Bevin, Crosland or Blair? Labour’s rival political economies

At the Labour Party’s annual conference in Liverpool last month, the mood was one of anticipation laced with nerves. Unsettled by the scandals and dysfunction at No. 10, attendees nonetheless recognised that, with Rachel Reeves’s first budget to be delivered at the end of this month, the broad contours of the new government’s economic strategy – likely the key determinant of its ultimate political success or failure – were yet to be determined. The result was something of a phoney war, in which politicians, activists, think tanks, and interest groups all worked hard to promote their own version of what the economic policy basis of Labour’s “decade of national renewal” should look like. 

Amidst this jockeying it was possible to discern – in ministerial speeches, in panel events at the conference fringe, and in wider informal discussions – three emerging economic outlooks within the mainstream of Starmer’s Labour Party, each extending vertically from the grassroots through the Parliamentary Labour Party and the party’s staff class and into the government itself. Their exact nature is still protean and their organisational potential unrealised. Yet their fates will profoundly shape the politics of this government over the medium term.

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The first is what we might call “neo-Bevinism”. This tendency is currently most reflected in some (though not all) government pronouncements, supported by more moderate trade unions such as the GMB, and theorised by think tanks like Labour Together and the IPPR. Heavily influenced by Bidenomics in the US, this agenda centres on boosting growth and economic security through supply-side intervention and active industrial strategy. Core priorities for neo-Bevinites include increasing capital investment in infrastructure and the green transition through the National Wealth Fund and the publicly-owned Great British Energy. The importance of the latter illustrates the significance of the climate emergency to this group, who see aggressive decarbonisation as both an ecological imperative and an opportunity for economic development. 

As their interest in publicly-owned bodies and green investments attest, neo-Bevinities do not accept the assumptions of the 1990s and 2000s about the route to higher economic growth. Such sentiments were directly expressed by the new Business Secretary, Jonathan Reynolds, who told a GMB fringe meeting that this Labour government differs not just from recent Conservative governments, but the last Labour governments too. Nonetheless, although vaguely statist in instinct, neo-Bevinites seem willing to embrace a contextually dependent mixture of regulation, subsidy, direct state intervention, and the “derisking” of private investment, alongside targeted instances of deregulation – with liberalising reforms to the planning system as a key example of the latter. 

It might seem strange to invoke Ernest Bevin, the powerful interwar trade unionist known for his direction of “manpower” (sic) during the Second World War, as well as for his postwar role in founding NATO as Attlee’s Foreign Secretary, to characterise this agenda. Arguably, the more obvious resonances are with Harold Wilson’s 1960s efforts boost economic growth through corporatist “national planning”. However, the reasons for Bevin are twofold: first, a central feature of thecurrent neo-Bevinite prospectus is an ambitious re-regulatory reform of the labour market – the government’s recently-published “New Deal for Working People” – which aims to bolster employment rights and strengthen the role of trade unions within the economy. Second, for many of its leading advocates, this economic agenda is tied to a pessimistic and hawkish view on foreign policy, obsessed with the strategic threats posed by Russia and China. “Securonomics”, Rachel Reeves’ term popularised by Labour Together, neatly encapsulates this combination. 

Accordingly, at the GMB fringe, Reynolds echoed Reeves’ pre-election Mais Lecture by declaring that globalisation as we knew it is “dead”: a fractured and “dangerous world” is taking its place. Echoing the rhetoric of the Biden Administration in the States, Reynolds argued that the new government needed to “friendshore” production and ensure a resilient industrial “base”, while reducing energy dependence on potentially hostile foreign powers. On the same panel, GMB’s Gary Smith was blunter still. Declaring that the “curtain is coming down on neoliberalism”, Smith began his argument for bolstering domestic manufacturing capacity by talking about nuclear submarines. Not every supporter of an active industrial strategy is likely to be comfortable with these resonances – especially in the progressive think tank world – but so far they seem to be keeping any reservations private.

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Amongst Labour’s pro-Starmer tendencies, however, support for this hawkish and statist supply-side approach is far from universal. In critical murmurings, it is possible to detect two rival strains of thought: tax-and-spend “neo-Croslandite” social democrats, and pro-business “neo-Blairite” techno-optimists.  

If the neo-Bevinite agenda in some ways quietly resuscitates the concept of “predistribution” developed under the Ed Miliband leadership of 2010-2015, Labour’s neo-Croslandites would like to see a more assertive approach to traditional social democratic redistribution. Following the arguments of Anthony Crosland’s 1956 classic The Future of Socialism, which urged socialists to focus less on the structure of the economy than on reducing inequalities, today’s neo-Croslandites are less interested in supply-side reform of the market economy than in using its proceeds for egalitarian ends, seeing fiscal redistribution through the welfare state as Labour’s central animating purpose. In practice, they primarily want to see more anti-poverty measures (such as the repeal of the two-child benefit cap), and an influx of cash into Britain’s crumbling public services. Reportedly, a larger parliamentary rebellion on the cap was averted only with signals that it would be repealed in future. The later outcry over the means testing of winter fuel payments has also made MPs jumpy.

