Mission Implausible

If recent polling is to be believed, Sir Keir Starmer’s UK Labour Party will be sweeping to power with a large majority of seats. This victory is projected to include a large swathe of Scottish constituencies formerly held by the SNP. Ironically, across Glasgow, North Lanarkshire, West Dunbartonshire and parts of Fife and the Lothians Sir Keir will be cheered into 10 Downing Street by voters who want Scottish Independence and who voted Yes in 2014.

The appeal of Sir Keir is perhaps mostly down to the fact that he’s not a Tory. After the serial failings of Cameron, May, Johnson, Truss and Sunak it’s perhaps unsurprising that the main priority for voters is to get rid of the Conservative Government. And in a UK-wide perspective Sir Keir is the only alternative. In the land of the blind, the one-eyed man is king.

But what can we expect from a UK Labour Government during the five to ten year interregnum before we return to an even more right-wing Tory government voted in by English electors? A recent poll identified that the economy was the main issue that will influence how Scots plan to vote in the 2024 General Election. This post will focus on what measures Labour plans for growing the economy; and specifically what impact it will have on Scotland.

In recent speeches and interviews, Sir Keir has made clear that he is not keen on introducing higher taxes for the wealthy and wants to keep to the Tory spending plans. That means that there will be very little room for manoeuvre when it comes to public spending and investment. He has said (much like Liz Truss) that new investment will come through growing the economy, but states that this will come from 'bottom-up and middle-out' rather than top-down growth.

Starmer's mission identifies five 'shifts' each of which has three initial policy proposals attached to it. I'll look at each of these below.

1. Providing certainty and stability

On certainty and stability, Starmer is keen to mimic the Tories as much as possible so as not to startle the horses in Middle England. This means keeping to the current spending limits. So much for change. It’s more like ‘loose change’.

A lot of the Starmer ‘Missions’ document is rhetoric around why change is important and how bad things have been under the Tories. When it comes to detail on policies, there’s a lot of deckchair moving in terms of setting up new bodies (for example an Office for Value for Money) which will take time to establish and start delivering but little of substance on actual delivery.

As a side-note, I wonder who will measure whether the Office for Value for Money is delivering Value for Money?

The Mission identifies establishing a new body to oversee an industrial strategy; which is, as yet undetermined. But it’s impossible to judge what the impact of a UK-wide industrial strategy would be on Scotland without any detail on the sectors, levels of investment, prioritisation, timescales and mechanisms to be used to stimulate economic growth.

2. Seizing new opportunities

In seizing economic opportunities, there’s talk of bottom-up economic development (which would be welcomed) but without much detail of the mechanics or funding for delivering this. There’s a Green Prosperity Plan which appears to be a long-term strategy using public investment as a catalyst to attract greater private investment into growth sectors including clean energy and the digital economy. But like other policies this appears to be UK policy to fix England's problems.

There’s also a plan to remove barriers to investment by reforming the planning system (in England). This may be linked to the previous effective ban that David Cameron's Tory government placed on developing onshore wind in England back in 2015. Indeed, it’s likely that unlocking the onshore wind potential may well disproportionately benefit England, as there have not been the same level of restrictions in Scotland, so there will be fewer new projects in the pipeline.

As you can see from the figures below, there has been virtually no new onshore wind capacity delivered in England over the past five years, while Scotland has continued to grow its capacity thanks to a supportive National Planning Framework.

But aside from this there’s little evidence that tinkering with planning laws will be a significant boost to the UK economy. This is another example of Starmer's Labour Party borrowing the Tories' clothes.

Irrespective of this, planning is devolved and is overseen by the Scottish Government. Given that Labour’s plan is for catalysing investment, Barnet consequentials for Scotland will be minimal, potentially placing Scotland at a disadvantage in terms of the economic impact of these changes; which will unlock investment mainly in England.

The third ‘seizing new opportunities’ policy area is around reforming the British Business Bank and unlocking institutional investment. The Government-owned British Business Bank works with a range of banks and other lenders to invest in start-ups, growing companies and sustainable enterprises. However, its accounts show that it made a loss of £147M in 2023. And 39% of its funding went to London, with just 3.6% going to Scotland. Unless this imbalance is significantly redressed through Starmer’s unspecified reforms; its investment would still very likely favour London.

3. Ensuring all parts of the country contribute

Under this heading the Mission statement says that:

“Labour will harness the talent and efforts of working people in all parts of the country to generate growth”

Unfortunately, that country it refers to is England, with one of the key planks being a Take Back Control Act giving more power to English towns and cities. This is a fairly cynical attempt at appealing to Brexit supporters by using the same rhetoric for a rather vague proposal to strengthen local decision-making.

The second policy area here is another long-term plan to set up a National Wealth Fund. Well, better late than never, but yet again there is very little detail as to where the funding will come from to build up this Fund. Ideally, windfall taxes from banks, fossil fuel extraction and the obscene profits made by privatised utilities. A National Wealth Fund was a key plank of the 2014 Scottish Independence blueprint. But, over the past decade, billions of pounds from Scotland’s oil, gas and energy production sectors has flowed into the tax haven banks of corporations and their shareholders.

