It did not take long for the new government to be plunged into sleaze allegations. Prime minister Keir Starmer has accepted tens of thousands of pounds of free gifts, including free glasses, suits, boxes at Arsenal games, Taylor Swift tickets, and, perhaps most extraordinarily of all, free clothing for his wife. Most dual-earning couples well into the top tax bracket can easily afford their own glasses, but not, it seems, the Starmers.
Chancellor Rachel Reeves, despite preaching austerity for everyone else, has accepted free clothes, which were then oddly described as “office expenses” on her official declarations. Education secretary Bridget Phillipson accepted a £14,000 donation from Waheed Alli, a Labour peer, to pay for, among other things, a birthday party. The list goes on and on.
The Labour cabinet has in total accepted more than £800,000 in donations and free gifts since the start of this year. It would be easy to dismiss all this as politics as usual. After all, Boris Johnson as PM was constantly under attack for accepting free gifts, and the record of the last Tory government was far from unblemished. But Labour sleaze is far worse than Tory sleaze. Here’s why.
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Why Labour sleaze is worse than Tory sleaze
First, the party is far more pious than the Conservatives ever were. In opposition, Starmer and his team were constantly making allegations that the Tories were breaking the rules. They demanded inquiries and investigations of every possible infringement and painted a picture of a government that was completely corrupt. The amount that Johnson spent on renovating the flat at No 10 was turned into a huge political issue. Now it turns out that different rules apply to Labour ministers. It is fine for Starmer and his team to take gifts, for reasons that are never quite explained. It is hard to escape the charge of hypocrisy.
Next, and far more importantly, it matters because Labour explicitly claims that it wants, as the new chancellor put it, “to run the economy”. The party is planning to hand out billions in subsidies and grants. Great British Energy will have a budget of £8.3 billion to invest in wind and solar power as well as green technologies. The new National Wealth Fund will have £7.3 billion of public funds to invest in “green technologies and infrastructure”, and will leverage that up several times over with borrowed money as well.
In her speech at the 2024 Labour party conference, Reeves promised a full-blown industrial strategy, to be published alongside the Budget, and that is likely to involve a whole fresh round of subsidies. It does not stop there. The party is promising a far more active role for government, intervening in the economy, forming partnerships with business and unions, and shaping industries with regulation. Against that backdrop, it is no great surprise that business wants as much access to and influence over ministers as possible.
There are hundreds of millions at stake. The companies with the right connections will be able to get cash directly from GB Energy, or the National Wealth Fund. For a chosen few, there will be money available from the industrial strategy. If you know who to talk to, then you may well be able to get a deal waved through because you are operating in a “strategic industry”, and for someone with the right connections, a lucrative “partnership” with the government and the unions will suddenly emerge.
We can all argue about whether intervening in the economy as much as Labour plans to do is a good or bad thing, and about whether bureaucrats and politicians can really pick winners. But if it is going to do so, then it needs to be wary. It needs to treat business with suspicion, aware that it will be seeking special favours.
Instead, it is descending into the very worst kind of Latin American-style crony capitalism. A select group of mega-donors, and a tiny handful of fixers, dominate the economy, carving out lucrative markets for themselves and their friends, and paying off ministers with gifts and freebies and the promise of lucrative jobs once they have left office. It will be a disaster for the economy – and for the taxpayer who will end up footing the bill.
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