Britain’s Bottlenecks
Three major bottlenecks prevent this government from changing Britain: centralised power and wealth in Whitehall and the southeast, unsolved structural pressures on Britain’s public finances, and a rules-bound, incapable state that strangles delivery by itself or others.
Labour receives much unserious advice. “Break your fiscal rules.” “Reindustrialise.” “Tax wealth.” “Regulate.” “Deregulate.” Most of these things are hard and some of them won’t help. There is no one weird trick to get us out of this.
This paper does not add to that pile. We aim to be honest about Britain’s predicament, the scale of the response required and why politics has so far proven so incapable of providing answers. These three bottlenecks to progress are large and long-standing. Any serious political project must have an answer to fixing them.
In particular, Labour’s political project must. Labour is an all nation, all region party. If Labour can’t spread opportunity to the rest of the country, it will govern only in the interests of London and the southeast. If Labour can’t contain long-term pressures on the public finances, public services will falter and the country’s ability to manoeuvre in a more dangerous world will be limited. If Labour can’t solve the sclerosis that stops the state and businesses from doing things, living standards will stagnate and people’s faith in the state to do things will crash.
Labour has begun facing these bottlenecks. But it should not underestimate their scale.
The last Conservative government provides a cautionary tale. They did not understand the problems the country faced, so they did not fix them. Labour should learn from their mistakes.
Anglesey’s nuclear winter
We start in Anglesey/Ynys Môn. Albert Owen, its last Labour MP, spent years fighting for a new nuclear station at Wylfa. This was to be the centrepiece of what local leaders called ‘Energy Island’, their economic plan for Anglesey. It was hugely ambitious. Hitachi sank roughly £2 billion into the development. But Britain could not close the deal.
Now the project is in stasis. Albert Owen’s maiden speech in 2001 was optimistic for the island. When Llinos Medi narrowly won the seat for Plaid Cymru in 2024, her maiden speech featured food banks, homelessness - including her own - and a steady exodus of young people. Anglesey’s economy won’t collapse if it doesn’t make Energy Island a reality. It will feel more like a gentle decline over years and decades, with things getting harder and harder for the most unfortunate.
Anglesey’s predicament is Britain’s. It encapsulates what blocks us:
Westminster is paralysed by having to decide among hundreds of Angleseys. Like most places outside the southeast, the island depends heavily on fiscal transfers and holds only the autonomy Whitehall chooses to grant to it or the Senedd. Owen and Medi have fought for Anglesey. Hundreds of Labour MPs fight for their constituencies. Whitehall can’t make sensible decisions about them all. Places that aren’t succeeding already rarely start to succeed on their own.
Long-term fiscal pressures breed short-termism. Nick Clegg famously dismissed investing in nuclear because it would not arrive until the 2020s. By the decision point on Wylfa Newydd in 2019, ministers baulked at the guarantees needed by the developer. The government never faced up to its basic problem: it had promised lower taxes without fewer public services. Public capital investment was sacrificed as a result.
Sclerosis destroys the country’s capacity to get things done. In the 1950s, Calder Hall at Sellafield went from breaking ground to generating power in three years. Hinkley Point C will take four times as long and at a vastly greater cost. Technology and society have become more complex. But rather than meet that challenge, a steady accumulation of rules and processes and a hollowing out of state capacity has dismantled a specialised nuclear workforce and deleted crucial institutional memory. Reconstructing and reversing that is a slow and expensive process, which made Wylfa Newydd much costlier than it needed to be.
Anglesey needs a serious answer. It wasn’t necessarily unreasonable to walk away from Wylfa Newydd in 2019. Better, perhaps, to continue subsidising the island than to invest in its dreams at any cost. Labour’s advantage isn’t in its ability to review a cost-benefit analysis better than the Conservatives could.
The real future for Anglesey flows from fixing the bottlenecks that stopped Energy Island.
Anglesey’s future will, inevitably, be more complicated than the few hundred words we’ve devoted to it here. That complexity is multiplied a hundred times if we think about the country as a whole. That is all the more reason to build a country that gives people agency over the area they know most about, backs them with investment and gets the state to speed their progress up rather than slow them down.
Starting where people are
Change in Britain has to start where people are. Any think tank can write an ambitious, usually abstract plan to remake the country. Unless it starts with how Britain’s stagnation strikes the typical citizen, it will founder.
It’s easier to think about specifics. Take a typical voter. She’s married, with one or two children, paying a mortgage with a stable job. Her household has two incomes. She is in the decades of graft where people make their biggest contributions to their families and to society. If nothing changes, depending on whose projections you believe, she will either be a little better off at the end of the Parliament or a little worse off.
She thinks the core deal she’s struck with the state is broken. She feels like she is paying too much in taxes, and yet public services are getting worse. It’s harder to see a doctor and longer to get treatment than 15 years ago. Her town looks faded. There’s no reliable way to commute to her nearest city. High streets are littered with vape shops. Some pubs are shuttered over.
If someone who hasn’t worked as hard as she has needs benefits, the state will be there for them. She worries that migrants who haven’t paid in like she has will get more help than her. She resents that she will get almost nothing.
For her, the social contract - you put in, you play by the rules, you get out - feels broken.
By most standards, she is doing well in one of the world’s richest countries. She pays lower taxes than middle earners in any other large European economy. Like 95% of the population, she is actually pretty satisfied with her life. Like two-thirds of Britons, she has hope for her own future and trusts other people. Britain isn’t broken for her. Nevertheless, politics isn’t working for her. This means she both craves change and fears it. Things could be a lot better. But she has a lot to lose.
Any political project to change the country has to start by convincing people like her that the country can be better if we face its hardest challenges. The Institute for Fiscal Studies will have perfectly reasonable technocratic answers on the public finances. When we close our eyes, we can picture Paul Johnson imploring politicians to just be honest with people. There is a lot to be said for honesty.
But people have been given no reason to believe that their taxes need to go up or their public services need to get worse. Politics is not just about doing the sums.
Our voter never thinks about her problems in the terms set out in this paper. When asked, she chooses the NHS, cost of living and immigration as her top priorities. It can be very tempting to ignore the technocrats and instead base Labour’s political strategy purely around trying to pull levers that lead to small, steady progress on each of these.
Tempting, but mistaken. There are no secret buttons in Whitehall labelled ‘improve the cost of living’ or ‘stop migration’ - at least not without cascading negative impacts on everything else. This isn’t how society works. And it would also subtly misunderstand what people are telling us. You don’t understand very much about prisoners from learning that their biggest complaint is the food. People’s frustrations run deeper than that.
Labour needs to do both: start with where people are, but not stay there. Make an argument about where the country needs to go, firmly based on a diagnosis of why it is not there now and taking bold policy actions that evidence suggests will pay off for working people.
In the coming months, we will set out Labour Together’s stall on what those arguments and policies should be. But every political project has to start with that diagnosis.