Blighty newsletter: Labour’s 200-day shock doctrine

Labour has been in office for 200 days. While the first 100 days of a government attracts a torrent of analysis, the second century usually passes with little comment. This is a mistake. The first half-year or so of a government from which it is hard to veer. Milton Friedman, an economist, said that a new government has “some six to nine months in which to achieve major changes”. After that, reforms inevitably become more piecemeal.So, 200 days in, what are the most substantive measures introduced by Sir Keir Starmer’s Labour government? Forget about the rows. Memories of fights over the decision to scrap the £300 winter-fuel payment for all but the poorest pensioners will fade; leading a mob of farmers down Whitehall over inheritance-tax reforms already seems distant. Likewise, a major planning bill, which may yet define Labour’s term in office, is still to be published.Instead, look to three less-remarked-upon policies for Labour’s future legacy. The first is a significantly higher minimum wage, which at £12.21 an hour amounts to roughly two-thirds of the median wage. The second is beefing up workers’ rights, which will make it harder to fire and rehire employees or to use flexible zero-hours contracts, while also giving unions more rights. The reform will make hiring workers more burdensome. The third is higher taxes on employment. An increase to employer national insurance (from 13.8% to 15%) and, significantly, levying it from the much lower level of £5,000 rather than £9,100 will make it more costly to employ someone.Taken together they mark a big shift in Britain’s economy, which the government hopes will shock business into being more productive. Labour has made hiring people more expensive and complex. Businesses should, as a result, invest more in capital, such as better machinery or technology, which will make each worker more productive. The potential cost is fewer jobs, or businesses misallocating resources; the potential benefit is a healthier economy. For some in Labour, that is a good deal—albeit not one they are willing to shout about. After 200 days Labour’s economic strategy for the next four years is already set.