What Keir Starmer did at Davos

What Keir Starmer did at Davos

This is an audio transcript of the Payne’s Politics podcast episode: ‘What Keir Starmer did at Davos’

[MUSIC PLAYING]

George Parker
The global elite met in the Swiss Alps for the World Economic Forum this week, and there to deliver the message at Davos that Britain is open for business wasn’t the UK Prime Minister Rishi Sunak, but rather the opposition Labour leader, Sir Keir Starmer.

Keir Starmer
I think our prime minister should have showed up. Should there be a change of government? I hope there will be. The United Kingdom will play its part on the global stage.

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George Parker
Welcome to Payne’s Politics, your essential insider guide to Westminster from the Financial Times with me, George Parker, holding the fort for a few weeks until we relaunch the pod with an exciting new format. In this week’s episode we’ll first be looking at Starmer’s message to the titans of global finance and how Britain and its economic prospects were viewed by the Davos elite. Deputy political editor Jim Pickard is in London and Katie Martin, the FT’s markets editor, has her snow boots on in the Alps. Meanwhile, at Westminster, controversial plans for a bonfire of EU rules, around 4,000 of them from the UK statute book, was being debated by MPs. It’s a bit of a mess and business isn’t happy. Peter Foster, our public policy editor, and Professor Catherine Barnard of UK in a Changing Europe are here to explain what all the fuss is about.

So Keir Starmer gave an interview to the FT before heading for Davos, in which he lacerated the Brexit deal negotiated by Boris Johnson and promised to improve relations with the EU. Rishi Sunak in the Commons reminded Starmer that he’d previously backed a second EU referendum and free movement, but had now changed his mind.

Rishi Sunak
Mr Speaker, Mr Speaker, if we are gonna deliver for the British people, people need to have strong convictions. But when it comes to the honourable gentleman, he isn’t just for the free movement of people. He’s also got the free movement of principles. (MPs shout “Hear! Hear!”)

George Parker
Here with me in the studio is the FT’s deputy political editor, Jim Pickard, and also pitching in from Davos is the FT’s markets editor, Katie Martin. Jim, let’s start with you, because we met Keir Starmer and shadow chancellor Rachel Reeves for a joint interview before they got on the plane to Davos. So Jim, talk us through their message.

Jim Pickard
So I think the first point that they wanted to make when the four of us were in the room in Norman Shaw, which is a wing of parliament near the River Thames, they wanted to impress upon us that unlike Gordon Brown and Tony Blair, who pretty rapidly hated each other when they were prime minister and chancellor, these two were determined to press upon us that they are a joint force in politics. They have offices next to each other, their staff work very closely in the same room, and the body language and chemistry between them did indeed seem pretty positive. Who knows whether they’re actually chucking rocks at each other behind closed doors. But I mean, that was part of the message.

And then the macro message was, why are we off to Davos when the prime minister and chancellor are not going, but we’re going there because unlike John McDonnell, he was the shadow chancellor five years ago and went to Davos famously to basically tell the elite how much ordinary people held them in contempt — and this is my paraphrasing, a revolution is on the way — these two are very much sending the message out that they are pro-business, pro-investments, they favour stability and they want investors to come to Britain, and that after the chaos of the last year, a Labour government would be relatively more calm, which you kind of hope that any government would be calmer than what we’ve seen in the last 12 months. But, you know, it’s basically turning the page on the Corbyn era and sending out a pro-business message.

George Parker?
You’re right. When John McDonnell, the shadow chancellor under Jeremy Corbyn, went in 2018, he said he hoped that the elite were gonna be buried under an avalanche of contempt, I think he said, whereas Keir Starmer, Rachel Reeves were meeting some senior executives from Goldman Sachs, BlackRock, JPMorgan, Morgan Stanley, you know, the full gamut. So one of the key messages he wants to get across, I think, to us, and Rachel Reeves as well, was that they wanted better trading relations with the EU. That’s easier said than done, isn’t it?

Jim Pickard
Yeah. And Keir Starmer impressed upon both of us the fact that he is not talking about rejoining the EU. He’s not really talking about joining the single market. He’s talking about fiddling around the margins in terms of things like, you know, phytosanitary checks, maybe making it easier for young people to have visas to visit the EU. He’s talking about greater defence co-operation, saying that we’ve seen with Russia’s invasion of Ukraine Nato and the EU and the UK working together. So it’s sending out messaging about how he thinks the Boris Johnson deal was not only half-baked, it wasn’t baked at all. Boris Johnson’s own phrasing about baking an oven-ready cake. But he’s walking a very delicate path though, isn’t he, because the last thing he wants to do is send out a message to the red wall that he would somehow reverse the 2016 referendum result.

