Government and opposition alike must do much better

Times

23-07-2025

Out of the three parties that matter most, only one will be looking forward to autumn. When parliament packed up for the summer recess this time last year, the new Labour administration had a stonking majority, a sense of confidence and a clear plan of action. Twelve months on, morale has collapsed. Rarely have a government's fortunes declined so far, so fast.
This is not the consequence of world events or the vagaries of the global economy: Sir Keir Starmer is to blame. He came into power with the stated aim of boosting the economy's performance to improve public services. But prioritising growth demanded a degree of discipline that he has signally failed to demonstrate.
Although the government has chalked up a few achievements — for instance, in reforming the planning system — too often other considerations have taken precedence over growth. Workers' rights have been strengthened to the detriment of companies. Taxes on employers have been raised with the consequence that firms are hiring fewer people. Higher pay for public servants has contributed to the deterioration of public finances.
The government's big effort to rein in spending centred on its planned reform of the welfare system, but Labour backbenchers rebelled against it. Instead of facing up to the rebels by making the issue a vote of confidence, the prime minister backed down. Predictably, this cave-in has encouraged further dissent. The prime minister's problem is that he is a conciliator rather than a leader. That is why he has proved to be an effective diplomat in his dealings with foreign leaders. With his low-key style, he has succeeded in improving Britain's relationship with Europe, in encouraging European leaders to co-operate over defence and in establishing a good working relationship with Donald Trump, despite the two men's glaring ideological differences.
These external successes cannot compensate for Sir Keir's domestic failures, however. They have cost him credibility and the economy momentum. In the past two months, national output has shrunk while public debt continues to mount. In June, the government borrowed £20.7 billion. That is £6.6 billion more than in June last year and £3.6 billion more than expected.
As Sir Keir has lost focus on the economy, concentrating on averting short-term difficulties rather than pursuing a coherent agenda, he has come to look like a tactical politician rather than a strategic one. Both MPs and voters are increasingly unclear about what his government is for.
Labour is divided between pragmatists who want order in the public finances and leftwingers who want to spend more. The autumn budget, in which Rachel Reeves will have to reconcile the conflicting demands of the bond markets and Labour MPs' desire to protect social spending, will be a pivotal moment in the government's life.
Sir Keir's greatest boon has been the state of the Conservative Party. Despite a welcome recent attempt to reassert the party's commitment to fiscal rectitude in the wake of the government's welfare debacle, Kemi Badenoch has failed to establish a clear identity around which her party can coalesce. At 23.7 per cent, its share of the vote in the last election was the lowest yet; it has declined further in polling since then, to 17 per cent. This week's reshuffle will not by itself reverse the Tories' decline: changes in personnel cannot compensate for the lack of a compelling story.
The one party that has succeeded in devising one in the past year is Reform. Nigel Farage has capitalised on the loss of direction in both main parties to seize a commanding lead in the polls. Sir Keir and Ms Badenoch need to develop better ways of countering Mr Farage over the summer, or he will make short work of them in the coming year. For both, it is a case of 'must do better'.