A Labour government is struggling for legitimacy following its support for a brutal invasion in the Middle East. It is wishing into existence a UK ‘Silicon Valley’ in Oxford and Cambridge, dogged by infighting, trying to get a controversial Heathrow expansion over the line, and leaning into right-wing thinktanks’ demands for planning liberalisation. If Timbaland releases a number one hit soon, we can get the full 2006 experience again.
In the eyes of Rachel Reeves, reviving these long-standing projects is the unfinished business of the state, whose role it is to remove the ‘barriers’ faced by the ‘businesses, investors and entrepreneurs who drive economic growth’. According to her recent speech, it is only really the government and businesses who can do anything useful; ‘working people’ are the recipients of the fruits of the government-business ‘partnership’. As soon as those people have their own ideas about what might be good for their locality or the country, they become ‘blockers’.
The long-standing projects in question are public-private partnerships tasked with delivering infrastructure and housing. The last Labour government instituted these technocratic structures; the Coalition rolled them back. The difference this time is that Labour is making clear these institutions should now have minimal regard for ideas like ‘sustainable development’ or ‘environmental regulation’. The focus is on moving the growth figure up: from that, everything else is supposed to flow. Evidently, for Reeves et al., the problem with Tony Blair’s government was that it was not Thatcherite enough. They’ve even replaced the head of the notoriously socialist Competition and Markets Authority with a former Amazon executive.
There is no doubt that the abandonment of any sort of strategic planning for the best part of 15 years has hampered economic development in the UK, both in wealthy areas like Oxford and Cambridge and in much poorer regions. Devolution without appropriate funding and taxation powers has made this problem worse. Even when plans are made, there is a struggle to execute them without capturing the support of Westminster or competing for pots of its funding.
The real problem Labour faced when last in office, though, was that institutions like ‘Regional Development Agencies’ suffered from a democratic deficit in terms of accountability. They tended to be led by developers rather than by the public. Labour’s proposals to re-organise local government risk going down the same route, though this time without any of the handwringing about its effect on our national democratic health.
More worrying, however, is Reeves and Labour’s continued misidentification of the main challenges for Britain to overcome. This stems from their belief in business as the primary agents of growth, and in turn their method: asking CEOs what they want and then trying to do it. This is how we arrived at planning de-regulation as the cornerstone of Labour’s Growth Plan, a focus Reeves explicitly says comes from ‘Lloyds, Blackrock and Phoenix’. Labour’s leaders either don’t realise that the interests of Blackrock may not be neatly aligned with the interests of ‘working people’, or they don’t care.
Far from making a strong case, Reeves’ speech showed up the problems with Labour’s plans. Reves outlined the need to ‘rapidly streamline the process for determining [planning] applications’ and ‘to fundamentally reform our approach to environmental regulation’. But it is by no means clear that the UK is particularly slow in its infrastructure development relative to other wealthy countries, whereas it is very clear that the UK suffers from a lack of public investment and has never recovered from the levels of private investment lost through leaving the EU.
Reeves’ examples of planning and infrastructure failure — specifically, the ‘£100 million bat tunnel built for HS2’ and the lack of a new runway at Heathrow — demonstrate further weaknesses in Labour’s thinking. HS2 was hardly subject to the planning system — it was determined through Parliament. While Heathrow was subject to a lengthy inquiry back in the 2000s, the runway remained theoretical because political leaders were limited by significant public division and commitments under the 2015 Paris Agreement. After all that had played out, Heathrow Airport Ltd decided to pause the plans anyway, since passenger numbers dropped following the pandemic.
These examples are indicative, however, of what Labour could actually be doing — rebuilding state capacity after decades of austerity and privatisation. HS2 was not a failure because it included a tunnel or because it attempted to protect animal life; it failed because rail privatisation stripped the UK of the skills and public capacity to develop large-scale projects. Planning delays, likewise, are the product of austerity and the resulting privatisation and outsourcing of local government functions.
Growth for Who?
The issue isn’t that Labour’s Growth Plan won’t achieve anything. The fact that the party is actively interested in seeing new infrastructure like train lines and onshore wind developed marks a significant improvement from the last government. Increased public capital investment, while insufficient to the scale of what is required, should lead to tangible changes in people’s everyday lives. It is increasingly clear, though, that Labour’s plan is so heavily weighted towards what CEOs tell them over breakfast that the gains from development and growth will be skewed heavily to the investor class. As we saw with the last government’s PFI contracts, the organisation of finance and ownership for major projects has long-term implications, and is difficult to unpick once instituted.
The recycling of these old ideas — growth zones, the Oxford-Cambridge corridor, Heathrow expansion — reflects a government lacking new ideas and, most importantly, too scared to challenge the powerful individuals who have profited through the stagnation. The housebuilders, rentiers, and vulture capitalists who did very well out of the downturn are now being entrusted with ‘national renewal’. The state has been relegated to the role of policing public dissent to projects that threaten ecology or make questionable material improvements to most people’s lives.
The reality is that Labour’s wider agenda does not support the broad-based growth that would truly produce those improvements. Some incremental improvements to working conditions have been proposed, but trade unions remain limited by decades of legislation, and new projects do not come with guarantees for workers in the way they do for investors. Arbitrary cuts to migration, which Reeves touted in her speech, pose challenges for sectors where there are already labour shortages, including construction. The education secretary is asleep at the wheel while universities lay off workers across the UK’s smaller cities and towns; further education remains in a state of crisis. Welfare cuts will only create further impoverishment for those at the sharp end of decades of government failure.
Labour have essentially ducked the challenge of rebuilding state capacity in all these areas, opting instead for deregulatory policies and keeping the public in line with the preferred investment opportunities of the investor class — investments like the mass construction of AI data centres which may be obsolete before they are even built. Absent any real capacity for public planning, economic as well as spatial, Labour’s so-called industrial strategy is led by grasping whatever shiny new project is presented to them.
A serious rebuilding programme would scare those who have the Chancellor’s ear. It would mean pushing capital out of sectors like water, where it has proved to be less than useless, and would likely require redistributive taxation targeting the wealth accumulated over the last few decades to put it to public use. Labour’s approach might add a percentage point or two to the annual GDP figure, but investor-first growth is not going to deliver on the real material outcomes needed, like affordable rents or cheaper electricity bills. This is especially true when it continues to be led by the cold dead hand of the Treasury towards investing in already wealth areas. The result will be further extraction from households struggling to survive and unable to see a better future, creating fertile ground for a resurgent political right.