Mansfield is Open for Business

In 2017, the town of Mansfield pointed the way for the Conservative Party. The Conservative candidate defeated a longstanding Labour incumbent who had tried, among other things, to sue the Mansfield Town FC supporters’ association. Amid the density of local experience it was easy to dismiss the loss as a fluke result for an unpopular candidate, but the same was happening in Middlesbrough South and East Cleveland, in Stoke-on-Trent South and in Walsall. This reflected not just local issues or Brexit per se, but a longer-term secular decline in Labour support among voters in areas with declining manufacturing employment, which progressives soon dubbed Labour’s “Mansfield problem.” For locals, the drift was palpable. Left commentators were initially optimistic that Mansfield could be regained at the next elections, propelled by an impressive Momentum mobilization for a sympathetic local candidate. But the public image of Jeremy Corbyn proved to be increasingly repellent to many local voters. Speaking to people in Mansfield in the Corbyn years, it was not uncommon to hear them wish him dead. In 2019, Labour got trounced here, winning 31 percent of the vote to the Conservatives’ whopping 64 percent.

Keir Starmer’s party regained Mansfield in last week’s elections, having expelled many local leftists from the party. The party, it is being said, has remedied the causes of the stinging defeat of 2019 and won back the voters it lost in this traditional Labour bulwark. Or has it? Labour added only 870 votes to its 2019 Mansfield total, out of more than 40,000 cast. Turnout was down to a paltry 55.8 percent of registered voters, with many 2019 Conservatives staying home or deserting the Tories for Reform. As patterns like these brought Labour victories up and down the country, scholars rushed to read up on the Gallagher Index, the formal measure to indicate the disproportionality of an electoral system. Political scientist Dr. Heinz Brandenburg calculates that with Labour’s enormous landslide on a 34 percent vote share, this measure has reached a height unparallelled in UK political history. Coupled with an unprecedentedly fragmented party system, a decline in political trust, and Labour Party membership down by almost a third from its 2019 peak, Labour’s position looks more precarious than its Parliamentary landslide might suggest.

The disproportionality of the result makes Labour’s targeting effort no less impressive, nor its electoral strategy any less successful. But the narrowness of its base suggests that holding on to power will be a challenge. Thus far Labour has offered neither significant redistribution nor any soaring rhetoric to unify its coalition, fearing that a more polarizing, ambitious politics might galvanize the other side more than their own—Corbyn’s 2019 reception in Mansfield being a case in point. Instead, it relied on public anger and disillusionment with fourteen failed years of Conservative rule to bind together its coalition. That bond will slacken over time as attention turns to what Labour will do in power. Insofar as there is a larger narrative on offer, it lies in Starmer’s case for an active state in the national interest and his return to the language of class identity, if not the language of class conflict. The now-Chancellor Rachel Reeves has also affirmed her commitment to a political economy anchored around “security” and “resilience”—what she is calling “securonomics”—to be achieved through new entreaties from state to market. In doing so, the new government hopes to “unlock growth,” in Starmer’s words, to achieve rising living standards without large-scale redistribution in an economy defined by stagnation and inequality. 

These scrupulously focus-grouped messages fall some way short of a Gramscian project to rearticulate common sense. But with its hands now on the reins of state power, Labour has access to new opportunities to shore up its coalition. Moreover, the party has an incentive to match that public appetite for change. From the Left, the success of the Greens and the independent candidates risks the further erosion of two of Labour’s core voting blocs if Labour fails to deliver substantive change in government: a downwardly mobile graduate class, heavily concentrated in urban seats, and working-class Muslim voters, for whom the genocide in Gaza crystalized a growing disillusionment with the party. Meanwhile Reform, Nigel Farage’s reactionary revolt, now sits in second place in eighty-nine Labour-held seats. Although Reform draws few Labour switchers, a misinterpretation of the result would threaten to pull the government’s agenda in a very different direction. Against this backdrop, the best route to holding together and growing Labour’s 2024 coalition in 2029 is by wielding the power of the state to drive up quality of life, rather than waiting for the market to deliver.

Labour’s framework

One week before the election, Reeves laid out Labour’s program in a speech delivered at the Rolls Royce factory near Derby. The program rested on three pillars: stability, investment, and reform. Juxtaposed against “Tory instability” and “Tory chaos,” “Labour stability” would provide business with “certainty,” a prerequisite for “the lifeblood of economic growth…business investment.” “Reform” applied not to corporate behavior but to workforce training and construction planning, “to ease the burden of bureaucracy and red tape on British businesses.” Reeves pledged not to increase corporation tax for the duration of the next Parliament, summarizing Labour’s program with a syllogism: “If we can bring business back to Labour, then I know we can bring business back to Britain.” Four days after the election, she repeated the message from the Treasury’s offices at Whitehall, in rooms ceremonially opened by Alan Greenspan in 2002. She addressed the business world directly: “to investors and businesses who have spent fourteen years doubting whether Britain is a safe place to invest, then let me tell you…Britain has a stable government, a government that respects business, wants to partner with business, and is open for business.”

