“A Britain that belongs to you”. This refrain — repeated by Keir Starmer eleven times in his conference speech — points towards a new framing for his government’s agenda. The question now is whether this rhetorical innovation will translate into substantive policy and bear political dividends. Belonging can and will be understood in various ways, but a literal reading might be most instructive. The conference was full of events and discussion on Labour’s notable, albeit tentative, forays into public ownership and its new mode of industrial strategy, positioned through Great British Energy and the National Wealth Fund. Indeed, clean energy featured heavily in Starmer’s speech including: a stridently specific defence of overground transmission cables, the official announcement that GB Energy will be headquartered in Aberdeen and a promise in the peroration to “harness” clean power for national renewal.  

Soon, this agenda will move beyond the prose of speechmaking into the arithmetic of Treasury accounting and delivery: billions spent, gigawatts deployed, jobs created. This stage of the Whitehall policy sausage factory is where real fixed capital runs into its written representation in the official accounts and finds out whether it will survive the encounter. There is no guarantee under these circumstances that a rose by any other accounting convention would smell just as sweet. It is crucial to the UK’s economic prospects, given the unanimous diagnosis of the UK’s chronic under-investment, that the palpable widespread enthusiasm for mobilising real resources does not run into formal obstacles. Perhaps the most tantalising moment at conference came in Rachel Reeves’s speech, in which she noted a need to move beyond “just counting the costs of investment in our economy to recognising the benefits too”. This opens a crucial discussion on the fiscal accounting of the institutions, and public investment more widely.  

Much of the debate will likely focus on questions of scope. Which sides of which public institutions’ balance sheets will form the yardstick by which the Treasury restrains itself? Will planning reforms join the categories of labour migration and childcare whose productivity impacts the OBR scores in its forecasting, as the Chancellor told a fringe event? These are important questions. But debate also needs to begin with a refined conception of the active coordinative role that public investment can play in expanding economic activity and cohering essential infrastructures.  This is distant from the enduring Treasury analytical orthodoxy, which mandates a public good “rationale for intervention” with complex and dynamic impacts rammed into simplistic monetised “net present social welfare”. Simply having valuations of public assets play a part in fiscal rules, whilst welcome, could well be a flat accounting innovation if not accompanied by innovations in the core economic thinking and valuation techniques. A new framework known as “Risk Opportunity Analysis”, which portrays impacts in their original terms and builds from non-equilibrium assumptions, could be part of the solution, especially for the “transformational change” policies noted in the Green Book as needing special attention.  A focus on infrastructural “system efficiency”, which asks whether network nodes are effectively developed and operated spatially and over time, rather than the narrower economistic “allocative efficiency”, could also help enable Starmer’s new penchant for pylons and the clean power mission. Such an approach would recognise that investments in our energy infrastructure are not merely additions to the generic capital stock, but a nodally transformative intervention with the potential for non-linear effects on the competitiveness of British industry.

There is all manner of intricacies to be unwound here, including the balance sheet implications of mixed public and private assets under receipt of public funds through emerging “business models” in sectors like hydrogen and carbon capture. Are these public sector assets? Treasury officials tend to ask whether a majority of a project’s lifetime revenues will be private or public, but in a world of subsidies linked to uncertain market prices over decades, this can only ever be a guess. For GB Energy’s electricity investments, will the Treasury demand a certain assumed return on projects — effectively replicating the private sector’s damaging hurdle rate fixation, or allow the institution to be guided strategically after capitalisation and eventually borrow on its own account? The timeline is important as well, with fiscal rules bound to spending review timelines and OBR forecast horizons, but liabilities, and especially benefits, occurring further ahead. Moreover, any economic model will be making assumptions and simplifications, often fictitiously closing the economy to trade, retreating deep into partial equilibrium, or (as in recent OBR work) using decades old production functions. This is not simply a question of multipliers and elasticities, although those of course matter, but also deeper issues of technological path dependency, socio-technical transition, and systemic significance of infrastructure. Policymakers must always keep this in mind, understanding economic analyses and the fiscal projects they inform as one of several tools to guide ambition and renewal, not a convenient trap for timidity. Getting this right can open the path to the expansive, inclusive and sustainable economy that Britain desperately needs — a path on which any Labour government, and any progressive movement, must surely belong.