What Should The Shadow Treasury Be Doing?

Toby Lipatti-Mesme
5 min readMar 2, 2021

Labour’s economic alternative is non existent, and the Tories are making hay. What direction of travel should a progressive Shadow Chancellor be following right now?

Anneliese Dodds makes a fine speech. She’s an eminently competent politician, she can hold her own under fire, and she’s clearly got an analytical head on her shoulders. So what’s the issue? Where to start.

Dodds in her capacity as Keir Starmer’s Shadow Chancellor has made a number of TV appearances and speeches in the run up to the looming annual budget, the first one she’s been Shadow Chancellor during, so a big moment and the first point she really has a chance to cut through to the public as Labour’s voice on the economy. It’s been a damp squib, and it’s not even her fault.

On Marr last Sunday, Dodds couldn’t even answer straight bread and butter questions coherently on things like Universal Credit. She’s been send onto the TV with a mish mash of incoherent messages to get across, and no cut through lines. People bashed the Corbyn operation for this sort of thing, but I’ve never watched an interview so excruciating, and it wasn’t her lack of trying to parrot the party line, it was the shiteness of the party line! If Corbyn’s Labour couldn’t “do politics”, Starmer’s Labour doesn’t know the meaning of politics.

As for her speeches, Dodds has set out a fine and eloquent (if a little dull) critique of the Tory record on the economy, and small tinkering fixes required immediately, with a handful of effective cut through lines like opposition to council tax bill rises and benefit cuts mid pandemic, which are tangible things and useful attack lines, but all likely things the govt could address, and nowhere near enough to make up even a semi-coherent political strategy.

When asked questions, Dodds really hit rock bottom at her recent appearances. We get the same identikit parody of the “caring politician”, in the form of “Labour really cares about steel/nurses/pensions, and what the govt is doing is bad, and there are various things people want to do and we’ll look at them, and do better than the govt, but we can’t say how”. Infuriating. No concrete flagship positions on things such as the role of outsourcing, rail nationalisation, or nurse’s pay rises. Even where Labour has pre-committed policy, the questions are dodged and the answers are half-arsed,

Whether the 2024 manifesto will be hideous or glorious doesn’t matter, because that manifesto sure as hell won’t get a hearing when Labour gets out of the fridge if this is their strategy until election time. The politics, right here and right now, is dire. The optics are dismal. Labour has no stance and simple criticism with no solutions, and more hostility towards the left of their own than the Conservative party, how is this a party anyone would consider voting for?

Labour have been listening too much to focus groups, which is a worry. Public opinion has to be shaped, focus groups can be a guide, they shouldn’t be a map. Labour isn’t interested in winning any arguments, and is now actively pushing the Tories to the right. Now many arguments have been won by Corbyn’s Labour, and the Tories are changing tac on things like corporation tax, Labour should be jumping for joy, promising to go much further, keeping the heat on and pushing the govt in a yet further positive direction. Alas, they’re letting them off the hook and actively condoning an austere view of basic economics that even the Treasury and the CBI have rejected.

What’s happening right now from the opposition, is both bad politics, and bad economics. They’ve backtracked on corporation tax, but the damage is done. The Tories are going to use the bigger role for the state to further the interests of the 1%, and provide enough wins for people through the recovery so as to cement permanent Tory rule in place for the foreseeable, and Labour remain not even on the pitch. What should a genuinely progressive and ambitious Shadow Treasury be doing right now, and what ideas should they be disseminating into the public sphere?

First and foremost, we need total rejection of austerity logic. We don’t, and have never needed to “balance the books” or “pay down the debt”. The view of household debt and govt debt as the same is economically illiterate and a bad faith argument used to dupe the public into allowing elites to shaft them with regressive tax rises and eye watering budget cuts. We have our own central bank, interest rates so low (won’t change anytime soon) that we’re paying less on the debt than when it was much smaller, and that same central bank can buy up more govt bonds and keep interest rates low for as long as it wants (and it very much intends to). The deficit hawks have been proven wrong time and time and time again throughout history, don’t listen to them, and progressive policymakers shouldn’t have the debt in their minds whatsoever when crafting policy for the COVID recovery.

Now that’s out of the way, what about tax? Short term, there’s no rush, we shouldn’t strangle the recovery and we sure as hell aren’t going to go insolvent. We should see a windfall profits tax on those who’ve made a killing, and an online service tax to hit digital giants. In addition, let’s implement a wealth tax. None of these things would hurt the recovery, all of them hit those already doing well, and the fact Labour isn’t pushing a wealth tax when the circumstances have never been more favourable is ridiculous.

We have to see (another thing Labour are stupid to dismiss, as Dodds did when asked) is a £100bn People’s Stimulus package. As Ian Blackford says, we need to “boost it like Biden”, and kickstart a turbocharged recovery with a green stimulus package to stimulate demand, followed by a £500bn People’s Green New Deal, mobilising massive state investment on a scale this country has never seen, going faster and further than Labour in 2019, and reshaping our economy away from neoliberalism, while absorbing demand shock from Brexit, and taking rail, mail, water, and broadband into public ownership over the next 5–10 years.

People can call this excessive all they like, but this is smart economics, it’ll lift millions from poverty, improve quality of life right across the country, reshape our economy, and it provides the best chance of growing our way out of this mess. Yes we can afford it, because failing to match this moment (as both main parties are) will be 10 times more costly to all of us.



Toby Lipatti-Mesme

Insightful and innovative UK journalism and commentary, from Toby Lipatti-Mesme.