Labour spares the rich and hammers the poor

The global crisis reveals Keir Starmer’s warped priorities

On Wednesday our new government will land the third of three punches on the poor. Rachel Reeves, the Chancellor of the Exchequer, will announce yet more cuts to public sector departments that whose budgets been shredded for 14 years.

Before that, her colleagues announced £5 billion in cuts to the benefits of people with disabilities.

And before that, overseas aid took a hit, as the government reduced it to a mere 0.3% of GDP. Donald Trump was slashing US aid to the poorest people on earth at just that moment. And rather than step up to fill the gap, the British government decided to join him

If Britain had a Conservative government, we would just roll our eyes. But this is a Labour government, and its response to the crisis brought by the UK’s stagnant economy, and the sudden need to increase defence spending to cope with Trump and Putin’s new Axis, is genuinely shocking.

There’s a famous cartoon from the the start of the 1930s – well, famous to historians anyway. Labour used it to attack the Tory-dominated National Government of the day. Headlined “Equality of Sacrifice” it showed rich and poor men stepping down a rung on a ladder, with the poor man going underwater.

Almost 100 years on, Labour in power is worse than that. There’s no equality of sacrifice. Indeed, it is not demanding that the wealthy make any sacrifices at all.

“The language of priorities is the religion of socialism,” said Nye Bevan. The priority for his Labour successors is cutting spending for the poorest while refusing to increase taxes on the richest. Nor will it challenge the stagnation the right inflicted on the UK by taking us back into the EU’s Customs Union and Single Market.

Stop right there, I hear the government’s spokespeople say, we cannot break our manifesto promises.

But while Labour is a model of rectitude in its treatment of the rich and appeasement of anti-European sentiment, it happily breaks its manifesto promises on overseas aid and child poverty.

Some manifesto promises are more equal than others, it appears.

I have abandoned the absolutism of my youth. I now understand that middle-class radicals do not know and do not want to know about the improvements centre-left governments make to the lives of those who do not enjoy the privileges of a bourgeois upbringing. I now believe in all the old cliches: that the best should not be the enemy of the good, and that half a loaf is better than none.

But, come on, where is Starmer’s loaf? There’s nothing there. Not even crumbs.

Ed Balls seemed to sum it up when he said.

“Cutting the benefits of the most vulnerable in our society who can’t work, to pay for [defence]…It’s not a Labour thing to do. It’s not what they’re for.”

Indeed not. Many who are not on the far left and who wished Starmer and Reeves well are shocked by their behaviour. It’s as if we never knew them.

I had a long interview with the great social democrat author Polly Toynbee on the Lowdon podcast. (It’s on Apple, Spotify and every other podcast app.)

I want to try something new with this interview, after I have encouraged you to listen to it. Rather than just provide an edited transcript, I will add explanations and links in the hope of making the argument more coherent. Let’s see if it works.

Polly Toynbee agreed that whatever else this government is at the moment., it is not a Labour government.

It has been trapped by Treasury orthodoxy. Rachel Reeves is a strong Keynesian – or she was before the Treasury got its claws into her. She used to believe that you don’t cut in a crisis. “You don’t keep digging a hole. You invest.”

But the Treasury can now hold up the awful example of Liz Truss to all who doubt it. She defied Treasury orthodoxy with her unfunded tax cuts for the wealthy and saw the bond markets punish the UK.

Her disastrous premiership will haunt us for years. Maybe the markets will turn on Trump’s US if he carries on with his tariffs, and threatens the independence of the Federal Reserve.

For the time being, however, the only advanced country that has seen the markets almost crash the economy is the UK. As Polly said, to avoid that trauma, a Labour government is bringing back austerity, “which is pretty shocking to all the Labour supporters who've waited all this time for something better.”

Indeed it is.

Yet here is the problem for Labour. The bond markets just want debt kept under control, and that could be done as easily by raising taxes as by cutting spending. But Labour won’t ask the rich and middle class to pay more – so the poor will suffer.

Toynbee is sure that Labour in turn will pay a political price for its cowardice, and explains how.