Sir Keir Starmer will feel Downing Street approaching after routing the Scottish National Party in the Rutherglen by-election on Friday, reaching a swing of 20 percentage points.
The Labor leader will take a stand at the party conference in Liverpool this week, aiming to present himself as a credible alternative prime minister.
However, even if Starmer manages to finish in 10th place, he will face the same problem as Rishi Sunak: a lack of money. For a party that's typically associated with higher expenses, this could be a problem.
«If you want gifts, you'll have to pay for takeout,» says Carl Emmerson, the party's deputy director. Institute for Financial Studies.
Any big campaign promises must be accompanied by equally big spending cuts. Starmer's challenge is how to present a unique message to voters and convince them that such financial constraints do not mean Labor and the Tories are «two cheeks of the same thing», as Chris Lowe of the Scottish National Party told Parliament last month.
The dire state of public finances and Labour's self-imposed budget rules make this a difficult task.
The biggest problem is the mountain of public debt, which almost dwarfs the size of the entire economy in present time. 98.8% of GDP.
Like current chancellor Jeremy Hunt, shadow chancellor Rachel Reeves has committed to reducing the debt-to-GDP ratio within five years.
“This It's really quite difficult at the moment to get debt down because we have a lot of debt, it's more expensive to finance and we don't have much growth prospects,” says Emmerson.
“Whoever becomes Chancellor after the election, we will have to fight this.”
Currently, Hunt is just a hair's breadth away from achieving that goal, even as taxes on workers and businesses are at their highest levels since World War II. The Chancellor has given himself just £6.5 billion to achieve his financial targets — the smallest reserve of any chancellor since at least 2010.
This means Reeves has little room to do things differently if she becomes chancellor: there is no available money and it is unclear whether the country could bear higher overall taxes.
“The obvious way to give yourself room to maneuver is to it's to announce a more painful policy of paying for what they want to do,” says Emmerson.
Labour has so far announced three proposals to raise taxes: taxing untaxed income. houses, the end of tax breaks for private schools and the reversal of Hunt's decision to remove lifetime benefit caps on pensions.
«These three tax hikes are not huge, and therefore there will be limited spending increases that can be gained from them,» says Emmerson.
The policies alone will not generate enough revenue to make the deep spending cuts needed to deliver on Labour's key commitments. The party promised to improve the NHS, make streets safer and improve education.
If the money to finance these policies does not come from taxation, borrowing may be another option. However, the Labor Party has said it will only borrow to finance infrastructure spending. This means that Starmer and Reeves could borrow to finance the construction of schools and hospitals, but not to pay the salaries of the teachers and doctors who staff them.
Even here the options are limited. Government bonds are rising. The cost of borrowing over 30 years is now the highest for the UK since 1998.
Starmer has been forced to adapt to a worsening macroeconomic picture and has already eased Labour's flagship policy of borrowing £28 billion a year for investment into a net zero income, which, as originally stated, would consist entirely of “new” money and would take effect immediately.< /p>
Instead, the party will borrow just £20 billion to invest in net zero income and do so gradually.
“I didn't foresee what the Tories would do to the economy, maybe it did. stupid of me,” Reeves said when she announced the delay.
In a bid to help Labor meet its target of reducing the debt-to-GDP ratio within five years, Labor is also planning to use some accounting tricks.
They plan to take into account not just liabilities but also public sector assets such as schools, hospitals and roads when calculating the country's debt.
Labour says this will remove incentives to sell off assets to «massage». government debt is reduced» by raising cash and paying down debt.
However, Labour's proposals may themselves provide some massage, making the net debt figure look lower.
The IFS warns that while the proposal will discourage some forms of bad behavior, it should not replace traditional measures such as debt, interest and borrowing.
In other words, if the government believes its assets have become more valuable, this should not be used as an excuse to increase borrowing. A debt is a debt and will have to be repaid one way or another.
The only sustainable way to pay for gifts will be to get the economy growing again.
«I think we'll see a real emphasis on the economy and stability, and a much more forward-looking, grown-up approach to politics,» says a Labor source.
With little scope for gift-giving, Starmer will seek to portray the Labor Party as having a steady hand on the steering wheel during the financial storm. In fact, Labour's budget straitjacket may even prove to be a vote-winner in some quarters.
“People who voted Conservative in 2019 aren't scared by the prospect of a Labor government and don't think things will change that much,” says Josh Simons. head of the independent think tank Labor Together.
“In 1997, the scale of our Labor victory had as much to do with Tory voters staying at home as it did with people turning out to vote for Labor and the Liberal Democrats.”
”I would «The importance of a Labor government's significant risk reduction has not been underestimated.»
Polls show Labor 21 percentage points ahead of the Conservatives, and Rishi Sunak has failed to make the expected gains after the Tory conference.
Labour also appears to be gaining traction in traditional business stronghold of conservatives.
“I think the annual conference will be a very clear representation of how connected Labor in this country is with the people who generate the money. “says a party source.
“Every business leader we speak to is clear that they want some certainty and some stability. What really irritates them is that they make plans and evaluate those plans based on a set of policies, and then those policies change.”
However, elections are not won by supporting businesses. With mortgage shock on millions of families and little to offer in support, Starmer will have to hope his vision for the country resonates.
Labor Together's Simons says: «I think Labor is really trying to appeal to its the kind of emotional possibility of hope and stability and the idea that families can start going out on Friday for a pint, going to the cinema on Sunday with the kids — these tiny things that so many millions of people in this country can't do.»
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