George Parker
Absolutely. Now Katie, thanks for joining us from Davos. Are people interested in what’s going on in the UK over there?

Katie Martin
(Laughs) It’s a good question. And broadly speaking, the answer is no. (Laughs) You know, how they say that, you know, the only thing worse than everyone talking about you is nobody talking about you? Nobody is talking about the UK (George laughs) unless I raise it in conversations with people. It just doesn’t come up. We kind of don’t really matter. We’re not the big deal at the moment. Everyone’s talking about it’s like Russia, it’s the US economy, it’s all the new green energy subsidies that are flying around from the US that have really annoyed Europeans and how they’re going to try and kiss and make up over all that. The UK honestly does not come up to the extent that it does. You know, a couple of people on the investment side have sort of sighed and put their head in their hands and said that in their view, Brexit has just been a complete, unmitigated disaster, not just economically, but in terms of Britain’s standing in the world. On the business side, people have talked about if Starmer is serious about some sort of rapprochement with Europe, then that has to be good news because a lot of the extra paperwork that businesses are facing now after Brexit came into full force is really unwelcome. But broadly speaking, I’m afraid we’re a little island, you know, we don’t matter so much.

George Parker
Indeed, Now, Keir Starmer has been there. Has anyone heard of Keir Starmer in Davos?

Katie Martin
(Laughs) Not that I know of, but the beauty of Davos is, it’s like really posh speed-dating in the snow (George laughs). So, when they say the great and the good are here, it’s just mad that everybody’s here. All the big money, all the EU bigwigs on the political side, all the big businesses and you can just, within the space of a couple of days, meet dozens and dozens and dozens of people. You have these rapid-fire meetings, and I suspect that’s exactly the sort of thing that Keir Starmer and Rachel Reeves are doing alongside things like fancy dinners and lunches and that sort of thing, you know. For the record, I’ve been getting my lunch from the supermarket so I can write stories.

George Parker
Nooo.

Katie Martin
I know, I know. (George laughs). But yeah, you know, as a way to just kind of meet everyone, all at once. It is very difficult to beat. And so, if they’ve been going around and giving this consistent message that no, Brexit isn’t going to go away, but there are elements that we can do differently, I strongly suspect that will have gone down very well.

Jim Pickard
I thought there’s something really interesting about who Keir Starmer’s chosen to meet out there, and when you think about Ed Miliband’s messaging a decade ago, he had that famous speech where he separates business into producers and predators, and Ed Miliband was trying to triangulate between New Labour and what would eventually become the Corbynista hard left and basically say, look, we love people who make stuff and who, you know, run essential services like supermarkets. What we hate is parasitical City people. Again, my phrasing, not his. And yet who has Keir Starmer chosen to meet out there? It is literally the chief executives of some of the biggest investment banks, and you could have wondered whether it’s almost a deliberate “Screw you” to the left wing part of the party to say things are really changing under me, whether you like it or not.

George Parker
Well, I think that’s true. I mean, going to Davos in the first place and doing a big pre-interview with the FT is all part of the signal, isn’t it, Jim?

Jim Pickard
But they could have met, you know, the head of Nissan or the . . . 

George Parker
Yeah.

Jim Pickard
But they’ve chosen to deliberately go for the elite, the investment banks.

Katie Martin
In part, I think that’s an acknowledgment that the City is massive, you know, and we’re going to really struggle as a country to make widgets, you know, for a living. That’s not going to prop up the economy. Banks and investment firms are one of the biggest industries we’ve got in the UK, and it, there is some value in schmoozing them and keeping them happy.

George Parker
And Jim, uhm, Keir Starmer, you mentioned has this Britain is open for business message and he’s particularly touting the Labour party’s plan of a green technology boom, the Green Prosperity Fund. Do you think Britain can be a leader in green technology, particularly when it’s up against the huge green subsidies being paid out at the moment by the Biden administration?

