What exactly will the Labor Party do in government? The instructions in the Manifesto point to a surprisingly radical agenda

Since the first polls of the official election campaign were released earlier this month, there has been talk of Labor repeating the 1997 landslide.

And now we have Labour’s 2024 manifesto and there are further similarities. Like Tony Blair’s 1997 New Labor manifesto, Keir Starmer’s document makes education and health its top policy priorities. Both manifestos announce a tough approach to crime, the abolition of hereditary peers in the House of Lords and the delegation of greater powers to regions.

There are also some important differences. The most important of these is that Labor in 2024 promises less spending than Labor did in 1997, and at the same time more state intervention. This discrepancy indicates a significant change in the party’s approach to economic growth. This is a welcome departure from the neoliberal consensus on economic growth led by the Conservatives and New Labor.

Both manifestos promise to improve the quality of education for school-age children, expand pre-school education, expand lifelong education, improve student-teacher ratios, and reform higher education. However, Blair promised nominally twice as much education spending in 1997 as Starmer promises in 2024 (£3 billion versus £1.5 billion).

Both manifestos promise investment in the NHS and reducing waiting lists. Both manifestos promise the introduction of a living wage. The minimum wage was an election promise of the Labor Party and was introduced in 1999. In 2024, the Labor Party promises to pass a minimum wage that will be a real living wage.

Both manifestos state that Labor does not spend big, but it does spend money wisely. In both manifestos, the party is very careful to distance itself from its “tax and spend” image.

In both manifestos, the party promises not to increase income tax. As in 1997, the party defends this choice, arguing that average working families already face high tax burdens. Here, too, one can find similarities between 1997 and 2024 in what the manifestos do not say directly.

In 1997, the Labor manifesto attacked the Conservatives for cutting capital gains tax without making any specific commitments in either direction. In 2024, Starmer and his future Chancellor of the Exchequer have not promised not to increase capital gains tax.

Noticing the change

So in many ways Starmer has brought Labor back to Tony Blair’s third way social democracy. This is not surprising because, like his predecessor, he is trying to build a winning coalition of the middle and upper classes that will bring the party to power.

However, I believe that the 2024 manifesto does indeed contain some radical policy proposals. Blair and New Labor were strongly associated with the neoliberal dogma of the free market, where economic growth is driven mainly by the private sector. Predictable and favorable tax policy made it easier for house builders and investors, and the government provided them with further assistance in the form of its own investments in human capital (education and health).

Starmer’s Labor Party goes further. Labour’s 2024 manifesto promises the creation of Great British Energy, a state-owned energy company that will invest in green energy. This represents a significant departure from providing incentives to private companies; it is a recognition that the state has a significant, independent role to play in the energy transition.

He also promises to create a national wealth fund that will invest in public infrastructure such as ports and hydrogen technology. Once again, this is a much more statist approach to public investment than we have seen in the UK. Both of these policy promises depart significantly from New Labor’s 1997 manifesto and economic growth agenda. They are bolder in supporting state-led growth initiatives.

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Why is this where the divergence with New Labor becomes apparent? There are probably several reasons, including: failure of the private sector to invest in infrastructure and increase productivity.

However, Labour’s 2024 manifesto should be understood primarily as a representation of Labour’s electoral coalition – made up of working and middle class voters. However, unlike in 1997, this is not a coalition bound solely by cheap credit and ever-increasing asset and property price increases, but by the need for state intervention to restore growth through a centrally planned industrial strategy.

Since the early 1980s and the Thather Right to Buy program, both Conservative and Labor governments have deregulated the banking and financial sectors, making mortgages more accessible and cheaper. This credit-driven house price inflation benefits property owners and the wealthier middle class and exacerbates inequality.

Housing unaffordability is fueling political polarization, making New Labor’s 1997 coalition difficult to replicate. Starmer and Labor are being urged to propose a new working and middle class coalition that is not driven by consumption. This can only be driven by investment, higher skills and higher wages.

This is the ultimate case of a social democratic “supply-side” strategy that seeks to reconcile two things – the demand for higher wages and quality of life among the working and middle classes, and the fiscal austerity demanded by capital owners and higher earners.

As political scientist Carles Boix argued in his groundbreaking work, a coalition is best built through wise investments in human and physical capital and macroeconomic stability. The key questions for Starmer at this stage are whether this coalition is sustainable and whether his team will be able to achieve the desired economic growth that will enable this plan to be implemented.