Good morning. Is Keir Starmer a Thatcherite? That’s the question Labour would like you to be asking yourself this week. Or maybe not you, precisely. By inserting a line of praise for the former prime minister in a Sunday Telegraph column – she “sought to drag Britain out of its stupor by setting loose our natural entrepreneurialism”, he said – Starmer is once again declaring where he intends to focus his party’s energies ahead of the next election. A set of voters who supported the Conservatives in 2019 are still, it seems, making their minds up about Labour. If Starmer can convince that fabled demographic of his rectitude, the argument goes, he’ll enter Downing Street with a majority.
Quite how many undecided punters view the Thatcher years as a halcyon age is another matter. In any case, Starmer doubled down on that approach yesterday, in a speech at an event run by economics thinktank the Resolution Foundation. “Anyone who expects an incoming Labour government to quickly turn on the spending taps is going to be disappointed,” he said. And he warned that relying on spending to create growth is “a habit the Labour party has had for a long time”.
It may not be Yes We Can-level sloganeering, but it is meant to serve a purpose. Starmer’s comments, and much of his party’s positioning this year, are intended as an answer to another question: can Labour be trusted to be frugal with public money?
But not everyone is persuaded that Starmer’s answer is the key to an electoral victory – or that the question is even the right one. In today’s newsletter, the Guardian’s senior economics commentator, Aditya Chakrabortty, explains why. Here are the headlines.
Five big stories
Cybersecurity | The UK’s most hazardous nuclear site, Sellafield, has been hacked into by cyber groups closely linked to Russia and China, the Guardian can reveal. The astonishing disclosure and its potential effects have been consistently covered up by senior staff at the vast nuclear waste and decommissioning site, the investigation has found.
Immigration | James Cleverly has announced a package of measures designed to cut the number of migrant workers and their dependants entering the UK, making it far harder for employers to bring in overseas staff, including in the NHS and social care sector. The home secretary presented a five-point plan which he says will help reduce net migration by 300,000 a year.
Cop28 | The president of Cop28 has been forced into a fierce defence of his views on climate science, after the Guardian revealed his comment that there was “no science out there … that says that the phase-out of fossil fuel is what’s going to achieve 1.5C”. Sultan Al Jaber said: “I respect the science in everything I do.”
Contaminated blood scandal | Rishi Sunak suffered his first parliamentary defeat as MPs voted to establish a compensatory body for victims of the infected blood scandal. MPs voted 246 to 242 in favour of an amendment to the victims and prisoners bill that will require the government to set up a body to administer compensation within three months of the bill becoming law.
Coronavirus | Boris Johnson asked spies to plan a “raid” on a Dutch vaccine plant to obtain “impounded” doses of AstraZenica’s vaccine during the pandemic, it has been claimed. Ahead of the former prime minister’s appearance at the Covid-19 inquiry, the Daily Mail reported that Johnson asked for “military options” because he was “enraged” at possible export restrictions within the EU.
In depth: ‘Whatever the benefits of a Labour government, Reeves is a like-for-like replacement for Hunt’
While Keir Starmer’s language yesterday was especially stark, the policy behind it is nothing new: for some time, it has been clear that Labour is focused on heading off any possible Tory charge of fiscal irresponsibility. Shadow chancellor Rachel Reeves has promised “non-negotiable” fiscal rules: “We will not borrow to fund day-to-day spending and we will reduce national debt as a share of the economy.”
The key plank of this strategy is the widely reported principle that there will be no more tax increases announced before the election, and no increases in public spending beyond what has already been set out by the Conservatives. There is no defined end date on that approach, which is instead linked to the return of growth to the UK economy.
“Labour policy on this has been a bit of a moving target over the last couple of years,” Aditya said. “It’s not that long since Reeves was talking explicitly about taxing higher earners more and closing loopholes in capital gains tax.” Similarly, in June, Reeves scaled back flagship plans to borrow £28bn a year to invest in green jobs and industry; it has since been suggested that the green plan could be watered down further. “I would read the position today as being that day-to-day spending [under Labour] will not be that different to the Conservatives,” Aditya said.
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What are fiscal rules, anyway?
Fiscal rules sound like an ironclad economic law, as inescapable as gravity; the reality is that they are arbitrary guardrails that can be changed at will.
