It sometimes feels as if this Labour administration is dedicated to driving political obsessives mad. The Government doesn’t seem to have any ideological consistency to it at all. It’s a test-tube of unrelated political molecules.
But there is in fact a consistent story here. It’s not about left and right. It’s about principles and restraint. Today’s developments throw it in sharp relief.
On the one hand we have the Employment Rights Bill. This is the flagship workers’ rights legislation which has been spearheaded by Deputy Prime Minister Angela Rayner.
It’s intended to bring back dignity in labour, especially for low income workers on zero-hours contracts living without any sense of stability in their employment. It promises decent pay, decent conditions and a sense of security – all of which will give workers more money and greater confidence to spend it, ultimately leading to increased demand and higher economic growth. A virtuous cycle.
For about a year now, business groups have been attacking the plans. It started before the election and continued past polling day. Most commentators expected Labour to buckle, as it had over criticism of its £28bn net zero investment pledge. But that did not happen. Instead, the newly published amendments to the bill actually strengthened it.
Employers and business groups were left disappointed. Their attempts to water down the proposals had failed.
On the other hand, we have the Treasury’s letter to the Office for Budget Responsibility (OBR). This is expected to confirm a series of “major measures” on tax and spending which will likely cut several billion pounds in draft welfare and departmental spending. Justice Secretary Shabana Mahmood told the BBC it was a matter of principle. “There’s a moral case here for making sure that people who can work are able to work and there’s a practical point here as well, because our current situation is unsustainable,” she said.
If it is a matter of principle, it’s probably not one Mahmood holds. Labour politicians don’t usually spend their careers hoping they’ll one day be able to cut benefits. In reality, Chancellor Rachel Reeves has to make the cuts because she’s lost her fiscal headroom.
The financial buffer of £9.9bn the OBR estimated in the Budget last year has gone, in the face of a global tariff war, stubbornly high inflation and sluggish growth. She promised to try and match day-to-day spending with income. That now means she’ll need to make some difficult choices.
You tilt your head one way, the Government looks left wing. You tilt it the other, it looks right wing. The workers rights provisions are good, old fashioned egalitarianism – a commitment to trade unionism, state intervention and assistance for the vulnerable. The decision to cut welfare is the sort of thing George Osborne would have done in 2010. What kind of government manages to combine these contradictory elements?
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Read MoreThe seeming lack of political consistency partly explains the Government’s unpopularity. One of the old truisms of tax policy is that the losers scream loudest. The same is true in politics. People tend to be more aggrieved by what they don’t like than they are pleased by what they do.
So you will hear left-wingers say the Labour Government is no different to the Tories on welfare, without recognising that no Tory government would ever pursue the Employment Rights Bill. And you will hear right-wingers complain about increased trade union power without recognising Reeves’s fiscal conservatism. Political people are generally a negative bunch and they’re far more likely to notice the things they hate than the things they love.
On cultural issues, like immigration, the Government is genuinely confused – torn between more “Blue Labour” conservative elements that want to replicate Reform’s agenda and more liberal centre-left elements who want to maintain some sense of progressive principle. This is what explains the morally disastrous recent move to ban refugees from claiming citizenship – Labour’s muddled moral incomprehension and electoral anxiety on culture war topics.
But on economic issues, the Government is actually far less confused than it seems to be. What we’re witnessing here is not really about ideology at all, but about what happens to political principles when they come face to face with necessity.
In each case, Labour starts from a position of soft-left principles and then adapts it to the restraints it faces. Sometimes it sticks to its ambitions, sometimes it waters them down, and sometimes it buckles.
Reeves’s fiscal rules are an example of the latter option. She was genuinely alarmed by what happened after Liz Truss’s mini-Budget. She is intent on preventing the same thing happening to her. The wobbly behaviour of the bond markets in recent months will have increased that impression.
Why does she respond by targeting welfare? For the same reason the Government recently targeted international development. Because it is unpopular and expensive. There is no more to it than that. Faced with a series of strict limitations, it has adopted the least painful choice. Progressives won’t like it. I don’t like it. But the political reasoning is obvious.
On any given day, the Government’s ideological position seems completely insane, a kind of Frankenstein’s monster of left- and right-wing body parts. This leads people to conclude that it must be in line with whoever their enemy is, or that it simply has no true political beliefs at all. The reality is more prosaic.
It’s a basic centre-left government that faces severe restraints on what it can do. Sometimes it is able to push past those restraints. Sometimes it is not.
It is a frustrating state of affairs for voters, political obsessives and the Government itself. But, for now at least, it’s the state of affairs we’re in.
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