Katy Balls
(Picture: Evening Standard)What’s the best thing to happen to Keir Starmer this year? No, not his recent trip to Mallorca — even if it was his first real holiday in “about three years”. Nor is it Boris Johnson’s departure — there are plenty in Labour who think it would be better for the party if he stayed in post. Instead, the most important political turning point can be traced back to May, when the Tories adopted a Labour policy and brought in the windfall tax.
The Conservatives had initially dismissed it as anti-business, before allies of the then chancellor Rishi Sunak heralded it as smart politics.
But fast forward a few months and it’s costing the Tories. Labour’s plan to deal with the cost of living — freezing the October energy cap rise and funding it largely by an extension of the windfall tax — is making it hard for the Tories to go on the attack. The terms of the economic debate are shifting leftwards — and it’s the Conservatives who are, in part, to thank.
When Starmer unveiled the plans yesterday, Tory MPs were quick to suggest it was “pure socialist” and close to “a magical solution”. Only, Conservative voters appear to take a more sympathetic view — a poll found that three-quarters back Starmer’s plan to freeze energy bills.
To be fair to the Labour leader, he wins some points simply for saying something. Johnson is on his second holiday of the month while the two Tory leadership rivals have spent the bulk of the summer refusing to get into the detail.
When it comes to that contest, it’s been dominated not by spending pledges but by tax cuts in a bid to woo undecided Tory members. The public have different priorities. A YouGov poll earlier this month found that two-thirds of voters believe the Government would be wrong to prioritise tax cuts over tackling the cost of living. Liz Truss’s claim of ‘no handouts’ in an interview with the Financial Times didn’t even last the week.
It’s not just that the scale of the cost- of-living crisis coming down the track means voters are in the market for drastic measures that could once have been derided as extreme. It’s that the Tories have gone some way to offering Labour something they have been missing for some time: economic credibility. This is viewed by figures in the Leader of the Opposition’s Office as the key metric for bringing the party back into power.
It’s an area where they have struggled, both after Liam Byrne’s infamous “there is no money” note and Jeremy Corbyn’s legacy as leader. Polling showed his manifesto pledges of mass nationalisation and free broadband were pretty popular. The problem? Few people believed he could afford them.
But now that the Tory government has taken a Labour policy in the windfall tax, it’s hard to attack the opposition as mad or dangerous when they suggest it should be extended.
There are other forces at play. The pandemic — which saw the Government provide billions in emergency support — means it is much harder for the Tories to now say there is no magic money tree or that they can’t step in in times of crisis. What’s more, the higher spend message Johnson ran on in 2019 means many new Conservative MPs take a more lax approach to spending.
What does this all mean for the next prime minister? While Truss is opposed to any extension of the windfall tax, both candidates are expected to provide relief if they enter No. 10. “They have no choice,” says a government minister. There’s a sense she will have to do something drastic. For all the red meat, the political reality come September 5 will be enough to bring even the most Thatcherite contender back down to earth.