For a sense of how dubious they can be, Aditya points to Hunt’s primary rule, which Rachel Reeves has said she will maintain – that debt should be on course to fall as a share of national income in five years’ time. “That just means debt should be falling by the last year of that period. That’s it. Think about what that means: it’s like saying on 1 January, right, I’m going to go on a diet this year, but I’m going to lose all the weight in December.
“Nobody would take you seriously if you said that, and economists from a broad spectrum think it’s stupid. Fiscal rules are there to look plausible, they are often broken when it comes to the crunch, and they rely on the public not really knowing what they mean.”
Because they can be technically adhered to by making promises about the far-off future, these rules can be gamed. In his recent autumn statement, Hunt found the room to make tax cuts by claiming that public spending would fall dramatically after the election – a forecast that independent analysts found totally implausible. Weirder still is the fact that, simply because Hunt has said so, Labour is under a self-imposed obligation to stick to the same fantasy. Starmer said yesterday that Hunt has “salted the earth”, but that doesn’t change the Labour promise.
When I asked Aditya if I was understanding this correctly, I thought I must be missing something. “No, that’s completely right,” he said. “Two weeks ago, Jeremy Hunt came out with plans which everyone credible says are simply not going to happen. And Rachel Reeves says, I’m going to accept all of it anyway.” This feels a bit like handing your worst enemy your wallet, and asking them to count your money.
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What do Labour’s rules mean for public spending?
That there won’t be a lot more of it. Labour has left itself with the ability to borrow to fund capital expenditure, on projects like energy infrastructure. But that money is not available for day-to-day spending (like benefits, or nurses’ salaries). With no major tax rises expected beyond relatively small wins already announced like VAT on private school fees and a windfall tax on energy companies, Reeves will largely be limited to reallocating the same money the Tories are already spending.
This isn’t just a question of improving the public realm, but of standing still. Centre-left thinktank the Centre for Progressive Policy estimates that because of the UK’s ageing population and price rises on core public services spending, an extra £142bn – equivalent to a 1.56% increase in public spending each year – will be needed by 2030 just to maintain the status quo. While estimates on that figure vary considerably, everyone agrees that the state is going to get more expensive.
None of this is an inspiring framework for a radical new government. “People know from experience that the state of public services is terrible,” Aditya said. “Whether it’s your kid’s school sending home begging letters and fundraisers, or your mum’s hip replacement being cancelled three times. Effectively, the Labour message is that you can’t expect any of that to get any better.”
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So how will Labour do things differently?
Labour does not agree that its message says nothing is going to get any better, obviously. It says that an improved outlook for growth, because of policies like ripping up planning rules, will bring in more tax revenue, allowing it to eventually turn the aforementioned taps on a bit. It also says that it will raise more funding from other sources for major investment: it will aim to secure £3 in private sector funding for every £1 of public money.
“But Tory chancellors have been trying to do the same for ten years without a lot of success,” Aditya said. “There is also a whispered suggestion that while Keir can’t promise anything at first, it is going to get better later on. But from what they’ve spelled out, the message is pretty clear.”
The promise of growth is not convincing independent observers. “The Office for Budget Responsibility sees us heading somewhere below 1% next year,” Aditya said. “Over the longer run, no respected forecaster is seeing a boom over the next decade. Whatever you think about the other benefits of a Labour government, in broad tax and spend terms, Reeves is a like-for-like replacement for Hunt.”
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Why is Starmer doing this?
Aditya is sceptical that fiscal rules have any intrinsic value. If they have to exist, the fact that they are self-imposed means there is nothing to stop Labour creating a different set of parameters. “You could set public debt against the assets you create, for example,” he said. “That would be a more realistic way to approach something like the value that comes from building a new school, even if it creates a debt.”
If Starmer is uninterested in such an approach, it may be because he thinks that Labour’s polling lead is much more fragile than it appears. The often-cited metaphor from the 1997 New Labour victory is of Tony Blair as “a man carrying a priceless Ming vase across a highly polished floor”.
Yesterday, Blair’s former political secretary John McTernan made the case for why that logic might not apply now: “The brutal truth is that there are no swing voters left – when support for the Tory party has fallen to 25%, there is no longer a pond to fish in.” The better strategy, he argues, is for Starmer to “talk to the 45% of the voters he has won over and to reassure them that he is the change they want to see”.
