AS I SEE IT: TERRY MURDEN says fortune favours Sir Keir Starmer’s Blairite party, but the Tories are not finished yet
Just a fortnight ago the Tories were coming out in goosebumps as they enthusiastically welcomed their new party leader and Prime Minister. There was talk of a Thatcherite resurrection that would see them safely through the next two years until the next general election. Then came the ‘Fiscal Event’ and the market meltdown.
Sir Keir Starmer could not believe his luck. His keynote speech to the Labour party conference was always going to be a test of his own leadership credentials. Instead, he was handed a free pass.
The Tory Cabinet initially rejoiced at the Truss-Kwarteng tax cuts, but within hours those same backbenchers had stopped counting their money and began fretting as the pound and stock market sank and the UK’s reputation for sound economics was being trashed around the world.
Sir Kier found himself in the ring seemingly without an opponent. A Labour leader, who reminded us he was from a working class family, was now able to claim Labour is the party of sound money without anyone laughing. He could trash the Government’s record on managing the economy and even the pinstripes in the City of London were nodding with approval. He may have pinched himself a few more times when a YouGov opinion poll put Labour 17 points clear.
The stand-out statement was a commitment to set up a publicly-owned energy company that would be built from scratch and would support the development of renewables. Nicola Sturgeon proposed something similar in 2017, promising it would offer low cost energy. I revealed last year that the Scottish Government had quietly ditched the plan. It has never fully explained its reasons. Needless to say, it would not have been easy under current powers for Holyrood to build its own energy company and one example of a Scottish social enterprise, People’s Energy, was among the 30 or so that have failed in recent years.
Sir Keir’s Great British Energy would also compete directly with the private sector but focus on generation and, notwithstanding current circumstances, it would have access to lower cost capital. It would be modelled on France’s EDF and supported by a Norwegian style national wealth fund. What’s not to like? At a time of energy transition is may be the missing link that will join up the existing structure and speed up the process.
A new energy company represents a concrete proposal that the voters can focus on and, just now, looks like its time has come. Ms Sturgeon must be thinking of what might have been.
Crucially, Labour’s return to a Blairite middle ground – winning friends across the political spectrum – suddenly turns a party that was thrashed and almost unelectable three years ago into a potential government with sound policies. Sir Keir’s biggest target is rebuilding the red wall in the north of England that was demolished by Boris Johnson.
So, has the current turmoil engulfing the Tories left Sir Keir on a clear road to victory, or is this as good as it gets?
Before he starts thinking about new wallpaper for Downing Street [sorry, I forgot it was recently decorated], his broader plans for government require a deeper dive. He promises “after the first term of the next Labour Government” to defeat the cost of living crisis, lift the clouds of anxiety by creating a stable economy built on business investment, higher wages, more jobs, fairer taxes, more affordable housing and an NHS back in good health.
A better Britain or fantasy island? This could just as easily be the agenda for the Conservatives. And probably will be when they gather next week.
The difference this party season is that circumstances are changing so quickly that speeches are being ripped up and re-written, with hopes raised and shattered within days. Ms Truss and her Chancellor left the Commons on Friday to loud cheers from the backbenchers for delivering the biggest tax giveaway since 1972. By the time they were home for tea the markets had decided they didn’t like the scale of borrowing needed to finance the Growth Plan and proceeded to ruin Downing Street’s weekend. Now the International Monetary Fund has raised concerns.
Remarkably, Truss and Kwarteng are already on borrowed time, with reports of backbenchers calling for them to go and bookmaker Boyle Sports shortening odds on Ms Truss being replaced as PM next year. Labour has been gambled into odds-on favourites at 4/7 from 6/4 to emerge with most seats at the next general election.
And yet it may be premature to write off the the Truss-Kwarteng model of a better Britain. The markets have calmed a little and Armageddon has been postponed. The pound even ticked up a few cents against the dollar while the Labour leader was being hailed as the new Caesar.
And don’t forget that other currencies are also being sacrificed for the strong greenback. Inflation, high energy costs and recession loom large around the world, not just in the UK. Both France and Italy have a higher debt to GDP ratio. There is some bewilderment that while the Bank of England is trying to squeeze spending, the government is delivering tax cuts. But no one would forgive Ms Truss if she had walked into Downing Street and sat on her hands.
In the end we will have to await developments in the energy markets which are largely to blame for this mess and there are already signs that prices are coming down as countries readjust their supplies to the impact of the Russian invasion. If prices fall significantly, inflation will also fall and talk of recession may turn to hopes for recovery.
In the meantime, investors will have to settle on the new value of money and hope that the measures being taken by governments and central banks will steadily reflate the global economy. To coin a phrase, it seems we are all in this together.
Terry Murden held senior positions at The Sunday Times, The Scotsman, Scotland on Sunday and The Northern Echo and is now editor of Daily Business