Inside No 10's new dysfunction

New Statesman​

04-06-2025

Keir Starmer's Downing Street was dysfunctional from its earliest days. Labour, senior figures often say, had a plan to win but not a plan to govern. Blame for this was attributed to Sue Gray, who resigned as Starmer's chief of staff after just four months in office and whose tenure still 'casts a long shadow' in the words of one government source.
No 10 has strived ever since to recover from this false start. As well as the appointment of Morgan McSweeney as Gray's replacement, two Blair-era figures joined last November: Jonathan Powell as national security adviser and Liz Lloyd as director of policy delivery and innovation. In his memoir A Journey, Tony Blair writes of the latter that she brought 'order and discipline' and 'had an excellent temperament too: lovely to work with, honest and, underneath all the English feminine charm, quite steely. Above all, capable.'
Powell, who was No 10 chief of staff from 1997-2007 (making him the longest-serving Blair aide), is regarded as one of the government's most successful hires. He is credited with helping to broker the US-Ukraine détente and overseeing a wider foreign policy reset (with Britain striking trade deals with the US, Europe and India).
But Lloyd, who served as Blair's deputy chief of staff from 2005-07, is proving a more divisive figure. Insiders speak of tensions between herself and Stuart Ingham, the head of the No 10 Policy Unit and Starmer's longest-serving aide, who joined as a senior parliamentary researcher in December 2016.
Ingham, who has consciously eschewed a media profile, is described by those who know him well as a cerebral social democrat (his PhD dissected the debate between the liberal philosopher John Rawls and the Marxist intellectual GA Cohen). 'If there's one person in the country who can define what Starmerism is, it's him,' an ally told me. Cabinet ministers liken his relationship with Starmer to that between a father and a son (Ingham survived an attempt by Gray to remove him).
Yet during Labour's fraught early months in government, grandees such as historian Anthony Seldon and former cabinet secretary Gus O'Donnell complained that loyalty had come at the expense of experience. 'I do think there is a need for No 10 to have a lot more heavyweights in there – a lot more policy heavyweights,' said O'Donnell after Gray's resignation, recalling past Policy Unit heads such as David Miliband, Andrew Adonis and Geoff Mulgan.
Such critiques helped prompt the appointment of Lloyd who is close to Pat McFadden, Starmer's chief Whitehall fixer ('what does Pat think?' the Prime Minister will often ask). But government sources speak of a difficult marriage between Lloyd – who is unashamedly Blairite in her outlook – and a broadly soft left Policy Unit (No 10 denied claims that Ingham, who now reports to Lloyd, threatened to resign over her arrival).
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Before her return to government, Lloyd held roles including group company secretary of Standard Chartered Bank and chief investment officer of British International Investment. Though some praise her aptitude and experience, others speak of a clash of worldviews. In one meeting on growth at the start of this year, Lloyd is said to have raised concerns over the government's abolition of non-dom tax status.
'People who operate with assumptions from 20 years ago are different to the people who were in the guts of this election campaign and who understand how we built our coalition,' a senior Labour source told me.
Lloyd is also said to have expressed concerns over Bridget Phillipson's school reforms, which impose new requirements on Blair-era academies such as employing qualified teachers and following the national curriculum (a Phillipson source insisted that talk of divisions was 'nonsense'). The recent appointment of Oli de Botton, who co-founded a free school former Blair aide Peter Hyman, as Starmer's education adviser was viewed as a shift in emphasis. But intermittent speculation that the Education Secretary will be moved at the next cabinet reshuffle is downplayed. 'Keir really, really likes Bridget,' remarked one insider.
A recurrent critique of Starmer's government, intensified by the recent U-turn over winter fuel payment cuts, is that it has lacked a clear philosophical direction. Both Blairites and the soft left, for different reasons, have been disappointed by Labour's first year in office. Some believe this is exacerbated by the marginalisation of the Policy Unit, which one observer described as 'demoralised, lacking purpose and cut out of the loop left, right and centre'.
Two advisers, Tom Webb (health) and Nick Williams (planning and infrastructure), left last month and a third, Ravinder Athwal, who oversaw Labour's manifesto and led on the economy, will depart in July. Some on the party's soft left – which has openly challenged Reeves' fiscal approach in recent weeks – hope that a new economic adviser could serve as a counterweight to the Treasury but others contend that 'there isn't an economist in the world who could come in and persuade Keir to go against Rachel'.
As Starmer's government strives for direction, insiders believe that relations between Lloyd and Ingham will be a key litmus test. 'He's a great survivor,' said one Labour source, predicting that the original Starmerite would ultimately outlast his new Blairite boss.
[See also: Andy Burnham has made his leadership bid]
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