will face a very rude awakening.

Articles You May Like

Crypto lender BlockFi gets court nod for plan to repay customers
After months of debate, Massachusetts primed to pass tax relief package
Poll respondents gloomy about California’s economy
The debt-fuelled bet on US Treasuries that’s scaring regulators
Cities win class-action status on VRDO charges against banks