Starmer and Reeves are narrating a new economy – now all they have to do is deliver it

Kate Alexander-Shaw

If there has been one perennial criticism of Keir Starmer’s leadership it is his lack of a clear political narrative. The Labour leader has seemed to be eternally playing defence, criticising the Conservatives but failing to offer a left=wing vision around which frustrated activists could rally. This year’s Labour conference marked a change of gear in that respect. Starmer’s speech in Liverpool was short on policy but long on atmospherics, describing a country in disrepair after thirteen years of Conservative governments disinterested in, or detached from, the struggles of ordinary people. Labour made few new policy promises this week, but instead set out a stall in terms of hope and renewal. Both Starmer and the shadow Chancellor Rachel Reeves committed to fight the coming election on the economy, and on economic growth, but these were not economic policy speeches; their content was less manifesto than mood.

However, when it comes to economic policy, the mood itself has a job to do. Starmer and Reeves are laying the groundwork for their first budgets, using keynote speeches to gradually shape public and market expectations of what a new government might do, and whether it can be trusted. This is not just a placeholder for policy announcements that are being held back; rhetorical groundwork can actively make space for policy, because economic policy is fundamentally different from other policy domains. Whereas NHS waiting lists, or exam results do not change because someone makes a speech about them, the economy can and does respond to rhetoric. Economic behaviour is affected by sentiment and expectations, which in turn can be affected by political messaging, so when it comes to economic policy, words are deeds. As Nobel laureates George Akerlof and Robert Shiller have said, when economic rhetoric moves markets “the stories no longer merely explain the facts; they are the facts”.

This does not mean that politicians have it all their own way; the Truss mini-budget showed that financial markets structured on the status quo are apt to punish radicals on the right as well as the left, and that in economic policy, sudden movements are risky. Truss’ mini-budget was flawed in substance, but its faults were amplified by the speed and flourish with which it was announced. Starmer and Reeves are betting that careful use of rhetoric can pave the way to policy change by both trailing policies and softening up reaction to them in advance.

So what kind of economy are Reeves and Starmer trying to talk into being? Several key themes can be discerned. The first, as always is competence, contrasting the haplessness of the Truss/Kwarteng minibudget with Reeves’ background as a Bank of England economist. Reeves’ establishment credentials were reinforced by the endorsement of former Bank Governor Mark Carney, whose swing behind Reeves helps Labour position themselves within the mainstream of international economic opinion. It is a mark of how far things have come since 2010 that the endorsement of economists is once again seen as an asset; apparently we are no longer sick of experts.

Second, Labour are consolidating a message in which the role of the state is reimagined, and more interventionist economic policy is positioned as the sensible centre-ground. Labour have got comfortable with industrial policy again, particularly where it can secure Britain a share of the action around decarbonisation and the green transition. Starmer’s criticism of the “stand-aside state” is a substantive departure from Blairism’s unwillingness to intervene on the demand side of the economy. Reeves’ “securonomics” locates economic stability in both sound money and sound public services and infrastructure, making room for the latter to be prioritised again.

And here again, rhetoric acts as a buttress against negative reactions in the press and the markets. One of the hallmarks of Corbynism was to take fairly mainstream policies and call them radical, a rhetorical indulgence that spoke to (some) party members but was off-putting to many voters. Starmer is adopting the opposite strategy, trailing potentially large and controversial changes (to planning, industrial policy, employment law) but framing them as common sense, using rhetoric to soften the party’s radicalism and so to advance it.

Third, this week’s speeches projected a kind of determined optimism that makes for good pre-election messaging, conjuring a party that is ready and eager to get on with the hard work of government. Reeves’ speech in particular had a sense of there being plenty of low-hanging fruit for an incoming government to pick, from restricting ministers’ use of private jets to clawing back money misspent during the pandemic. Just as George Osborne in 2013 could ease into his austerity programme by cutting the more obviously inefficient parts of the state, Reeves has identified some possible early wins and is using them to construct a larger story about restoring good government.

But in economic policy narratives, what is omitted can be just as important as what is included. Gillian Tett’s work on the last financial crisis drew attention to what anthropologists call “social silences” – the things that are not said, and eventually not even thought. Such silences help preserve dominant structures by quieting certain challenging ideas or facts, but in doing so they create reserves of political and economic risk that can come back to haunt us. The key silence in Starmer and Reeves’ rhetoric is redistribution, and the extent to which tackling Britain’s ills must mean taking from some people, industries or regions, to give to others. While no opposition party would prepare for an election by publicly identifying the losers of their policy trade-offs, it will be vital that Labour do so behind the scenes, and consider how such losses will be handled. Labour cannot count on a swift return of growth to blunt distributional trade-offs for them; having identified inequality as a barrier to a thriving economy they must get serious about how to change it. Cutting waste in public spending is never going to generate the kind of money necessary to make inroads into structural inequality; only redistributive tax and spending can do that.

Political communication is always strategic, but when it generates a social silence that extends into party thinking, parties’ economic narratives can become a liability. Labour have finally begun the process of expressing an economic vision that calls for change, and makes the pursuit of change sound like common sense. Delivering on that vision, however, will mean making redistributive choices. At some point, probably after the election, Labour’s rhetorical groundwork will have to turn from projecting optimism to confronting and selling those trade-offs.

Kate Alexander-Shaw is a Research Officer at the London School of Economics and Political Science