Jim Pickard
Yeah, and we were discussing earlier in the office when we went whether Britain could have its own IRA, the unfortunately named Inflation Reduction Act. And, you know, the backdrop to your question is, of course, the failure of Britishvolt earlier this week, which was meant to be this big battery champion. It was gonna invest £3.8bn up in, I think, Northumberland. And people thought it was gonna be a great kind of post-Brexit success. And at the moment they are desperately looking for a buyer for it. I mean, do I think that Britain has the potential to be successful in green energy? I mean, sure. And if you look at wind generation, for example, we have one of the biggest offshore wind industries in the world, but there is a danger of losing out to other countries in this race. And what Keir Starmer and Rachel Reeves were very clearly saying to us is that there is a danger that America and other countries could move ahead. I mean, if you look at where China is and things like the production of solar panels and other renewable technologies and battery technology, China is far ahead of the western world. What Labour would do, as you say, would be this big green deal. It would involve £28bn of borrowing a year. It would go into all manner of green technology and free marketeers would say, well, plenty of money is already going into these industries without government intervention. Why do you need to do that? Labour is very keen to accelerate it so that we don’t lose out and there are similarities between what Labour wants to do and what Joe Biden’s doing with his IRA.

George Parker
Katie, how do you think the Europeans generally are gonna respond to the Biden Inflation Reduction Act?

Katie Martin
It’s really interesting because the message that they’re sending out so far is that they will fight this gigantic wall of money that Joe Biden is throwing at green energy with regulations. (Laughs) It’s very European. And again, you know, no one’s talking about the UK, but similarly, no one’s really talking about the European response to all this. They can just see the dollar signs on the other side of the Atlantic and they’re like, well, we’re going over there. And why does Europe keep bellyaching about this rather than doing something about it? Get your own Inflation Reduction Act, get your own subsidies. And also it’s really funny because, you know, normally you would expect the Davos set, kind of thoroughbred capitalists, are kind of allergic to industrial policy unless it turns out the state is throwing lots and lots of money at companies, in which case it’s like, oh, we like it now, we like industrial policy, all good. So they’re very enthusiastic about what the States are up to, and the UK could get a role here. It could be involved in the supply chain. I think US energy companies are keen not to rely too heavily on China for everything. There’s definitely a piece of the pie here for the UK, but we’d have to be kind of canny about how we went about getting it.

George Parker
So Jim, one final question to you. Downing Street has never given an explanation of precisely why, but why do you think Rishi Sunak isn’t in Davos?

Jim Pickard
So I have to just guess here. But I would imagine that he, as a very successful former investment banker and hedge fund manager, worth close to a billion quid or half a billion quid along with his wife, would rather be burnishing his credentials as man of the people, which is why I think he went to Morecambe and talked to ordinary voters rather than being on the slopes of Switzerland.

George Parker
And finally, Katie, I think Jim and I, as I’ve said, have never been to Davos for the World Economic Forum. Is that true Jim?

Jim Pickard
I’ve only in my wildest dreams, but it sounds kind of ghastly to me.

George Parker
Well, exactly. So Katie, is Davos losing any of its swagger? It’s notable that only Olaf Scholz, the German chancellor, is there among the G7 leaders. Is it losing a bit of its dominance of the global financial political scene?

Katie Martin
Maybe. But you know, it’s every possibility that the US presidential circus could roll into town next time around and then we won’t be having this conversation. You know, in terms of getting all the kind of people out of the corridors of power in New York and in Silicon Valley and in London and, you know, across the European capitals, and plonking them all in a not particularly lovely Swiss town up a mountain two hours away from Zurich, where you have no option but to talk to each other (laughs) because there’s nothing else to do apart from hobnob and ski, it is a useful forum people to come to and get that contact. You know, New Yorkers have said to me that everyone here is from New York. I could’ve just seen them at home. But there’s some value in just having everybody here in one place so that you can do, like I say, the speed-dating thing and just talk to everybody you’d want to in a really short space of time.

George Parker
You about to get your skis on?

Katie Martin
No. Been working very hard, George.

George Parker
Mmm, brilliant. Katie Martin in Davos and Jim Pickard, thank you very much.

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George Parker
It was pretty chilly back in London this week, but there was a lot of heat generated in the House of Commons as MPs discussed the boringly named but highly-charged Retained EU Law Bill.

Jacob Rees-Mogg
This is providing legal certainty. So rather than having a flow of EU law interpreted according to EU principles, we will from now on have a single set of laws within this country and that must be certainty rather than otherwise.

