Labour’s evidence-free approach to policy is baffling
Keir Starmer is often criticised for lacking an ideology, but his actions suggest a pathological belief in in restricting personal freedoms, impoverishing strivers and narrowing horizons of young people. Or socialism, for short, says James Price
A catchphrase I’m fond of reciting is that the best way to make God laugh is to tell Him your plans. It’s a colloquial way of expressing the great economist Friedrich von Hayek’s “knowledge problem”.
His argument is that in any developed society, it is impossible to collect and interpret the information, or knowledge, necessary for any central authority or state to efficiently allocate resources. As a result, it is better to leave this process to the dispersed, decentralised market – or the invisible hand as Adam Smith put it.
This is excellent advice. No system ever devised can be powerful enough to plan everything. Humility is best, then. This is a lesson that all politicians should heed, though few ever do. Despite this broad helplessness in the face of the complexity of reality, there are still some areas where policy makers have built up a corpus of evidence based on what has already happened. In fact, in the face of an uncertain future, concrete evidence from the past is all we have to go on.
Ignoring the evidence
So it is particularly baffling that the Labour government seems hell-bent on ignoring the warnings and lessons where they are acutely available. An obvious example of this is the Employment Rights Bill – where the government’s own impact assessment lacked detailed evidence to justify the £5bn-a-year cost for businesses. These are costs that are halting recruitment, slowing investment and pouring cold water on the hopes of small businesses around the country
It happens on tobacco – high excise rates have seen smokers turn increasingly to illicit cigarettes, losing the Treasury billions in tax. Labour is also ploughing ahead with the generational ban, back in the Lords today – despite Australia’s cautionary tale of tobacco wars and retail crime. Harm to small businesses, a hit on tax revenues – policy based on bad evidence, but allowing the government to feel smug. The worst of all worlds.
It’s happening with private schools too – with higher taxes increasing pressure on state schools, just as research from the Adam Smith Institute predicted. And it’s happening in those very state schools: any incoming government should have taken one look at the PISA league table rankings and asked themselves “how can I keep this progress up?” Instead Bridget Phillipson is ripping up school freedoms to ensure that England stoops to the same level of Wales, where education is devolved.
And I don’t need to tell a City PM reader what raising taxes on business and investment will do for growth – and yet all that experience is being ignored. Despite clear evidence from HMRC and independent economists showing that higher taxes on top earners drive capital flight and reduce tax revenues, Labour presses ahead with punitive tax rises. And now Britain is losing more millionaires than any other country on earth.
And it’s happening on energy – where repeated expert advice warns that inconsistent policies, excessive windfall taxes and hostility to North Sea investment threaten supply and push up prices. Yet Labour carries on regardless, ignoring the facts….even though the Tony Blair Institute has now told them the current net zero agenda is wrong!
Sir Keir Starmer and his top team are often accused of lacking any kind of ideology. But this bloody-mindedness across a broad range of areas, in the face of overwhelming evidence, can only be explained by a pathological belief in restricting personal freedoms, impoverishing strivers, and narrowing horizons of young people. Or socialism, for short.
No amount of evidence seems capable of changing their minds. As Jonathan Swift lamented: “You cannot reason a person out of a position he did not reason himself into in the first place.”
I hope that he is wrong, and that Labour see sense on these issues, especially ahead of the budget. Otherwise, their plans will wipe a smile even off the face of the Lord.