THE Labour Party and the wider Labour movement had waited 15 years for this moment. Last Tuesday, a Labour Prime Minister took to his feet to address his own conference.

Over those 15 years, we had seen the most protracted period of austerity in the country’s history, an independence referendum here in Scotland, Brexit, Covid and a procession of UK Tory Prime Ministers overseeing a slow, painful, and ultimately farcical, fall from power.

Sir Keir Starmer took to the stage bolstered by a massive parliamentary majority and having routed the SNP here in Scotland.

However, less encouragingly for him, both his and Labour’s popularity ratings have fallen substantially since the election.

To some extent this is unsurprising. There was a definite sense in July of the vote being less an enthusiastic endorsement of Labour than it was a wholesale rejection of the Tories.

There has been no Blair bounce. In 1997, both the PM and Labour gained in popularity in the months following that election. So far, the opposite is true for Starmer and Labour.

Read more

Added to this, both the short and medium-term economic outlook looks bleak.

Labour’s key message, that it has inherited a disaster necessitating hard choices, has no doubt contributed to its fall in popularity.

The strategy has been to maximise the gloom and present policies as hard choices in the hope that “hard” will translate in the ears of the electorate as “right”.

This hasn’t really worked.

Hence, perhaps, the decision taken in the speech last week, to strike a more positive tone. The Prime Minister said there was light at the end of the tunnel.

He reminded us that legislation is already on the table to begin the re-nationalisation of the railway; this will swiftly be followed by returning rights to workers stolen from them by the Tories; the creation of a National Wealth Fund; and that GB Energy, to be based in Aberdeen, will begin the long-awaited job of investing in the new green jobs our climate and our workers desperately need.

These represent important and meaningful change, and the conference responded with appropriate enthusiasm.

To even more rapturous applause, Starmer proclaimed that there would be no return to Tory austerity.

Now it may be accidental or not that the Prime Minister prefaced austerity with “Tory” rather than saying no return to austerity full stop.

Of course, for the Tories, austerity was essentially a pretext for an ideological attack on state provision.

No-one would accuse Starmer of this.

Yet, by its simplest definition, austerity is the use of fiscal policy to reduce debt and that is what Labour currently plans to do.

The problem with austerity as argued from Keynes, through Nobel prize winner Joseph Stiglitz, to top economist Mariana Mazzucato, and a thousand others besides, is that reductions in public expenditure and investment at the wrong time in the economic cycle inhibit growth thereby increasing the size of the debt relative to GDP.

The important thing about debt is not its size, but the future capacity to repay it.

As things stand, though things could change, the Chancellor intends to fill the black hole through a combination of revenue savings, of which the Winter Fuel allowance cut is the most cited and least popular, as well as cancelling capital investment programmes in future years.

We are told these are hard and unpopular choices, but that there is no alternative if we are to restore trust, stabilise the economy and, in due course, secure the private investment that will lead to growth, in turn obviating the need for tax increases.

Prime Minister Sir Keir Starmer has seen Labour's popularity drop since the electionPrime Minister Sir Keir Starmer has seen Labour's popularity drop since the election (Image: James Manning)

Two years ago, Liz Truss spooked the markets and trashed the economy by threatening massive debt expansion in order to shower tax cuts on billionaires.

However, this categorically does not mean that all increased government borrowing is wrong or would be viewed by the markets in the same way.

Borrowing big to invest as part of a modern industrial strategy is an entirely mainstream and orthodox alternative to the current plans.

There is a desperate need to start (we should have started at least a decade ago) to invest heavily in the technologies and infrastructure that will deliver the well paid, unionised jobs we need to replace those which are being lost hand over fist from Port Talbot to Grangemouth.

Compared to the EU and US, our current programmes are miniscule. The cost to our economy of government inaction is far greater than the cost of action.

In this sense, GB Energy has the potential to be a bright spot, providing public ownership, equity stakes and conditionalities on profit re-investment and quality job creation are part of its remit.

The British Jobs Bonus could and must provide guaranteed quality jobs and union representation. However, even with this welcome policy initiative, UK public and private investment is set to continue to lag nearly all comparator countries.

Meanwhile investment in public services should come through a wealth Tax. This has been supported by Labour Conference, not to mention SNP conference here.

It seems that working people know what is needed, but, as of yet, their respective leaderships don’t.

A modest wealth tax on the richest 140,000 individuals could raise £10.4 billion for the public coffers.

There is simply no need to swing the axe of public spending cuts onto working people’s backs.

In addition, the UK Government could make moves to equalise capital gains and income tax while reducing inheritance tax rates reliefs.

It’s also high time that the UK and devolved governments work together to implement a property valuation across the nations to end the outdated and regressive council tax model.

There was a chink of light last week as rumours circulated that the concept of borrowing to invest and the potential for changing Treasury borrowing rules to facilitate this are being actively considered.

If this were partnered with the progressive tax measures mentioned earlier, the black hole would disappear, and the Prime Minister’s promised “light at the end of the tunnel” would feel a bit closer.

Whether such choices are easier or harder. I cannot say.

Neither can I guarantee it would make the Labour leader any more popular. At least, though, they would be choices that it would be worth being unpopular for.

Roz Foyer is General Secretary of the STUC