George Parker
Jacob Rees-Mogg there, supporting a piece of legislation that he promoted during his brief spell as business secretary under Liz Truss’s government. The Retained EU Law Bill will either be a purifying exercise that will remove unwanted legislative relics from Britain’s time as an EU member from the statute book, or it could create huge new uncertainty for businesses and citizens, removing vital protections and creating a legislative vacuum. Take your pick! Here to explain the background to all this is Peter Foster, our public policy editor, and Professor Catherine Barnard of UK in a Changing Europe. Peter, first of all, can you explain why this is such an emotive issue?

Peter Foster
Which is just because rather than looking in a targeted and specific way at which bits of that enormous body of law that we sucked onto our statute book at Brexit, which bits we should change, which we are free to do now. Rather than doing that, what the government said is it wants to review or revoke all of that law, at least 4,000 pieces, although actually, it doesn’t totally know how many pieces, and it wants to review or revoke those laws by the end of 2023, except for very complicated ones that can go to 2026. And where a decision is not made, there’s a sunset clause in this bill which just means that laws fall off the statute book potentially willy-nilly, and an incredibly broad group of trade unions, of businesses, the CBI, the British Chambers of Commerce, conservation groups, lawyers, an incredibly broad range of groups, George, are saying this is a recipe for chaos, for uncertainty. And the one thing that deters investment, you hear it time and time again, is regulatory uncertainty. People want to know what the rules of the road are and how they’re going to be applied.

George Parker
And if ministers don’t even know how many bills are covered by this, how do we know, as you say, that things just don’t get lost by mistake?

Peter Foster
No, indeed. And I think that’s the thing, is that even if this legislation goes over the line and they try and, you know, put lots of it into the longer sunset clause for business, it still means that vast amounts of horizon’s counting of constant vigilance. And that, of course, takes time, it takes money. And when you’re making investment decisions, you want to know what the rules are going forward. And it’s that kind of permanent feature actually being outside the EU. You can complain that EU regulation was sclerotic and it was overblown and it was a negative, but you did know what was coming and you did know that applied to all 28 members of the European Union. So there was stability. And if you talk to business, they’ll tell you time and again, really, whatever the rules are, we just need to know what they are so that we can apply them, we can adapt to them, we can prepare for them. And what this does is the exact reverse of that.

George Parker
So Catherine Barnard, who actually gets to decide which of these 4000 laws are retained or scrapped, where’s the parliamentary accountability in all this?

Catherine Barnard
Huh! Well, that’s the big problem with this bill. In the name of taking back control, as Jacob Rees-Mogg said in your clip, in fact, it’s taking back control to the executive and not to parliament, because, as Peter said, there are possibilities of hanging onto some of that legislation. They fall into three groups. There’s the “keep”, i.e. the pile of legislation that will be capped and there’s no sunset on it. The decision to keep that legislation could be made in Whitehall or in the Devolved. Then there’s a second pile, “delay”. That’s the legislation where the sunsets delayed until 23 June 2026 and the decision to delay the expiry of legislation is left to Whitehall and not to the Devolved. And then there’s a third pile which can be rewritten in some form, provided it doesn’t add regulatory burdens. And again, that’s a huge Henry VIII power, and that means there’s considerable discretion for ministers. And what we don’t know is what the process is for ministers to decide whether to put legislation on the keep, delay, rewrite or indeed scrap pile and were there’s any form of accountability about it? And so it puts tremendous powers in the hands of the executive in the name of taking back control.

George Parker
This extraordinary amount of power in the hands of ministers. I mean, these are laws that were passed by the European Parliament. They were passed by the UK Parliament as well. And yet we’re giving ministers the power to scrap on their own volition up to 4000 laws. That’s amazing, isn’t it?

Catherine Barnard
Well, I think that’s right. There’s much talk about red tape and scrapping red tape. But what might be red tape for some people is safety to you and me. And this legislation covers things like food standards, gas safety standards, airline safety standards, not to mention swathes of worker rights and environmental rights, consumer legislation, you name it. It’s pretty much covered. And the default position, as Peter said, is that everything must go. It’s a massive fire sale at the end of the year unless ministers decide to act.

George Parker
So Peter, will business welcome this? I mean, after all, Rishi Sunak says that simplifying Britain’s rules, particularly in cutting edge sectors of the economy, is a real Brexit dividend.

