The Labour leader sipping champagne and indulging in canapes with global CEOs would have sounded unimaginable several years ago. However, last week Keir Starmer attended Davos. This piqued political and media interest – why was the Labour leader schmoozing up with the so-called “Davos elite” instead of convincing potential Labour voters to come back to the part in the so-called Red Wall?
This is in fact part of a deliberate and careful strategy. One that is about showing Labour are ready for Government. It is part of a wider professionalisation of the party’s operations at home and abroad.
Meetings with Goldman Sachs, Morgan Stanley, JP Morgan and BlackRock – and the ease of engagement of the shadow economic team with ‘big business’ has underlined how this is a party now seriously gearing up for power.
Starmer used the opportunity at Davos to set a new ‘Overton Window’ for a future Labour government.
New conversations with EU leaders have seen positive coverage about the potential for a relationship reset under a future Labour regime. Starmer himself has mentioned Labour’s Green Prosperity Plan on repeat throughout Davos, seeing it as the framework for a future government that seeks a shift in the operation of the UK economy – at the very least from an energy and environmental perspective.
The Green Prosperity Plan, while more specifically focused, takes many cues from President Biden’s Inflation Reduction Act in how it seeks to surge and accelerate investment in renewable technologies while benefiting from innovation impacts. In effect – to create an environment where opportunities such as developing gigafactories, are seen as ‘too important to fail’ for the energy transition.
The green credentials of this approach were made most clear with Starmer making a firm statement about no more oil and gas exploration in the North Sea. He announced a future Labour Government’s policy would be more specific – “not new investment, not new fields up in the North Sea.” – while acknowledging the need for oil and gas supplies for a considerable time forward, the abstraction of current resources is seen as appropriate to meet energy transition needs.
This movement from the retained policy of a ‘hard-edged timetable’ could face some blowback from unions ahead of a final manifesto commitment. The reaction from the sector’s trade association, Offshore Energies UK, that this would cause investors to lose confidence is not unsurprising, given the policy position was, by definition, discouraging new investment.
This shift should not be surprising. Labour’s policy of business engagement is pragmatic but with guard rails. How this affects the excitement for investors in the current licensing round for oil and gas exploration in the North Sea given current opinion polls will be insightful.
Alongside Starmer, his Shadow Chancellor Rachel Reeves was also busy at Davos, building relationships and outlining her proposed economic approach. Yet it was back in the UK in a speech to the Fabian Society that another critical element of an expected harder line on oil and gas producers was outlined.
She made clear that not only would Labour close what she described as loopholes around investment for oil companies around the Government’s windfall tax going forward, she would apply this retrospectively.
In highly charged language, she compared the increasing income that producers have realised with the increased price of oil and gas to war profiteering. On this basis, a retrospective backdating of this windfall tax, without the ‘loopholes’ backdated to the beginning of 2022 was seen as appropriate.
The proceeds of this would also be targeted to reductions in energy bills for consumers – adding a politically popular strand to what is, in effect, a super tax.
The final strand of this approach is that both Starmer and Reeves have also underlined one of the most ambitious and challenging elements of their approach. Through a programme of investment in green energy development and energy efficiency, the ambition for 100% clean power by 2030 (which would include nuclear and potentially green gas) remains paramount.
By being firmer on windfall taxes and narrowing where investment would be accepted, are they intending not just to set a vision but also to move the market? Could Keir Starmer get his desired policy outcome on the future of the North Sea, investment, and green power generation without being in power?
The Conservative comeback to Starmer has tended to surround the lack of a Labour plan or policy platform. That is a line that will no longer hold. Not only do they have policies – they are working to make them happen. We may have up to two years until the next election – but Davos has made clear that the time to engage, and build relationships, with Keir Starmer’s team and the Labour Party is now.