This three-legged framework to drive change reflects a shift in the logic of British economic statecraft, albeit one that remains incomplete and contradictory. At its core it is about the state attempting to govern fixed investment—the composition of capital and infrastructure stocks that shape the supply side of the economy—to deliver on the government’s overarching missions: higher growth, rapid decarbonisation and rebuilding economic resilience. The National Wealth Fund announcement is an early indication of that shift, reflecting a recognition that industrial decarbonisation and its benefits are best delivered with supportive public investment and new institutions to guide the process. Yet this recognition of the necessity of a more active state to address Britain’s deep-rooted problems is undercut by Labour’s signaled reliance on private investment and ownership as the primary instruments of social and economic transformation.

This reliance partly reflects ideological commitments to entreprenurialism over the postwar Labour goals of planning and socialism. But it also underscores political concerns that a more ambitious fiscal agenda will frighten key Labour constituencies: owner-occupiers sensitive to fluctuating interest rates, certain fractions of the business community, and financially squeezed households that might be skeptical of tax hikes and higher borrowing. There is, however, a tension. Starmer achieved his electoral advantage over Corbyn by broadening the geographic scope of his coalition, recapturing the ex-industrial constituencies of the midlands and north. Symbolic losses in Labour heartlands such as Mansfield, Walsall, and Stoke have been reversed, while ex-industrial swing seats like Corby and Newark have turned red once more. These places are familiar with the results of market-led renewal, as beautiful civic buildings are left to rot while shared spaces are paved over for business parks full of bad employers and newbuild housing that locals can’t afford. It is unrealistic to expect the private sector to rebuild the public realm in these marginalized areas; a lack of direct state action risks deepening political alienation. Interviewing local citizens, as one of us did recently, many express a sense that their representatives do not care: “I’ve always felt that they [politicians] were a very unsafe bunch, a very self-interested bunch,” one former steel worker said. “They only look after themselves. [That’s] number one. Number two they look after their family. Number three, they might or might not look after their constituents. Number four, they look after the country, if they have to.” His wife nodded. “We are way down the list.”

Winning again, strategists say, depends on delivery, delivery, delivery. But delivery how, by whom and in whose interest? Take the question of childcare: the Labour Party has matched the Conservative pledge to expand free hours for working families in England, bringing it closer to universal childcare than ever before. Delivering policies like these will make a tremendous difference to people’s everyday lives. The new government has taken no position, however, on who provides state-funded childcare and has thus far declined to impose limits on the extractive practices and dubious financial constructions that characterize the private equity-backed part of the sector. Doing so might trigger market exits, hampering the roll-out of provision and necessitating greater state involvement. But the government’s queasiness over these possible reactions to regulation or public enterprise leaves the door open to profiteers. While smaller providers are struggling to meet rising costs, private equity firms are hoovering up childcare settings and loading them with debt. 

Similar dilemmas arise in other flagship policy areas. Will Labour’s housebuilding strategy involve state action to guarantee affordability or limit itself to handouts to the property developers? Will Great British Energy—the name of Labour’s new public energy company—offer genuine public ownership and operation of clean power or become a mere vehicle for enlarging private profits? A division of labor between state and capital wherein the state largely abstains from undertaking direct public investment and long-term ownership leaves it scrambling to induce private investment through public subsidy, debt guarantees on private financing, and other “derisking” mechanisms. 

Alternatives

Labour’s response to these economic questions is shaped by a public mood of political cynicism. As the transformative projects of Corbynism and Brexit lose their grip on politics at large, a rising tide of political engagement recedes again, with large swathes of the public left alienated and mistrustful. Many citizens are disinclined to put their faith in another political project. Faced with a public wary of big promises but eager to see change, Labour will receive offers of assistance from private finance giants like BlackRock, Macquarie and Fremman Capital. The UK history of private finance initiatives for public provision suggests that this will be more expensive and less effective, while carrying all the same political uncertainties about the reality of delivery. As it sets out to rebuild the UK, the new government will nevertheless be tempted by this Faustian bargain, which allows it to temporarily avoid the spiky politics of tax rises and greater public borrowing at the cost of turning the country into a giant infrastructure asset.

Renewal will require a fuller break with the primacy of market rule. Market coordination — premised on private control of investment, private ownership of capital and infrastructure, and decision-making driven by the profit imperative — is ill-equipped to deliver the quality and quantity of investment needed to renew the public realm and revitalize Britain’s fraying infrastructure. Nor is it likely to distribute the gains of potential growth equitably across time or space. Among other things, an active state could revitalize ex-industrial town centers by taking over abandoned and underused sites and redeveloping them into hubs for learning and leisure, including childcare provision, cultural centers and technical and vocational education. This requires, however, that the state increases not only public investment, taking chances where the market will not, but also the level of ongoing expenditure on operations that may earn no return at all—it requires growing a public sector insulated from profit motives and funded by redistribution. Only by challenging the institutions and practices of market coordination can Labour revitalize its reconquered heartlands and restore the promise of politics as a collective project of demands and decision-making.

