Starmer’s Trump problem won’t be eased by pumping out old announcements

The government needs to turbocharge plans for growth and pull out all the stops to reduce trade friction with the EU if it wants to protect Britain from the gathering storm, writes Andrew Grice

Another day, another pro-growth announcement from the government’s media grid. Keir Starmer and Rachel Reeves are trumpeting the go-ahead for a giant Universal theme park in Bedford, which could create 28,000 jobs, inject £50bn into the economy and become the UK’s largest visitor attraction. Good timing as both a domestic response to Donald Trump’s tariffs and a nod to the US president about UK-US collaboration.

It's a good sign that the UK can attract investment. However, a government in which only three ministers are believed to have direct experience working in business still has work to do to convince investors it “gets” the business world. Such doubts will be enhanced by figures showing London has lost 11,300 dollar millionaires over the past year, an exodus that has accelerated ahead of the government’s crackdown on non-doms.

After Trump ushered in a “new economic order,” some MPs are worried that so far, the government is merely pumping out announcements already in the pipeline rather than “turbocharging” growth as Starmer claims. Meg Hillier, Labour chair of the Treasury select committee, put her finger on it when the prime minister appeared before the liaison committee of senior MPs yesterday. Starmer insisted “a whole host of things” were being looked at and cited (long planned) announcements to ease electric vehicle targets for car makers and boost health research.

"We know about those,” Hillier told him pointedly, asking, “Is there anything that you are looking at other than what you had already put in place or were planning to put in place as a result of last week?"

While Labour backbenchers welcome the new mantra to go “further and faster” to secure growth, some doubt the government will seize the moment. “The gap between rhetoric and action is widening,” one told me. “We have raised the speed to 60mph, but we need to go at 80mph to make a real impact. If not now, when?”

The government's dire fiscal position means it can't unleash a big bazooka used in previous crises, such as nationalising banks in the 2008 financial crisis or the £400bn splurge, including the furlough scheme in the pandemic. There’s no sign to date of the tax discounts the motor industry wants to encourage people to buy electric cars.

‘The government's dire fiscal position means it can't unleash a big bazooka used in previous crises, such as nationalising banks in the 2008 financial crisis ‘ (PA Wire)

The government is not powerless. Reeves could “temporarily suspend” her “iron clad” fiscal rules to permit more government borrowing without rewriting them. This is allowed under her “charter for budget responsibility” in the event of “an emergency, or a significant negative economic shock to the UK economy”.

One thing Starmer must do urgently is pull out all the stops to reduce the trade friction with the EU left by Boris Johnson’s threadbare agreement. A new deal is due to be signed at a UK-EU summit on 19 May. But pro-European MPs fear the PM will continue his cautious approach to closer EU links because his strategists view Reform UK as the biggest threat to a Labour second term and do not want to hand Nigel Farage any ammunition.

There is no shortage of ideas to enhance growth being proposed by organisations such as the Labour Growth Group, backed by 100 MPs, the Red Wall Group of 40 backbenchers and the Labour Together think tank. Some members blame Treasury orthodoxy for blocking reforms such as new powers for English metro mayors to raise taxes or borrow money “off the government’s books” for building projects through development corporations. The MPs want the Treasury to tweak funding formulas to make “levelling up” a reality by diverting resources away from London and the southeast to boost growth in other regions.

Angela Rayner, the deputy prime minister, is under pressure to beef up the Planning and Infrastructure Bill now going through parliament by further diluting the power of local councillors to veto developments and further limit the opportunities for judicial review. Internal Labour critics claim Rayner’s top priority is housing, particularly social housing, and she is missing a trick by not turning her sprawling Ministry for Housing, Communities and Local Government into an engine for growth.

Concern about government caution is not confined to Labour MPs. Even former senior Treasury officials, including Gus O’Donnell and John Kingman, are urging Starmer to be more radical. O’Donnell, the crossbench peer and former cabinet secretary, told BBC Radio 4: “They have got to go further. They have got to think [again] about planning and how we get new projects going.” Kingman, the former second permanent secretary in charge of growth at the Treasury, said the “serious possibility of global recession” demanded “a much more wide-ranging set of interventions,” adding: “There can now be absolutely no downside now to serious boldness and speed.”

As Albert Einstein wrote, “In the midst of every crisis lies great opportunity.” Starmer needs to replicate his solid performance on the world stage by transforming a domestic agenda currently lacking coherence and proving that growth really is his government's "number one priority.”

Reheated morsels from the Whitehall cupboard can fill a hole in a media grid but will not be enough. It's now or never for a bold “plan for growth” to shelter the UK from the gathering storm.