The Tories have demolished the house – does Labour have the courage to build a better one?

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Never has there been an organisation so enthused to grab a poisoned chalice with both hands and take a massive swig from it than Keir Starmer’s Labour Party.

Having defeated the left in their party and with the Tories in disarray, they’re now ready to go with the easy stuff – fixing the UK’s economy. Thus last week’s Labour conference was, if anything, surprisingly triumphalist given the backdrop of absolute carnage taking place in the national economy. In a change of pace for Labour, it featured multiple policy announcements – some of which even looked good!

However, I cannot help being ever so slightly sceptical about whether the new raft of policies from Labour – while definitely an improvement over no policies except “we are not Jeremy Corbyn” – are entirely up to the job. Yes, the Tories are running an increasingly catastrophic looting and pillaging of the UK economy which has now started to collapse in ways the middle classes and banks can’t ignore, but standing next to a short person doesn’t make you tall.

One of the long-term structural problems we’re having to deal with – perhaps the core problem from which all the others ultimately stem – is that politically acceptable policies always lag behind the real world problems they’re trying to fix. On climate change, on the economy, we always seem to be just about getting round to fixing the problems of 10 or 20 years ago. When everything is not only getting worse, but getting worse at a swiftly accelerating pace, that’s never going to be sufficient and you’re always going to be playing catch up.

“Will Labour be better (on certain issues) than the Tories?” is fundamentally a very different question to “will Labour be able to present policies that meet the scale of the overlapping crises, not just as they are in 2022, but when they take office in 2024 or 2025?”

While these speeches are all great if you imagine them being delivered in 2010, there are warning signs that, despite Starmer saying “this time the rescue will be harder than ever,” Labour doesn’t know what it’s about to let itself in for.

In his speech, Starmer said “above all, we must shift towards ‘a prevention first’ policy” when discussing health and social care. But on the economy, the environment and much in the way of public infrastructure, prevention isn’t really an option any more.

For years, the Tories have been ignoring the warning signs of the rot in the basement, the bulging plaster, the rats in the walls. Now that the bathroom has come crashing down into the kitchen, everyone seems to be suddenly looking around and saying “my word, things are in a poor state of repair, aren’t they?” But, as much as Liz Truss and Kwasi Kwarteng should be criticised for their disaster of a budget, it’s more that they tried to strip the piping out of the already sagging bathroom floor than that they inherited a house in great condition and somehow broke it overnight. If they pushed it over the edge, it’s only because it was already teetering precariously.

As any builder could tell you, that’s gonna cost you. The big problem with not doing prevention and letting things go to rack and ruin is that putting it right again is often eye-wateringly expensive. Labour, though, seem to be convinced they can do it all without spooking the people ready to go with “Tax and spend Labour” and “Maxing out the country’s credit card” headlines.

Over and over, Starmer and Reeves made grandiose promises about what they intended to deliver, but then alongside it Starmer kept saying Labour “have set out a framework for sound money. We’re determined to reduce debt as a share of our economy.” Well, OK – which is it? You can tell me that you’re going to fix the structural problems, and you can tell me that you’re going to be frugal, but tell me that you’re going to do both and I simply don’t believe you. This was one of the major problems with John McDonnell’s plans during his tenure as shadow chancellor, and speaks in itself to a deep lack of confidence on the broad left.

While they may be happy criticising the Tory approach of austerity, they still seem to accept all the broad assumptions which underpinned it, and no level of crisis seems sufficient to shake them free.

In one particularly baffling, if potentially enlightening, part of her speech, shadow chancellor Rachel Reeves said: “The 45p top rate of income tax is coming back. Here’s what we will do with that money. The next Labour government will double the number of district nurses qualifying every year, train more than 5,000 new health visitors, and create an additional 10,000 nursing and midwife placements every year.”

The thing is, mathematically, if you roll back a tax cut that someone only announced last week, you’re not, in fact, getting any extra money. You’re just keeping the same amount of money. That Labour are counting this as new money to fund investment is pretty dubious, to put it mildly.

To be clear, it’s not that I personally mind them spending money without engaging in the fool’s errand of trying to account for every penny in advance. My own bias is towards “fix the problems” over “watch the purse-strings”. As John Maynard-Keynes said, “look after unemployment, and the budget will look after itself”. We have been obsessed with debt and deficits for over a decade now, since the global financial crash, with catastrophic results.

Eventually, someone is going to have to be honest and say: “Look, this is all going to be really expensive, but it costs what it costs, and the longer we wait, the more expensive it’s going to get. There is no cheap option here.” But that’s not what Labour are doing, so the question comes, when they hit government, with higher interest rates and borrowing costs and a bond market which is, as we’ve seen this week, easy to spook, how many of these promises will fall by the wayside?

Labour’s big environmental promises centred around the creation of a National Wealth Fund to invest in green energy. While the name invokes the idea of Sovereign Wealth Funds, this is inapplicable to the UK. The UK doesn’t have the excessive surpluses that countries such as Norway uses to fund theirs. This would instead be far smaller £8Bn pot from central government – for comparison, Norway’s fund, built up from its oil revenues, has almost £1 trillion in assets.  Part of this would be used to fund the new publicly owned Great British Energy, with the hope that returns from renewable investment would eventually build it up.

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Labour have been clear that neither the National Wealth Fund nor Great British Energy are “nationalisation” – but if, as Reeves says, “the British people will own a share of that wealth, and the taxpayer will get a return on that investment,” it’s not clear why they wouldn’t benefit more from getting all of the wealth. If the purpose of the fund is to take on riskier projects that private finance currently shies away from, it begins to look suspiciously like another project to socialise the risks and privatise the profits.

Labour’s policies sound big, until you look at the details, which all seem to be carefully designed to not upset any apple carts. The circle they’re trying to square here is to keep the confidence of people who currently run, and profit from, the way things are currently arranged, while also promising everyone else that things will change. It’s doubtful as to how significant these policies will turn out to be if Labour are scared of putting too many big and important noses out of joint.

Right now, it is looking increasingly unlikely that they can possibly lose the next election, so there’s little to complain about there for superfans of the red team. For the rest of us, whose livelihoods depend on issues a little more concrete than which manager is overseeing our slow and grinding decline, there’s an unnerving feeling that we’re being asked to grasp onto anything that’s being offered and not ask too many difficult questions.