The New Liberal Party — Editorial 2

It was reported in the Financial Times on 18^th Feb that Labour has entered into a de facto agreement with the Liberal Democrats on how to fight the next general election.  It’s an unsurprising development.  Starmer is focussed on ousting the Tories at the next general election but has come to the conclusion that the Labour Party is not capable of winning an overall majority.  His goal is to have Labour as the biggest party.  This will give him the ability to form a government with the Liberal Democrats.  It is a dangerous strategy.

In 2010, 2 years into the Global Financial Crisis (GFC), Labour lost the general election.  It was a hung parliament.  The Liberal Democrats opted to go into a coalition government with the Conservatives.  There followed 5 years of unnecessary and harsh austerity as the Conservatives pursued their goal of reducing the size of the state with the support of the Liberal Democrats who still maintain that the austerity was necessary because of the size of the national debt.  This impoverished vision created the impoverished communities who would vote for Brexit in 2016.

In the general election of 2015, after 5 years of coalition government, the LibDem voters gave their verdict on the LibDem participation in the coalition.  The LibDem seats in parliament dropped from 57 to 8 as LibDem voters in the south west abstained from voting in protest.  This protest abstention in fairly marginal seats in the south west effectively gave the seats to the Tories and resulted in an overall parliamentary majority for the Tories.  Labour’s weak opposition to austerity under Ed Miliband was also punished. 

There is no reason to think that the LibDems now believe that the imposition of austerity was wrong.  They bought into Thatcher’s view of how British society would develop with an increasingly unregulated private sector and a small state.  As did Labour under Tony Blair. As does Labour under Keir Starmer.  One would be hard pressed to list the policy differences between Labour under Keir Starmer and the Liberal Democrats under Ed Davey.  Keir Starmer is effectively turning the Labour Party into a kind of Liberal party with a commitment to free enterprise and a small state.

It is a strategy that is directly opposite to that pursued by Jeremy Corbyn in 2017.  In the 2017 general election, Corbyn opted to present a radical set of policies to the electorate.  The electorate, particularly the young electorate, had no doubt that a Corbyn government would make a difference.  And so the young voted for the Labour Party in huge numbers.  In the red wall seats Labour’s vote also dramatically increased because the electorate liked the radical policies and, importantly, because the party was committed to respecting the result of the 2016 referendum and implementing Brexit.

Starmer’s strategy could leave Labour in a position to form the next government, but only in a coalition with the Liberal Democrats and Scottish Nationalist Party.  From the perspective of working people, it will most likely be an ineffective government since it will be unable to implement policies that will bring about the substantial changes that are required to improve the lives of working people.  If the recent statements by Starmer and shadow Chancellor Rachel Reeves are anything to go by, it will be too pre-occupied with the size of the national debt to do anything truly radical.

Although Starmer’s strategy might result in ineffective government, it has a chance of removing the Tories from office.  The interesting question is how will the Tories react to this prospect.  Johnson would clearly favour spending whatever it takes to level up and win the next general election.  But the typical Tory MP would struggle with that as it will result in greater national debt.  The chancellor Rishi Sunak and the full weight of the Treasury will oppose any spending that increases the national debt.  

Johnson will be fully aware of this dilemma.  He must get rid of Rishi Sunak and whip the Treasury into line.  It is unclear whether he has the power to do that.  If he does not, it is distinctly possible that Starmer will be in a position to form a centre-right government after the next general election.