Without additional spending on public services and welfare, the neo-Bevinite aspects of the government’s current agenda leave many neo-Croslandites cold. Given the strained fiscal context, neo-Croslandites are conscious that such spending would require the government taking a more aggressive approach to taxation. They are liable to express disappointment at the extreme caution of Labour’s pre-election tax pledges, and to express hope that Reeves may ultimately either ditch or find some way around them. Some also make the bolder argument, previously made by disappointed critics of New Labour (such as Peter Hyman – once Blair’s speechwriter, and more recently a pre-election senior adviser to Starmer), that social democratic governments need to find the courage to openly make the case for redistribution, and to win the argument for tax rises – above all on various undertaxed forms of wealth. 

There are potential overlaps between these two tendencies. Many neo-Bevinities could gladly sign up to higher taxes, especially if they unlocked possibilities for greater capital investment. Few are unaware, furthermore, of the widespread view that Labour must make tangible improvements to the NHS and other public services to stand a chance of re-election. Public sector spending can also be presented as a supply-side intervention in itself: sicker and more poorly-educated workforces do not make a growing economy make. Moreover, shaped by the welfarist legacies of both Wilson and New Labour, and the left’s longstanding interest in social policy, neo-Croslandism has arguably become the default attitude of the average Labour member, activist or MP.

Nonetheless, there are obvious pressure points too. The clearest is the extent to which true believer neo-Bevinites would prioritise capital investment (infrastructure, green investments, buildings) over public consumption (public service pay, welfare payments). If political or economic limits on taxing private consumption and wealth are reached sooner than both neo-Bevinites and neo-Croslandites would ideally wish, their differences could become starkly apparent.

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Whereas neo-Croslandites worry about the neo-Bevinite lack of focus on distributional questions, neo-Blairites share the neo-Bevinite emphasis on growth and the supply side. Like them, neo-Blairites want the state to pursue an active industrial strategy to boost growth and decarbonisation, and generally support a bold approach to planning reform. However, in an echo of Blairite optimism about the progressive potential of free markets and globalisation in the 1990s, today’s neo-Blairites (represented institutionally by the lavishly-funded Tony Blair Institute for Global Change, and in Cabinet by ministers like Peter Kyle and Darren Jones) follow Blair himself in taking an optimistic view of the “technological revolution” represented by recent developments in machine learning (“Artificial Intelligence”). For neo-Blairites, AI is the key to both unlocking growth and positively transforming public services. 

This neo-Blairite techno-optimism has wider implications. Firstly, neo-Blairites are heavily oriented towards business, seeing private enterprise as the primary source of economic and technological innovation. By contrast, they are generally more sceptical about the role of the state, and so push for a more hands-off approach to the private sector. Secondly, attracted by the lure of foreign technology firms and sympathetic to internationalised businesses, neo-Blairites often downplay the geopolitical dimension of industrial strategy, preferring to emphasise the opportunities presented by openness to foreign companies, technology, and capital. 

In both aspects, one can see the potential for clashes with neo-Bevinites. In their cosiness with business leaders and penchant for potentially disruptive public service reform, one can equally see sources of conflict with neo-Croslandites. An illustrative example might be debates over the last government’s decision to award a lucrative NHS data contract to Palantir, an American technology firm founded by the far-right entrepreneur Peter Thiel – a policy choice inimical to the instincts of both neo-Croslandites and neo-Bevinites, but with which neo-Blairites are largely comfortable. By contrast, neo-Blairites often criticise aspects of the New Deal for Working People, which they see as undermining the labour market “flexibility” valued by many businesses. 

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Despite such clear points of tension, these emerging outlooks are not always in direct conflict. Their possible compatibility was nowhere more apparent than in Rachel Reeves’ conference speech, which contained something for everyone: warnings of the “age of insecurity” and a firm insistence on an increased role for the state, a paean to the New Deal for Working People, and promises of greater capital investment, came alongside public service pay deals, and a pledge that Labour is “open for business”. In favourable circumstances, a bold supply-side agenda could be combined with redistribution and investment in public services, and with an embrace of new technologies, and a relatively collaborative treatment of business.

However, the essential condition for such a synthesis would be economic growth. With growth, neo-Blairite concerns about the impact of labour market reforms will lessen, and neo-Croslandite spending demands will be easier to satisfy. By contrast, if growth proves difficult to achieve, leaving public finances strained, the trade-offs between different approaches will become sharper, and the language of priorities will again be the religion of socialism. In such circumstances, these three rival economic outlooks may well crystallise into competing  groupings or sects within both the Cabinet and the PLP, and begin clashing openly over policy.

David Klemperer is finishing a PhD in history at Queen Mary, University of London and is a contributing editor of Renewal.

Colm Murphy is a lecturer in politics at Queen Mary, University of London and a contributing editor of Renewal.