Labour's summer of discontent

New Statesman​

30-07-2025

Photo by Toby Melville -.
At No 10's summer media reception, Keir Starmer sought to conjure optimism. He invoked the success of the Lionesses – who won the European Championship five days later – and the return of Oasis. As memories turned to the 1990s, he conceded there was at least one difference: Labour's parlous poll ratings. But, he said, 'things can only get better'. It was the party's 1997 anthem that soundtracked the downfall of Rishi Sunak, who came to embody a stuck Britain: a country of stagnant living standards, crumbling public services and uncontrolled immigration.
Labour always knew it could not rely on the wellspring of optimism that accompanied Tony Blair's first victory. But matters have deteriorated faster than pessimists anticipated. After a year in power, Labour's average poll rating stands at just 22 per cent, putting it eight points behind Nigel Farage's Reform (not until the fuel strikes in 2000 did Blair briefly lose his lead to the Conservatives). Cabinet ministers openly speculate over whether Starmer will still be leader by the next general election. The word that Britons are most likely to use to describe the country, according to research by More in Common, is 'broken'.
The evidence of this disaffection is widespread. In Epping, Essex, on 27 July, around 500 protesters gathered for the fifth time to demonstrate against the use of the Bell Hotel to house asylum seekers (one of whom has been charged with sexual assault against a 14-year-old girl). Similar demonstrations were held in towns and cities across England. The following day, resident doctors held a fourth day of strikes over pay restoration. Their union, the British Medical Association, is emblematic of a newly militant middle class (the logo of Broad Left, an influential faction in the BMA, features a stethoscope in the style of a hammer and sickle). Doctors complain their earnings remain below the 2008 level even after a 28.9 per cent pay increase. But the sympathy of a public contending with an NHS waiting list of 7.36 million is exhausted.
Looming over all this is the state of the economy – which it is Labour's defining mission to grow. It has shrunk for the last two months, with business closures at a 20-year high and consumer confidence falling at its fastest rate since Liz Truss's 2022 premiership. Inside Westminster and the City of London, the UK's fiscal precarity is the subject of animated conversation (Britain has the sixth-highest debt, fifth-highest deficit and third-highest borrowing costs among advanced economies). 'There's a real risk there could be a crisis quite quickly because of the situation with the bond markets,' Helen Thompson, the Cambridge professor of political economy and author, has warned.
Then there is Gaza, a humanitarian catastrophe that an increasing number in Labour fear could become a political one. After almost half the cabinet, including Angela Rayner, David Lammy, Yvette Cooper, Wes Streeting, Shabana Mahmood and Lisa Nandy, pushed for faster recognition of a Palestinian state, Keir Starmer announced a deadline of September. But as a new left party led by Jeremy Corbyn and Zarah Sultana gestates, some in Labour fear that London could fall, just as former fortresses such as Scotland and the 'Red Wall' did.
Rather than the optimistic 1990s, the mood is more reminiscent of the fraught 1970s: the decade of 'stagflation', trade union militancy, an International Monetary Fund (IMF) bailout and a putative military coup (38 per cent of those aged under 34 have a positive view of 'a military strongman with no government or elections'). That decade ended with the election of a politician previously thought too right-wing to win: Margaret Thatcher. Will the 2020s be any different?
There might not be a vacancy inside Labour, but there is always a contest. Angela Rayner is the person that MPs believe is winning it. This is one reason her words to the cabinet on 22 July carried such weight – they are increasingly studied as those of a prospective prime minister.
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A week before the anniversary of the Southport murders, which triggered last summer's riots, Rayner told the cabinet that 'economic insecurity, the rapid pace of deindustrialisation, immigration and the impacts on local communities and public services, technological change and the amount of time people were spending alone online, and declining trust in institutions [were] having a profound impact on society'. Her comments, a day after Farage declared the UK was facing 'societal collapse' and 'civil disobedience on a mass scale', led to warnings from Michael Gove and others that the government was 'tacitly encouraging' unrest. But Rayner's allies – though surprised by the candour of No 10's cabinet readout – maintain she is prepared to speak uncomfortable truths on issues such as immigration and wants to 'start where people are'. The Deputy Prime Minister's perspective, they say, is informed by her north-west constituency Ashton-under-Lyne (where Reform finished second at the last election with 24.8 per cent of the vote).
