Rishi Sunak will leave the economy in a hole – Labor will have to think big to dig it | Owen Jones

NInitially, 30% of all post-war British Prime Ministers will have been in office in the last six years, all from the same party. But at the root of this chronic political instability isn’t just Tory psychodrama: it’s an economic model that has failed to deliver rising living standards.

David Cameron’s political career was eroded by a referendum result in which dissatisfaction with stagnant incomes played a central role: “Dissatisfaction with austerity measures was significant enough to give the exit campaign its majority,” a detailed academic study found. When Theresa May’s prime ministerial office was mortally wounded in the 2017 snap general election, voter anger at years of financial struggle – and a belief that Labor was best placed to do something about it – proved key. While Boris Johnson was brought down by scams over illegal partying, public anger at a escalating cost-of-living crisis – and the Tories’ failure to address it – was instrumental in the Tory election stifling, leading his MPs to conclude that he was no longer an election activist and could therefore be dismissed. As for Liz Truss, well, it needs no further explanation.

Even before the surge in inflation and Truss’s attempt to crash the UK economy with a series of deadly right-wing policies, wages in 2026 should be lower than 2008’s decade lost in people’s living standards, but the reality we’re dealing with now are facing is a lost generation. Too often political reporting reduces British politics to a soap opera, to personality-driven machinations: thereby removing the much deeper drivers of political turmoil.

So what does the rise of Rishi Sunak mean for all of this? That he is widely portrayed as a relatively moderate Tory is a political farce: Sunak is slightly to Johnson’s right on economic policy. The anonymous briefing from a senior Sunak ally underscored why so many Tory MPs were unhappy with Johnson, and it wasn’t because of his penchant for deception: “There is no evidence that during his time as Prime Minister he understood the need for restraint spent or had an understanding of how public finances worked.” Johnson, they believed, was opposed to renewed austerity and lacked a true-blue ideological commitment to pushing back the state’s borders. Sunak, on the other hand, will be happily brandishing the scalpel, from real-world pay cuts for key workers, who have been hypocritically applauded by Tory ministers in the pandemic, to the core services a healthy society depends on to function. Sunak must believe that he will avoid the same fate as his four predecessors – three of whom were more experienced than he – even if he is likely to overlook a more dramatic drop in living standards than any of them.

Sunak is likely to be the fifth and last Tory prime minister of the era whose career will end in humiliating failure, in his case an electoral defeat by Labor is likely to be his final chapter. For many Keir Starmer cheerleaders, this spells the end of Britain’s Age of Chaos. The turbulence after 2016, they believe, was driven by the Tories’ infantile zeal for ideology: Now a supposed “pragmatist” and “adult” should be in charge, so that stability returns and politics becomes boring again.

Labour’s rhetoric revolves around ‘sound money’, ‘hard choices’ and ‘balancing the books’ and there is a fear that this will lead to austerity measures, albeit with an attendant Labor rosette. In that case, don’t expect the political turmoil to abate – quite the contrary. That would be different from the New Labor period – after all, Tony Blair’s landslide was linked to rapid economic growth and rising living standards, hence the Tory slogan: ‘Britain’s booming: don’t let Labor ruin it’. This proved driven from an unsustainable financial bubble, but bought a long period of relative social peace. If Labor comes to power in an age of acute social crisis and fails to offer transformative measures to deal with it – even relying on cuts – then more political turmoil beckons, like the governments of Ramsay MacDonald and James Callaghan in the 1930s and 1970s respectively years discovered.

The obvious answer here rests on a rehash of Margaret Thatcher’s “There is no alternative”: that while the Truss government was crushed by a market revolt over free tax cuts for the rich, a Starmer government married to unfunded public spending, will suffer the same fate. But what it really means is that Labor must commit to sweeping tax increases for Britain’s burgeoning rich to support ambitious spending commitments. It is worth noting that markets have been rocked by plans to eliminate tax increases for big companies: corporate tax increases can now objectively be described as “market-friendly”. If the advance briefings on Jeremy Hunt’s forthcoming Halloween budget are to be believed, even the Tories are now looking into the property tax case.

That leaves Labor room to come up with far more ambitious proposals. There’s already a ready-made blueprint, developed by tax experts in 2020: A one-off wealth tax for millionaire couples, paid at 1% a year for five years, they say would raise more than £260bn. One of the architects was a tax expert whose job it was to help wealthy clients navigate tax law; Their entire plan was devised trying to stop the rich from looking for loopholes. Should Labor finally end the Tory turmoil in two years’ time, it faces a choice: impose real cuts in terms and provoke more chaos; Increase public spending at no reasonable cost and face market retaliation. or tackle the country’s numerous social disasters with breakthrough measures funded by tax increases for those who benefited from those 14 dismal years. To coin a phrase, there really is no alternative.