One year from now, our new Labour government may be finding it as hard as the outgoing Conservatives to govern effectively, despite its substantial mandate. Here are the principal problems likely to sour its staggering success from day one:
The economic bind
During the campaign the Institute for Fiscal Studies (IFS) accused both main parties of ignoring reality, contending that “spending on many public services will likely need to be cut over the next five years if government debt is not to ratchet ever upwards or unless taxes are increased further.” The Institute also spotted various cans being kicked down the road by promises of “reviews and strategies” in Labour’s manifesto, rather than immediate action.
The party’s client groups – notably in the welfare lobby – have already expressed dismay at the lack of promises. The likelihood is that within 12 months they will not only face the predictable annoyance of those who did not vote for it, but the outrage of many who did. And economic problems are not all that await.
Migration
The Tories’ defeat was partly caused by their ineffectuality over illegal migration. Labour too may find this impossible to handle without leaving the European Court of Human Rights, which would outrage its supporters. Yvette Cooper, the putative Home Secretary has refused to set a target for reducing migration but talks of a “new border security command” to “smash the criminal gangs”.
Also promised are new investigators, intelligence officers and cross-border police officers; the last would involve the party working with a government probably run by the French Rassemblement National, to which it is highly antipathetic. Labour would set up a “returns unit” to remove failed asylum seekers, clear the asylum backlog and end asylum hotels. All that costs money, which the party thinks will come out of its £5.23 billion windfall tax on oil and gas companies.
The deportations of failed asylum seekers – those who have entered Britain illegally for economic reasons and not because of persecution – will need to be swift and plentiful if public anger is to be contained. And if they are, that element in the party that believes in entirely open borders will be angry too. A large majority will help them act divisively. The party promises to end reliance on overseas workers in health and construction, which would mean taking off benefits for many who choose not to work: which would open up another front with the Labour left.
Benefits
Labour is cautious about raising social security benefits: Rachel Reeves knows doing so is unaffordable, but every pressure group demands it. As a sop, Labour has promised to “review” universal credit and have a “strategy” to cut child poverty. ‘How would that be funded?’ asked the IFS during the campaign, and received no answer.
As it is, the two million receiving disability benefits in 2019 is now three million and estimated to be four million by 2028-29. The money will have to be found or some disabled people will need jobs. The party has said the minimum wage must become a living wage, with age bands scrapped. It has also promised to ban zero-hours contracts and create more workers’ rights. The likely effects of both policies will be to drive up unemployment and costs and reduce profits and tax revenues.
Tax rises
Labour has signed up to a fiscal rule of the outgoing government, which entails cuts in “unprotected” public services and investment: but as the IFS has said, proceeding without tax rises is unrealistic, and has predicted a continued freeze of thresholds. What Sir Keir Starmer calls “working people” will not feel better off. Nor has a revaluation prior to raising council tax been ruled out.
Labour promises to boost growth by reforming planning to build housing and infrastructure. That will trigger endless local disputes and litigation. Windfall taxes on un-green energy companies are a certainty, and Labour promises a National Wealth Fund that will create 650,000 jobs in “clean” energy industries: how quickly such jobs will materialise is unclear. The party also hopes to raise £7 billion by limiting tax avoidance: previous such initiatives have driven people abroad and actually reduced revenues.
The NHS
Reducing NHS waiting lists is a priority. Labour says there will be 40,000 more appointments a week, by paying staff more to work weekends and evenings. It promises thousands more medical training places, modernised equipment and buildings to help detect cancer and other conditions earlier. It guarantees face-to-face appointments with GPs and a modernised booking system, 700,000 more NHS dentistry appointments each year and a “supervised toothbrushing scheme for three-to-five year olds”.
This cannot all be funded out of the proposed windfall tax. Wes Streeting, the probable Health Secretary, has said that it’s not about spending more money, it’s about spending more effectively. But unless a social care system is created rapidly (which is unlikely) hospitals will contain elderly people unnecessarily: Age UK reported a year ago that up to 14,000 were “stranded” in hospital for want of care, three times the figure of four years earlier. Also, unions continue to demand big pay rises for everyone from doctors downwards. They have been told they will be disappointed: a confrontation with reality is looming.