An agenda that builds out the institutions of public coordination must be complemented by a fiscal politics capable of slaying the ghosts of the Truss debacle. The legacy is double-edged: her catastrophic if short-lived mismanagement of the British economy was a decisive blow to perceptions of competent Conservative economic management, yet if the lesson learned is that borrowing at scale is a forbidden fruit then her premiership will prove harmful to progressives in the long run. Truss induced an economic shock by her assault on institutions like the Treasury, the Bank of England and the Office for Budget Responsibility combined with an unstrategic, inegalitarian and poorly signposted borrowing surge, which exposed hidden frailties within the pension system. By contrast, investors have already signaled Labour could borrow more to invest without UK bond market backlash. With Britain’s disastrously weak investment performance relative to the OECD at the heart of its economic divergence, Labour would be wise to take advantage, cashing in on the greater latitude their stress on stability has earned them by borrowing to increase investment.

At the same time, Labour must be prepared for shocks. The world is still reeling from the turbulence unleashed over the last few years by an intensifying ecological crisis, sharpening geopolitical tension and macro-financial fragility—shocks that are likely to become increasingly frequent. Many of us have experienced the sinking feeling at the supermarket self-checkout when you scan the contents of your trolley only to find your weekly shop has increased in price again. At the most abstract level this reflects the inflexibility and limitations of the transatlantic macroeconomic policy framework for governing the economy. In response to highly specific price shocks, the conventional macroeconomic wisdom is capable only of restraining demand and inducing stagnation and recession, in turn preventing the larger production and consumption nexus from processing those shocks without severe side-effects. 

Addressing what Britons used to deride as the Conservative’s “stop-go” economy demands a more granular and concrete understanding of the structure of the British system of public and private enterprise. As Isabella Weber and others have argued, the response must be for governments to develop targeted macroeconomic and macro-financial stabilization policies, from price coordination of strategically significant sectors and green credit guidance to sectoral windfall taxes or building out commodity stockpiles. This is undoubtedly a difficult political and technical task. But failure to move beyond macroeconomic orthodoxy will mean Britain is likely to remain, like much of the North Atlantic world, trapped in the toxic combination of stagnation and inequality that has been the hallmark of the past decade.

The alternative of status-quo politics with a dash of government-by-BlackRock is not just bad economics but also politically dangerous. It will alienate not just committed progressives but also “left-behind traditionalists.” In pubs, socials and community venues in the ex-industrial seats Labour regained, talk about politics often revolves around the alleged corruption of politicians. In places like Mansfield, respect for hard work and entrepreneurship often co-exists with the sense that the economy is rigged and that partnerships with the private sector are little more than handouts which prove that politicians will only ever look after their friends and business allies. When the government is forced to step in to protect over-leveraged childcare chains from collapse, when energy bills rise despite public investment and when the rentiers come to collect their due, these mistrustful voters will read this as proof that the new government has been lining the pockets of its mates. This may be a fragmented and contradictory consciousness, but people know a racket when they see one.

Major and imminent policy choices will indicate whether the government is ready for a more robust break with the past—or whether the turn toward renewal in Mansfield will remain nascent and half-formed. The first question regards what Labour has called its “new deal for working people.” Will it be more than a tweak at the margins of UK employment law? Workers in the distribution centers around Mansfield would materially benefit from fair pay agreements in the warehousing sector, but Labour, the party named for workers, has already moderated its ambitions in this policy area. Whether the amended plans can provide the foundations for a less unequal labor market and business sector remains to be seen, as does the future of the two-child limit on public benefits for families. Failure to abolish this regressive and punitive welfare cap is planning to increase child poverty. 

The second is the National Wealth Fund and GB Energy, and other institutions tasked with driving decarbonization of industry and power. Will these be based on genuine and substantive forms of public coordination, ownership and investment or amount to trivial and ineffective derisking ventures? Concretely, these should be adequately capitalized, able to raise debt and empowered to take on the coordination role that has been sorely lacking. Yesterday’s announcement in the King’s Speech that Great British Energy will “own, manage and operate clean power projects” marks a promising start, but the limited capitalization will prove an enduring issue. 

And finally, there is the question of housing. Having recognized that rapidly expanding the UK’s housing stock is a precondition for solving a nest of interconnected problems, the party must decide how to meet this objective. Are planning deregulation and private for-profit developers its principal instruments, or will it robustly commit to direct public provision of housing and strengthening protective regulation? Formulating the right answers to these questions will be critical to ending the housing crisis. In doing so, Labour can begin to build out a coherent economic and political strategy for ambitious public investment, strategic public ownership, and public coordination as central tools to ending Britain’s downward drift.

In the ex-industrial heartlands, the belief that hard work merits public rewards has never left. But this moral lodestar has proven incongruous with business-first regeneration, which has yielded poor jobs and little security, while town centers decline and provision disappears amid emaciated public budgets. In subtle and unsubtle ways, the reliance on private investment and the kind of economy it creates conveys to people that their work and their lives are not valued. Starmer’s welcome promises to restore a sense of public service, to commit to national renewal and to value working-class citizens is fundamentally incompatible with the economic model his policies implicitly rely on. One or the other will break. If Labour is to win another term and deliver on its commitment to national renewal, it is vital that it be the latter.