A Labour government must shed the assumption that public spending is “the only lever that can ever be pulled” to improve people’s lives, Keir Starmer has said, as he refused to rule out keeping planned cuts to government departments if he won power. Answering questions following a speech on Labour’s plans for the economy, Starmer said his party had a record of investing in public services, but twice declined to confirm he would reverse significant cuts set out in Jeremy Hunt’s autumn statement. Asked how his economic strategy differed materially from that of the Conservative chancellor, Starmer gave no policy specifics, saying instead that the Conservatives had “a plausibility problem” over the economy, and that a government led by him would have defined missions. After a speech in which he talked up the central role of economic growth and better productivity in providing extra money for services, the Labour leader reaffirmed his plan to spend up to £28bn a year in the second half of a parliament on green investment, but cautioned against expectations of greater spending. “We will borrow to invest subject to our fiscal rules,” he said. “That’s what the £28bn in the second half of the parliament is all about. But I do think it’s a mistake to think that this is all that you need to do to trigger growth. I think sometimes all of us get into this habit – and this is a habit the Labour party has had for a long time – which is thinking the lever that is spending, investment, is the only lever that can ever be pulled. I don’t accept that.” Instead, Starmer said, significant barriers to growth could be tackled without extra spending, such as changes to the planning system and more efficient public services. Questioned on how voters could hope for a rapid turnaround in their economic fortunes when such projects inevitably required time, Starmer said that while he would promise to improve living standards in the first few years of a Labour government, the benefits of policies such as home insulation schemes were not instant. “If all you do is say, I’m only prepared to do things that are relevant for the next six months, we will continue with decline for a very, very long time,” he said.
In his speech to a conference organised by the Resolution Foundation thinktank in London, Starmer said there were grave dangers in being unable to turn things around. Many people were facing “a loss of the future”, Starmer said, adding that the economic contract under which he grew up – life could be tough but the future would improve and the country was fundamentally fair – had come unstuck. That precondition, which had been “a comfort” for his parents, no longer existed, he said. “A political consensus that if you work hard and play by the rules, you will get on, a glue that binds British society together, has become nothing short of a lie – for millions. It’s a well from which so many political horrors can spring.” Starmer said the position he might inherit would be so difficult that everything depended on growth bringing in more money so services could be improved without adding to the tax burden. “Never before has a British government asked its people to pay so much, for so little,” he said. “That’s why growth is everything. It’s not just the quickest way out of this – it’s the only way. The path to public service investment and keeping taxes competitive. It will be a hard road to walk – no doubt about it.”