Peter Foster
Well, if you look at OECD averages across developed nations, the UK is a low regulation economy, George. And therefore, this sort of desperate belief that, as Jacob Rees-Mogg said, when he actually introduced the dashboard that lists all these laws, this would lead to a productivity boost. It won’t. You know, there are areas where you could sensibly reregulate, but what business wants is targeted and careful consideration of rules that is an absolute case. And you know, there are cases, you know, the government’s consulting at the moment on how you calculate holiday pay, etc. But the idea that there’s a sort of axiomatic benefit from deregulating, it’s just not something that you hear business say. They might not like some regulations, but they want them changed in an orderly fashion. And even on these new and advanced industries, because most businesses are hooked into EU supply chains were into US supply chains. So they’re gonna have to get their products regulated by European regulators or by the US regulators. Having a divergent UK rulebook comes with its own difficulty because you end up with two divergent systems. So, the potential upside that the Brexiteers constantly dream of is never quite as big as they’d hoped.

Catherine Barnard
Could I add something to that? Hmm and this might be a nerdy legal point, which I know you’d love. But the fact is it’s not just the rules are going, but it’s also the interpretative tools that have been used to analyse and understand those rules. And they will go to the general principles of law will go. And the effect of that is that everything has to be rethought, so everything will be relitigated. And that comes at a cost.

George Parker
And how big an administrative exercise is this, Katherine, for the civil service? Could they be doing something more worthwhile with their time, do you think?

Catherine Barnard
It’s vast. If you look at the dashboard that Peter mentioned, a dashboard which I must say, has not been updated since 1400 extra pieces of legislation were discovered. But if you just look at Bass, for example, that’s the business department, about 300 pieces of legislation, and they cover some really fundamental things. There’s some really difficult decisions to be made about how you change things. Even if there was a law dealt with every single day, there’s still would be some left over. And that presupposes that these regulations are straightforward. They’re not that complex, sophisticated pieces of legislation. And so all this talk about Brexit dividend, in fact, you will see civil servants time being eaten up by looking at all of these 4000 bits of legislation trying to work out which of the piles to put them in and remember to. Of course it comes with a significant cost, because civil servants are going to be able to do it all themselves. They’ll have to contract out a lot of that work to law firms and others. And of course, there’s not lot talk about big books.

George Parker
Can it be done by December the 31st.

Catherine Barnard
No, it can’t possibly be done. So many mainstream organisations say that’s impossible. But you can do it if you’re happy to turn it all off without giving it any thought. That’s clearly Jacob Rees-Mogg’s view because he thinks these legislations are unnecessary. But of course it’s not unnecessary if you believe that it’s important to have food standards, if you believe that it’s important to have airline safety and the like.

George Parker
Well of course, the government would argue that that won’t happen. But Peter, can I ask you, is this actually going to happen or is Rishi Sunak waiting for the House of Lords to come along, amend the bill, and effectively push the deadline back beyond December 31st? And who knows, probably beyond the next election, too?

Peter Foster
There has to be the presumption, George, doesn’t it? I mean, you remember Rishi Sunak sitting there with his threat and saying he was going to remove all EU law in 100 days after Liz Truss, during that summer election campaign and she’d do it by the end of the year. And anything Liz can do, I can do better. Sunak must know this is a nonsense. You know, it’s incredibly poor for the UK’s reputation. The difficulty is, George, that even if he does that and the bill goes over the line and says, “You know, we’re going to review and revoke by the end of 2026”, you still then have a prolonged period of uncertainty. You know that in my view, the whole bill is back to front. And you know, the Brexiteers want it because they believe that Whitehall and business has been sort of trapped in a EU inertia and they need to be shaken out of it. But all of this is gonna do is cause costs and uncertainty, and business investment’s been flat since 2016. [MUSIC PLAYING] And time and again when you talk to business and the Bank of England and proper surveys and papers on this, the thing that deters investment is uncertainty. And this is a recipe for uncertainty.

[MUSIC PLAYING]

George Parker
Well, Catherine Barnard and Peter Foster, thank you for joining us. And that’s it for this episode of Payne’s Politics. If you like the podcast, we recommend subscribing. You can find us through all the usual channels to receive episodes as soon as they’re released. We also appreciate positive reviews and ratings. Payne’s Politics was presented by me, George Parker, and produced by Anna Dedhar and Manuela Saragosa. The sound engineer is Breen Turner. Until next time, thanks for listening.

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