LABOUR'S A GIVEN: What Does this Presage about Attitudes to Investment?

One day to go and all evidence points to a Labour win – breaking 14 years of Conservative government. We are reminded daily that it’s not over until it’s over. Yet the possibility of any other outcome seems doubtful. Why? It’s not because people are itching to vote for Starmer per se. Certainly he has a low-key appeal – although there isn’t much competition on the charm front. But the Conservatives have amassed such a poor track record that, for many, almost anything seems preferable to maintaining the status quo.

I’m not a political expert, merely an expert writer. Yet even I can see that Sunak’s campaign has done little to persuade, lurching from one blunder or offence to another, and even when he finally put in a strong performance, it was strong and strident at the expense of human compassion: in fact, it seemed overtly calculated to appeal only to a minority of voters.

Sunak never stood a chance for a multitude of reasons, not least that the majority of votes at the last landslide were never ‘true’ Conservative votes in the first place; they were votes, specifically, for Johnson, a ‘big character’ who seemed at the time to transcend normative politics, and who also appeared on the ballot alongside a dubiously electable Corbyn.

Now with a more credible Labour leader and massively less charismatic and, for many, unrelatable Conservative Leader that (technically speaking) nobody ever voted for, there was little chance that the great swathe of votes would be retained, especially in the face of a Cost of Living Crisis and Levelling Up agenda all but abandoned to wholescale Levelling Down. As for the view that the Conservatives are the more credible economists? Post Truss, there is simply no way to sustain this argument.

In the final weeks, Sunak’s slew of bizarre, desperate and downright unpleasant policies seemed misguided: criminalising homelessness seemed callous (and pointless) to all but the most hard-hearted, whilst imposing mandatory national service on 18 year olds and scrapping so-called ‘Mickey Mouse’ degrees (the very degrees that most 18 year olds are drawn to) seemed intended to put off young voters. Indeed, Sunakian Conservatism made no bones about the fact that they were openly targeting an elderly, conventional audience.

What then is the market going to make of a Labour win?

Certainly Labour are taking more pains than usual to emphasise that every proposition will be fully costed and that, this time, there will be no ‘magic money tree’. Yet there are questions around the realism of the plans (for example, can the non-dom loopholes really come to the rescue, or is it merely another ideology?). In addition, both Labour and Conservatives alike have been accused of hiding from the electorate billions of inevitable ‘baked in’ cuts.

Regardless of how well Labour ultimately manages the economy, Labour’s very existence is a problem for markets since - almost by definition – it is loosely Keynesian, whilst the Conservatives since Thatcher have been largely Friedmannian. (Arguably the ‘love affair with laissez-faire’ was somewhat undermined by Sunak’s Furlough and Cost of Living payments.)

Markets could get on board with New Labour because it had a pro-private sector agenda. But despite Starmer’s low-key veneer – and some concessions towards privatisation - he remains more Old Labour than New, and Rayner is overtly so (or at least was until the 7th June BBC Debate, where she appeared to be severely constraining her own opinions).

Starmer certainly appears 'New-ish' Labour (though without the Britpop verve or overt vision) but – and this despite accusations from other Parties that Labour is mimicking the Conservative Party – holds largely conventional Labour views on state ownership, with policies including a renationalised rail service and a publicly owned Energy Company (although oddly, in a never-ending housing crisis, no mention of Social Housing).

More worryingly, some segments of Labour have a curiously negative view of investment itself (John McDonnell, no longer an MP, still holds this view), with the concept that ‘investment is unearthed wealth’ and should therefore be heavily taxed still strong within the Left, a stance that seems both disingenuous and self-defeating. On the face of it, it appears to target those with investments so large – and, presumably, no day jobs? - that they are living off their dividends / returns.

But how many actually do this? And how were the investments purchased in the first place if not with income which has already been taxed? In reality, any Government ought to be relieved that there are people who have investments to draw down in later life, and ought to be actively encouraging as broad a demographic as possible to invest. They ought, too, to be happy about investment per se if it happens to be in UK companies.

In fact a large proportion of investing is undertaken by ordinary working/middle-class people, who purchase investment products with hard-earned money (surely Starmer himself has solid investments beyond his Pension). True, there are also great swathes of people who either can’t afford to invest (perhaps not even being able to reach the £25 minimum monthly investment payment) or who simply know nothing about investing since, for whatever reason (that would be a whole different essay) schools fail (or refuse) to teach finance and investing as basic life skills. But this anti-investment rhetoric - whilst not openly espoused by Starmer himself - achieves nothing and in fact keeps the poor poor by adding further barriers to investing (both actual and psychological).

None of this has of course been discussed – why would it? Nor will it be enough to persuade people to stick with the Devil You Know. I concur – change is necessary. But whilst there’s little doubt that the UK desperately needs a new approach, and whilst markets will likely ‘price in’ any concerns, I’m not sure there will be street parties in the Square Mile come Friday morning.

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