It was Peter Mandelson, the Thomas Cromwell of New Labour, who used a cheeky, half-joking sentence that was in fact one of the most significant underpinnings of Blairism. In 1998, three months into his first big public-facing post as trade and industry secretary, he travelled to California. He wanted to sniff the brash, entrepreneurial air of Silicon Valley, at that time the epicentre of the dot-com boom, so he gave a speech to a group of senior executives at IT giant Hewlett-Packard.

Explaining the temper of the new government, he reassured his audience, “We are intensely relaxed about people getting filthy rich.” Those nine words signalled New Labour like almost no other utterance.

It had been the genius of Blair and Mandelson to understand that, whilst the electorate often liked Labour’s policies on public services and social policy, they were alienated by a nagging sense that the party could not celebrate individual success. In Blair’s words, they “were defined by reference to trade unions, the public sector and not much else”. The Observer’s Andrew Rawnley would go so far as to describe “Labour’s visceral aversion to wealth creation”.

Shedding that image helped unlock an electoral coalition which delivered three election victories in a row — but it was fragile. The Labour Party has not tasted success since 2005: the youngest first-time voters at the next general election were not even born. Whilst the chaotic exhaustion of the Conservative government is likely to deliver Sir Keir Starmer to Downing Street, Labour maintains a squeamish Victorian attitude to wealth creation.

The way Labour talks about economic policy is deeply revealing. Almost every pronouncement is steeped in an assumption that the state is the best and most virtuous expression of economic activity, such as the creation of a National Wealth Fund, whilst private enterprise is the home of “excess profits” and non-domiciled tax status, two major targets for the shadow chancellor, Rachel Reeves.

The repeated references to a windfall tax are indicative. Reeves announced at the Labour Party annual conference in October that there would be a “proper” windfall tax on energy suppliers, presumably in addition to the Energy Profits Levy and the Electricity Generator Levy. The party has also talked about taxing carried interest earned by private equity fund managers. This suggests that there is a morally or societally “correct” amount of profit to be made on any commercial activity.

The government views highly successful private companies as fair game

Across Europe, 30 different windfall taxes have been proposed or introduced since the beginning of 2022. Oxfam has described these levies as “intuitively fair”, whatever that means. Some potential investors are bound to be deterred by this ongoing threat: when will profits ever be “reasonable” or “defensible”? Some have argued that windfall taxes are inherently admissions of policy failure. They also suggest, however, that the government views highly successful private companies as fair game for almost unlimited revenue.

In September, Labour published its industrial strategy under the title “Prosperity through Partnership”. One of its key messages is that “the Labour Party’s central mission is to deliver growth”, which shows the role it imagines for government. Some intriguing observations about the document: the word “wealth” appears once, the word “profit” not at all. “Competition” gets 10 mentions, but every one is in connection with how to regulate it. You will look in vain for the words “free” or “freedom”.

This is dirigisme with good manners. Labour conceptualises economics as a collective effort, and Starmer and Reeves recently announced an advisory council on infrastructure which will be given statutory foundation if Labour wins the election. Reeves spoke of the need for “new models of collaboration between government and investors”, and she and Starmer have been courteously received by the major City players like Lloyds, HSBC, Santander and Blackrock.

The drumbeat is consistent: more taxation, more government intervention, more regulation, more control. A statutory infrastructure council, a state-organised wealth fund, and virtuous discipline exercised on otherwise excessive profits. Older readers may think of “Neddy”, the National Economic Development Council set up by Selwyn Lloyd in the thready-pulsed heart of the post-war consensus; and they may recall its record of success.

When Starmer became leader of the Labour Party in April 2020 — he beat Rebecca Long-Bailey and Lisa Nandy — he talked about “a moral socialism that is relevant to people’s everyday lives”. There were some clear moves to draw a line under the Corbyn era, most notably in eliminating the “stain” of anti-Semitism, “tear[ing] out this poison by its roots”. Even Starmer’s worst enemy would concede that there has been substantial change.

Economically, however, whilst there has been no revival of the Clause IV-style nationalisation Corbyn promised or major hikes in corporation tax, Starmer’s instincts are firmly on the left. During his leadership campaign, he wrote bluntly, “I believe the free-market economy has failed.”

He, Reeves and other senior figures know some of the things they have to say. Recently Starmer tried a bold approach: writing in The Daily Telegraph, daringly Tory-friendly territory, he lamented a “once great country now set on a path of decline” and, painting himself as an agent of change, invoked Margaret Thatcher for her achievement in “setting loose our natural entrepreneurialism”.

What lurks beneath, creeping out only in hint and nuance and language, is that the Labour Party has rolled back the Blairite revolution in this one intellectual respect. So far from being intensely relaxed, it gathers together its traditions of trade unionism, non-conformity and egalitarianism, and it simply cannot face up to the reality of wealth creation through private enterprise. It is too raw, too messy, too ugly, too bare-knuckle. These people may exist, Labour accepts, but you don’t have to have them at your table.