Aditya agrees, and sees a broader danger. “The real risk for Labour is that people stay at home. And there is longer-term damage to democracy that comes from not offering a real alternative – from politicians being scared to stand even one inch out of line.”
What else we’ve been reading
“In this time of great danger, how can anyone feel safe?” Novelist Ahdaf Soueif writes from Egypt, where a civil campaign is growing to open the Rafah border to Palestinians fleeing conflict. Clare Longrigg, acting head of newsletters
The days of rapid advancements with each new phone, laptop or smartwatch release is over, writes Samuel Gibbs. So while the temptation to shell out hundreds or even thousands of pounds on the latest shiny new tech for Christmas might be high, you are better off not giving in. Just remember: your iPhone 11 has a few years left in it. Nimo
More than two months after their flight crashed deep in the snow-covered Andes, Nando Parrado and 15 other passengers of the Andes flight disaster made it off the mountain alive. Fifty years on, he tells Chris Godfrey his astonishing tale of survival. Clare
ICYMI: Nesrine Malik details the true causes behind “record levels” of net migration: “These apparently vexingly high numbers are, to a large extent, the outcome of economic and political decisions that mean we invite immigrants to fill labour gaps that policymakers either did not anticipate, or ignored warnings about,” Malik writes in this compelling piece. Nimo
In a year dominated by war, economic stagnation and political dysfunction, the Republican congressman George Santos (above) provided the US with comedic relief. Now that the joke is over and Santos has been expelled from Congress, New Yorker writer Eric Lach looks at what other stories lay beneath this bizarre tale. Nimo
Sport
Commonwealth Games | The British government has told Commonwealth Games organisers that the UK will not step in to rescue the event (pictured in 2022 in Birmingham above) again after the Gold Coast withdrew its bid for the 2026 event. The Australian city’s decision only four months after Victoria also pulled out means that the post-colonial festival faces an uphll battle to survive, Sean Ingle writes.
Premier League | The Premier League has agreed a new deal with Sky and TNT Sports in which the competition will receive £6.7bn over four years for its UK television rights. The number of games is set to grow substantially, as – for the first time – all matches outside Saturday 3pm kick-offs will be broadcast live in the UK.
Ice hockey | Neck guards will be mandatory for all tournaments run by the International Ice Hockey Federation after the death of player Adam Johnson in an accident in England. The decision will apply to the Olympics, but not to the NHL, which does not have any such requirement.
The front pages
The Guardian leads with an exclusive: “Sellafield nuclear site hacked by groups liked to Russia and China”. The i claims the Environment Agency inspected just 10% of water pollution incidents last year, with the headline “Pollute if you want: Toothless sewage watchdog fails to visit 90% of toxic spills”.
The Times leads with the government’s “Five-point plan to cut migration”. The Financial Times says “Cleverly plans tougher wage and visa rules in bid to get grip on immigration”. The Telegraph reports “Migrant curbs to cut arrivals by quarter”, while the Sun says “Rishi gets tough on migration”, under the headline “Access denied”. The Mail says “Biggest ever clampdown ‘will slash migration by 300,000’”.
Finally the Mirror leads on I’m a Celebrity … Get Me Out of Here!, with the headline “Farage makes you kip”.
Today in Focus
Why are so many councils going ‘bankrupt’?
Nottingham council is the latest to in effect declare itself bankrupt, and one in 10 county councils in England are at risk of following suit. What does it mean for the services that so many people rely on? Jessica Murray reports
Cartoon of the day | Martin Rowson
The Upside
A bit of good news to remind you that the world’s not all bad
When Dorothy Wiggins’s husband, Guy, died at the age of 100, she was enveloped by grief. They had a “magical life” together during their 61 years of marriage, she says, but she knew she had to continue living hers. Her son asked a journalist friend, Michael Astor, to make a short film about his mother’s day-to-day life in New York, capturing her activities and her thoughts on camera.
Astor posted clips of the videos to Instagram and TikTok and Wiggins quickly cultivated a following. Even though she thinks social media is pretty stupid, her fashion sense and outspokenness has given her newfound fame. It has been three years since Guy died, and Wiggins thinks about him often. These days she finds joy in reading her fans’ comments and encountering them on the street. “I’m pleased that people are inspired by my longevity and attitude,” she says.
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Bored at work?
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