Labour conference pressed on economic credibility, fiscal rules and public investment

At the Labour Party conference, economic credibility was put under the spotlight as speakers and commentators argued over whether the party's 'hope again' message can survive tight fiscal rules and rising energy costs.

A panel discussion brought together Mariana Mazzucato, professor of economics at University College London and author of Common Good Economy, and Michael Gove, a former senior Conservative minister who is now editor of the Spectator. The debate ranged across Labour's economic strategy, public investment, public control and the legacy of the past 40 years.

Michael Gove said anyone watching would recognise greater cheer, confidence and genuine hope among Labour supporters than a year earlier. But he argued that John Healey's speech gave only a threadbare outline of an economic strategy. He said it appealed to nostalgic Labour values rather than setting out a radical plan. Gove also said Andy Burnham's critique of centralisation, privatisation and de-industrialisation was a lament without a fully worked out theory of change.

Mariana Mazzucato criticised the 'hope again' slogan. She said past growth had been driven by consumption and private debt. She called for real wages to rise and for proper public housing, rather than help to buy schemes. She said the National Wealth Fund and public sector procurement could be used as demand-side levers to help small companies grow. She argued that fiscal rules should value long-term public investment, including social infrastructure such as libraries, swimming pools and after-school clubs. She said the UK had low business investment and ranked 28th in the OECD on the business side. She added that matching the OECD average on public investment would have meant 500 billion more investment. Brexit, she said, reduced the size of the market, while austerity had weakened social infrastructure. The cost of inaction, she argued, is greater than the cost of action.

Gove did not accept that 40 years of neoliberalism were being swept away. He said Mazzucato's programme was radical and thought through, but that Labour's ambition was not matched by substance. He said public control could be exciting if it corrected specific market failures, and that housing was one area where compulsory purchase powers, government land and private sector building could unlock the market. He also said Keir Starmer had shown a similar desire to change the economic model but had pursued a minimalist approach. Gove described changes to the labour market and taxation as mistaken.

On the wider economic backdrop, the discussion noted reassurance about Britain's energy supply and people's bills, but also bad news for a North Sea platform. Gove later pushed back on relitigating the period after the global financial crisis. He cited Tony Blair's memoirs, saying New Labour had already been on course to spend too much and incur public debt that made continued spending at earlier levels impossible. The exchange ended without resolving how Labour would square its investment ambitions with fiscal constraints.