ALEX BRUMMER: Labour must prove critics wrong over growth

The scale of Labour’s win gives Keir Starmer’s government the muscle it needs to fulfil its growth mission.

Unlike 1997 when Tony Blair swept to power on a great wave of optimism, the ‘sunlight’ which Starmer referred to in his victory speech has yet to shine. And I am not referring to dank July weather.

Starmer and Rachel Reeves spoke passionately in the campaign and the manifesto about driving growth through the housing market and net zero by unleashing Great British Energy.

Both are worthy objectives. Even with the best will in the world, turning around Britain’s entrenched planning obstacles is never going to be easy. Just think about the things which haven’t happened because of formidable hurdles.

The high-speed HS2 link to Manchester, Leeds and beyond became un-investible as a result of environmental costs.

The third runway at Heathrow is in permanent abeyance. Brownfield sites are a no-go for housebuilders because of the expensive clean-up requirements. No one in rural areas wants the enormous pylons and overhead cables needed for the enhanced electrical grid required for a green revolution. On a commercial level, it has been made all but impossible for Marks & Spencer to redevelop its flagship store on Oxford Street. John Lewis has been struggling against residents in Bromley over its proposal for a 24-story residential tower. Nimbyism is an enormous obstacle to growth.

If Labour is really serious about a ‘mission’-driven economy, it needs to listen to UCL economist Mariana Mazzucato or, even better, put her at the heart of government, preferably in the Treasury’s growth unit or in the Business Department (or whatever replaces it). Starmer, Reeves, Rayner and the other major figures need to lift their eyes.

The real path to faster output is getting behind Britain’s intellectual brilliance. The UK’s great research universities are the powerhouse of our pharma, health devices, software, AI and tech industries.

Our creative excellence is nurtured by often maligned media studies, film and video IT and other such degrees.

Defence is the first responsibility of government and raising the proportion of GDP devoted to safety of the realm is critical. Beyond that, however, R&D is the real path to growth.

The US, which leads the world on tech, spends the highest amount proportionately on R&D among the G7 nations at 3.46 per cent of national output.

Israel, the ‘start-up’ nation, devotes 6 per cent of its GDP to the cause. The UK’s mission should be to raise the spend from 2.6 per cent and upwards towards best-in-class levels.

Governments easily become waylaid by inherited problems. When it comes to commerce, the day-to-day issues were barely touched upon in the campaign. Britain’s biggest water utility, Thames, is struggling under the weight of debt and will need a more generous price settlement if it is going to thrive and invest.

Czech sphinx Daniel Kretinsky has been taking advantage of the regulatory lull caused by the election to seize control of Royal Mail, a deal which needs to be blocked in the public interest.

A critical asset is being sold by a feeble board on the cheap. Even worse, the postal service, similarly to Thames Water, Heathrow and other utilities, stands in danger of being overwhelmed by a debt pile and the high servicing costs which go with it.

To allow its sale would be an act of industrial sabotage.

The Government should ignore voices arguing interference would show that Britain is not open to business.

Labour also needs to decide whether they will go along with Tory plans supporting the conversion to electric arc furnaces at Port Talbot in the face of union dissonance. It must also decide now to get behind the Rolls-Royce-designed small modular reactors by suspending a cumbersome auction process, or risk the UK’s leading edge on an advanced technology being lost to US and Japanese competitors. Time is of the essence if order possibilities from the Continent are not be sacrificed.

Nothing in the election campaign suggested that Keir Starmer and his team are ready to make bold and exciting decisions capable of lifting Britain out of a torpor. The critics must be proved wrong.