The final vague policy in this part of Starmer’s mission is to make it easier for universities to develop clusters. Again, it sounds helpful, but provides no detail of what will be delivered, the mechanism for delivery or any funding commitment. More research funding from the UK Government for universities would be welcome, but the document does not specify any funding support.

4. Giving working people the skills and opportunities to get on

Under this heading there is really next to nothing relevant to Scotland, with the first policy area already being implemented in Scotland. The Apprenticeship Levy (which is paid by large employers) is currently passed over to the Scottish Government for them to use flexibly for skills and growth investment. It's almost as if the author of this mission document is unaware of the devolved landscape for education and skills across different parts of the UK.

The second policy area falls into the category of vague rhetoric again. Scotland (through its Local Employability Partnerships) already has local power and flexibility for employment support. And the commitment on Jobcentres is very unclear. If Labour is planning to reopen the dozens of local Jobcentres closed down by the Tories that would be welcome. But making them accessible to all is a characteristically nebulous statement.

Helping First Time buyers and stimulating increased affordable housing is the final policy identified here. Again, there is no detail on what this help might look like; but previous schemes which subsidise buyers rather than increase affordable housing have not proven to be sustainable. Housing is devolved in Scotland, so an increased building programme in England and Wales would only provide an increase through Barnett consequentials. Planning, compulsory purchase and tenant rights are all devolved, and the Scottish Government has recently legislated to improve the rights of tenants.

But presumably UK Labour will strive to improve on its own record of affordable housing delivery in Wales, where it has been responsible for the lowest rate of affordable housing of any UK nation. Scotland has, for some time, outperformed the rest of the UK in terms of affordable house-building and delivery.

If we look at figures from the ONS on Affordable Housing delivery, it is clear that Labour-run Wales is well behind SNP-run Scotland and even Tory-run England when it comes to affordable housing. Looking at the average number of Affordable Houses delivered over the decade to 2018, Scotland delivered one home for every 340 households, compared with just one home per 560 households in Wales. Why would voters in England trust Labour on this? Luckily in Scotland, the SNP/ Green administration is outperforming the other parts of the UK.

Source: ONS Comparing Affordable Housing in the UK/ Labour Force Survey

5. Building a resilient trading economy

The fifth and final policy area is around growing the economy and the main priority for the UK Labour Government appears to be Making Brexit Work. Brexit is a catastrophic act of economic self-harm, which limits trading with our neighbouring countries and adds bureaucracy and red tape to cross-border trading. Making Brexit Work is like saying to a person who’s had a leg amputated that the priority is learning to hop better rather than getting a prosthetic limb.

Scotland voted overwhelmingly against Brexit, and yet there have been no concessions or special deals protecting Scotland from its devastating impact. Northern Ireland has been given special treatment, and benefits from continued frictionless trade with the EU.

Labour’s ‘plan’ is to fix holes in the Brexit deal and cut red tape. But these measures (if possible) are like putting sticking plasters on someone who’s bleeding out. They may slow down the damage but the bleeding will continue. Brexit is (and will continue to be) damaging to the economy and will hit poorer people the hardest.

Creating ”Great British Energy” was, until recently, the only UK Labour policy that had a funding commitment attached to it. But ever since the figure of £28 Billion a year was committed, Sir Keir has rowed back on the scale and nature of the funding pledge. As a long-term means of building sustainable green energy production it is a sensible policy. But it will require massive investment, and it will take a long time. But the more the UK Government can invest upfront, the bigger impact it will make. For example, through buying up existing capacity rather than starting from scratch planning new projects. That’s why the scale of investment is important. Building this nationalised business will create jobs directly but providing cheaper and more reliable green energy can also be part of a longer-term economic growth infrastructure that provide upstream and downstream employment.

I know they always say to finish leaving your audience wanting more, but this last one really does take the biscuit for vacuous nonsense. “Establishing a supply chain taskforce to review supply chain needs across critical sectors”.

Okay… who decides which sectors are critical? Critical in what way?

Who will be on this taskforce?

What will happen once they have completed their review?

Will they pass the findings onto another taskforce or implementation group?

It really is just taking up space in the document.

In conclusion, there is nothing in these policies that will make a short-term positive impact on Scotland’s economy. The majority of the medium-term impact policies will favour investment and skills development in England and unlock developments that have previously been blocked by conservative UK Government policy.

Six of these 15 policies either don’t apply in Scotland due to devolution (Planning, Housing, Local Government) or are already being implemented in Scotland (Local Employability Partnerships, Tenancy protection, flexible use of Apprenticeship Levy).

While Green Investment and the new nationalised Energy Company will have a positive impact on Scotland; their impact will be long-term and are contingent on significant public investment.