For Labour, the challenge is to match words with action. Home Office aides contend that the government is making progress after inheriting an 'absolute wreck' of a system. The number of asylum seekers accommodated in hotels, which surged as the Conservatives sought to introduce the Rwanda deportation scheme, has fallen since its peak in 2023. By the time of the next election in 2029, Yvette Cooper's team reaffirm, the government will have ended the use of asylum hotels entirely.
Others, however, declare that far more radical intervention is needed. One influential Labour MP calls for the government to 'requisition Duchy of Lancaster land and build temporary Nightingale accommodation' (along the lines of the hospitals constructed during the Covid-19 pandemic); to pass an 'Immigration Sovereignty Act' that unilaterally reforms articles 3 and 8 of the European Convention on Human Rights (which are blamed for preventing the deportation of foreign criminals); and, in an echo of Dominic Cummings, to 'send the Royal Navy into the Channel' to halt small boat crossings.
The divide inside Labour is partly a classic left-right split: the biggest rebellions in this parliament have been over welfare cuts. But it is also increasingly a conservative-radical one. Conservatives argue that, given time, Starmer's patient, incrementalist strategy will work: higher living standards, shorter NHS waiting lists and lower immigration will pave the road to a second term. Radicals, by contrast, argue that something fundamental must change if Labour is to succeed. From the left, figures such as Andy Burnham, who has undergone a Tony Benn-like reinvention, champion electoral reform and a multi-party future. From the right, heterodox cabinet ministers privately favour a dramatic overhaul of the state and the welfare system – with the latter shifted from need towards contribution.
Recently, the Overton window – the range of ideas and policies considered politically acceptable – has widened on immigration. Ahead of Rachel Reeves' daunting Budget this autumn, the same is becoming true of economic policy. Labour has no intention of introducing a wealth tax of the kind proposed by Neil Kinnock – a 2 per cent levy on assets worth more than £10m – but its refusal to rule out the policy has encouraged the most sustained debate yet. The IMF, meanwhile, has urged Reeves to consider charging for NHS treatment and ending the triple lock on the state pension. 'We don't have a democratic mandate for that,' one cabinet minister told me when I put the latter suggestion to them (though they did not reject the fiscal logic).
Yet to maintain market confidence, Reeves may have to think the unthinkable in her Budget. Treasury aides insist she will keep pledges not to increase income tax, National Insurance (on employees), VAT and corporation tax (something critics regard as the government's 'original sin'). But this has left her painfully short of revenue raisers as bond vigilantes whisper they would prefer fiscal 'headroom' closer to £20bn than £9.9bn. When the irresistible force of the markets meets the immovable object of Reeves' tax pledges, which will prevail?
For Starmer's government, the early signs are ominous. Exclusive polling by More in Common for the New Statesman shows that just 22 per cent of Britons believe the country is on the right track. Sixty per cent believe that it is on the wrong one (a plurality – 29 per cent – identify the 2016 Brexit vote as the defining error). Until recently, the great consolation for Labour has been a fractured right. The divide between Reform and the Conservatives has meant that Starmer could plausibly retain power even with a vote share lower than the 33.7 per cent he won in 2024. But the planned formation of a new left party threatens to subvert this calculation.
Inside Labour circles, opinion is divided on the impact of the as-yet-nameless party. Some recall the People's Front of Judea/Judean People's Front split and Logan Roy's declaration in Succession: 'You are not serious people.' Others believe the new party, which attracted more than 500,000 email sign-ups in just three days, poses a grave threat. One senior Labour source warns 'it is not inconceivable that Keir, Wes and Shabana could all lose their seats' and that the party faces a 'worst-of-all-worlds scenario' at next year's elections as the populist left and right combine to make protest irresistible. Leading supporters of a pact between the Corbynites and the Greens privately estimate that such an alliance could win around 100 MPs at a general election.
There is one figure whose name recurs with surprising frequency during discussions of Labour's fate: Tony Blair, still immersed in the minutiae of British politics and regularly receiving groups of MPs at his institute's office. Those who have recently met Blair say he believes 'the country wants someone to take it by the scruff of the neck, lead it and shake things up' as Donald Trump has in the US. Should Starmer prove incapable of doing so, the warning was clear: things will only get worse.
[See more: Why I am sticking with Labour]
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