A respectful question for Labour: do you have real change? | Economy

The election campaign mantra of “change, change, change” reminded me of those unlucky people who come up to you on the street and ask, “Got any change, boss?”

Until this month’s positive poll results, Labour had been unlucky. Since 2010, when the new Chancellor of the Exchequer, George Osborne, capitalised on the quip of the outgoing Labour chief secretary, Liam Byrne, that “there’s no money left”, the party has had to fight for power.

He was A joke. There was a tradition in the Treasury that such greetings were reserved for the next government, but there was no question of making political capital out of them. Until Chancellor Osborne and the coalition chief secretary David Laws came along, finding his predecessor’s joke in his inbox.

In 1964, the outgoing Conservative Chancellor, Reginald Maudling, joked to the incoming Chancellor, James Callaghan, “Sorry to leave things in such a mess, you old cock”, but Callaghan made no fuss and the story only emerged years later.

In 2010, money was plentiful, although the aftermath of the 2008 financial crisis did not make things any easier. But Osborne, quite misleadingly, blamed the crisis on Labour’s alleged overspending, when – as the senior Treasury official Nicholas (now Lord) Macpherson pointed out – “this was a banking crisis, pure and simple.”

Osborne used the fantasy that there was no more money to introduce austerity, the damaging effects of which were one of the factors that contributed to the protest vote in the 2016 Brexit referendum – and, eight years later, to the resounding defeat of the party that had foolishly called it.

But back to the mantra of total change. As much as I try to show goodwill towards Starmer and his iron chancellor, Rachel Reeves, when I see their strict adherence to the fiscal rules and the public spending plans of the previous government, I don’t see much sign of change, change, change.

Frankly, I think a Labour government with a huge majority and an enviable position of power is making a huge mistake in not capitalising on its freedom and the clear goodwill that has been shown to it by the majority of voters, as well as business and finance.

Reeves spends as much time reminding us that she worked at the Bank of England as Starmer does telling us that his father was a toolmaker. Andy Haldane, the Bank’s former chief economist and now director general of the Royal Society of Arts, also worked at the Bank. Haldane takes a more refreshing view of supposed fiscal restraint than Reeves. In an article in The Financial Times In May, he said of the fiscal rules: “By limiting investment and retarding growth, these rules are counterproductive… they must be replaced by rules that prioritize growth and seek to maximize national net worth, not minimize gross debt.”

Of course, the other electoral mantra that accompanied change, change, change was growth, growth, growth. But without a more positive fiscal policy and a boost to trade through reintegration into the single market, it is not clear that growth will be stimulated. Starmer and Reeves keep calling for such a boost. But I remember this great exchange in Henry IV, Part One:Glendower: “I can summon spirits from the deep.” Hotspur: “So can I, and so can any man. But will they come when you call?”

Another related area where I fear the new government is being timid is the lame way it has accepted the Sunak-Hunt spending plans. It is reminiscent of the way Gordon Brown accepted Conservative Chancellor Kenneth Clarke’s spending plans in 1997. Clarke laughed it off and said that, had the Conservatives been re-elected, he would certainly not have stuck to his own plans.

One of the distinguished predecessors of our new generation of Labour ministers was Harold Lever, who was the financial mastermind of the Wilson/Callaghan governments from 1974 to 1979. He had a favourite phrase to express his views on his colleagues’ approach to economic policy: they were “frolicking on the fringes”, he said.

On fiscal rules and our relationship with the EU, it seems to me that the new government is indeed playing the margin card. It is certainly good news that Starmer is trying to “reset” our relationships with our former EU partners. But, while welcome, the various ways in which he seeks to mitigate the economic damage of Brexit are relatively minor compared with the continuing and growing damage caused by our exclusion from the EU.

According to Mike Galsworthy, chairman of the European Movement in the UK, the latest IMF forecasts confirm that leaving the EU “has gutted the British economy”.