Defence
With a promise to “provide Ukraine with the support it needs following Russia’s invasion,” and Putin remaining a threat, Labour’s manifesto says it will “set out a path to raise defence spending to 2.5 per cent of national income.” That means the budget rising from £64.6 billion in 2024-35 to £78.2 billion in 2028-29, but the situation is urgent now. The Tories planned to fund this by cutting civil service payroll and reducing defence research and development: Labour talks of expanding parts of the state payroll.
Anti-Semitism
Ideological issues divide Labour, and those divisions will flare up. Sensibly, it wants a ceasefire in Gaza, but holds back from promising sanctions on Israel. The party’s anti-Israel wing has been mostly silenced during the campaign. It will not remain so.
Culture wars
On women’s rights, the Canterbury MP Rosie Duffield, abused in the campaign by trans rights activists, is not alone. Many Labour women take JK Rowling’s view that its policy on gender is anti-women, and quite rightly hate it.
The novelist and long-term Labour member Joan Smith wrote recently: “The party has taken an inexplicable decision to treat women, who make up half the population, as less deserving than the tiny population who are transgender. When journalists ask leading Labour figures to commit to supporting women’s rights, they all…start talking about what trans people want.”
There are 100,000 Britons identifying as trans but around 34 million women and girls. “Men who claim to be women dictate what Labour’s priorities should be,” she said. Labour’s policy of enabling what are effectively falsified birth certificates, and eliminating single-sex spaces, will meet fierce resistance.
Foreign policy
Foreign policy issues are fraught with problems. The rightward shift in the EU, which may now be compounded by an RN victory in France, will make the bloc harder for Labour to deal with. The EU that Britain left is not the EU Labour now has to handle. And polls suggest Donald Trump will become President of the United States in November. Just imagine Barack Obama’s friend, David Lammy, if he becomes Foreign Secretary, sitting down with the Donald.
Net zero
Labour has already backtracked on a £28 billion net zero initiative and on ripping out gas boilers. However it wants to revert to banning sales of petrol or diesel cars by 2030, a policy whose abandonment gave Rishi Sunak a rare moment of popularity. Those who can afford these policies least are Labour’s “working people.”
The new British Energy will, it says, generate “almost all” the country’s zero-carbon electricity by 2030. It will refuse new North Sea oil and gas fields and coal licences, and ban fracking, rejecting wealth creation. Its windfall tax on oil and gas companies will, it says, help fund a £5bn “green prosperity plan”. However, this depends on borrowing costing £17.5 billion over five years that will keep debt high. Compromises look certain, with Labour’s eco-fringe gravely upset.
School fees
VAT on private school fees will not, Labour has hinted, happen until next year. The IFS’s research played down problems: it accepted Labour’s assumption that £1.5bn would be raised, including from business rates, with a mere 3-7 per cent of the 570,000 private pupils in England joining the state system. The schools themselves regard that figure as wildly optimistic.
The IFS also assumed that money not spent on fees would be spent on other VAT-bearing goods: which forgets that people might use it to pay off additional loans taken out to pay fees, or that generous grandparents would keep it in their savings. A fall of 700,000 overall pupil numbers is predicted by 2030, so the 6,500 more teachers Labour says the tax will fund will be spread less thinly. However, in the short term, the plan could cause chaos in some areas with oversubscribed schools. In the long run, it could undermine a private sector that currently saves taxpayers billions.
Law and order
Finally, Labour inherits a law and order problem. Boris Johnson and Sadiq Khan closed three-quarters of London’s police stations. A surge in violent crime and street robbery followed. Yvette Cooper says police will be “back on the beat” and will “halve knife crime” with tougher sanctions (unspecified) within 10 years: but even that would still leave 25,000 incidents a year, and people won’t happily wait a decade for such results.
New prison places are promised, but without indications of when they will come, or when the backlog in the courts will be cleared. Such vagueness typifies Labour’s entire manifesto. As with every other aspect of governance, the public is already impatient. They will not allow the new ministers long before turning on them too.