Labour Faces Backlash: Rightward Drift Sparks Infighting as Critics Slam Alignment with Financial Sector

580 words, 3 minutes read time.

In recent times, Labour’s political trajectory has faced criticism from various quarters, with dissent emerging from left-wing groups, MPs, and disillusioned former voters. Notably, Momentum, the Socialist Workers Party, and Jewish Voice for Labour have voiced concern, accusing Labour of forsaking its socialist roots by aligning itself closely with the financial sector. Their critique revolves around the belief that this alignment perpetuates inequality, austerity, and environmental degradation.

A significant faction of criticism stems from Labour MPs and members, particularly those who championed Jeremy Corbyn’s leadership. They argue against compromising the party’s foundational policies and vision to gain favor with the media or business elite. Instead, they advocate for a steadfast commitment to a radical alternative, positioning Labour as a robust counterforce to the policies of the Conservative government.

Adding to the chorus of discontent are former Labour voters and supporters who perceive the party’s shift towards the center as a betrayal. Some have defected to other political entities, such as the Greens, the SNP, or even the Brexit Party, while others have chosen abstention as a form of protest. This group reflects a sentiment of disillusionment and contends that Labour’s attempts to court the city will alienate its core base and potential allies, hindering its ability to regain public trust and secure votes.

The critics collectively caution against the potential pitfalls of Labour’s current trajectory. They argue that the party’s rightward drift and embrace of the financial sector may lead to accusations of hypocrisy, especially in light of its historical opposition to the removal of the cap on bankers’ bonuses. This cap, initially introduced by the European Union in 2014 as a response to the 2008 financial crisis, aimed to curb excessive risk-taking and align bankers’ interests with the long-term stability of their institutions.

However, the UK government, staunchly opposed to the cap from the outset, dismantled it in 2022 as part of its post-Brexit deregulation agenda. The decision sparked controversy, with critics, including the Labour Party and trade unions, arguing that the move favored the financial sector over wider societal interests. The removal of the cap was perceived as a reward for the sector, prompting accusations that it perpetuated a “greed is good” culture in the City of London.

At the forefront of Labour’s current stance is Rachel Reeves, the shadow chancellor, and former Bank of England official. In her pursuit of support from the business and financial sector, Reeves has pledged to reduce regulations, stimulate economic growth, and champion the UK’s financial services industry. Notably, she has firmly ruled out reinstating the cap on bankers’ bonuses or raising the corporation tax, decisions that have attracted criticism from within Labour ranks and left-wing groups.

Critics argue that Reeves’ position diverges from the party’s foundational values and public opinion. They emphasize the necessity for the financial sector to contribute its fair share of taxes and contend that stricter regulations are vital to prevent a recurrence of a financial crisis. Some critics have also questioned the consistency of Reeves’ stance, highlighting her previous opposition to the removal of the bonus cap. In defence, Reeves asserts that her approach aims to establish smart and sensible regulation that benefits consumers and the sector alike. Additionally, she commits to closing a tax loophole benefiting private equity executives, seeking to balance her outreach to the financial sector with measures that address concerns about fairness and accountability.

By Patrick Harrington

Picture credit: By Chris McAndrew, CC BY 3.0, https://commons.wikimedia.org/w/index.php?curid=61329695