Things will only get incrementally better for Keir Starmer

New Statesman​

4 days ago

Photo by Simon Dawson / No 10 Downing Street
Britain's political doom loop remains unbroken – perhaps one of the last things about us that is. A country whose economy has been too weak and growing too slowly to give people the living standards and services they believe they deserve, that chews up and spits out wildly different forms of leadership, year after year after year.
Now it's Keir Starmer's turn. YouGov reports that the proportion of voters with an unfavourable opinion of the Labour leader has risen to 69 per cent, giving him a net favourability rating of minus 46 – his worst so far. The good news is twofold: he still has four years left, and when it comes to unpopular British leaders, it's 'join the club'.
But that is about it. With a tough Spending Review on 11 June, and Labour MPs in mutinous mood about benefits cuts, gleeful speculation has already begun about how long Starmer will last, and about where the putsch is coming from. Let's deal with that later, but start by asking: even during days dominated by the hugely important defence spending review, what is the biggest issue for Downing Street?
It is, simply, an electorate that feels skint. One key Starmer adviser tells me he thinks the very phrase 'cost-of-living crisis', popularised with the spike in energy prices after the invasion of Ukraine, grossly undersells the problem: 'This is a profound living-standards crisis.'
He goes on to sketch a married couple in their fifties living in the suburbs. Their standard of living – the holidays they can take, the car they drive, the restaurants they can afford to eat at – is lower than it was 15 years ago, when annual pay rises came regularly, loans were cheap, the high street still worked, and technology was getting cheaper. Looking back, they are angry. Looking forward, they keep pulling the political levers to get change – Cameron, Brexit, Johnson, Labour – and nothing happens.
The causes are well known, from the financial crash to spiking energy costs, Vladimir Putin's war, and decades of underinvestment. But voter rage, based on daily experience, doesn't blow away. It leads, next, to Reform with its fantasy economics and further in-built disappointment. The only Labour answer, so it follows, is to invest, to bring good jobs and grow the economy. Increased defence spending helps. But refiring the growth engine is not something that any government can do in a single year.
So, cost of living is what dominates Downing Street strategy to the exclusion of all else. Until recently, that wasn't clearly so: Keir Starmer was the (successful) Prime Minister for Abroad. If there was a prime minister for the home department, it was Rachel Reeves.
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At the heart of government, perhaps the most significant shift has been a greater focus by the Prime Minister on domestic spending and economic decisions, following a series of bilateral meetings with Reeves in May. He is becoming steadily more assertive with those around him. When Liz Lloyd, the Blair-era policy chief, for instance, tried to get rid of Stuart Ingham, Starmer's veteran policy adviser, she was rebuffed. It is Starmer who has driven a rethink on the two-child cap and a bigger autumn announcement on child poverty, and who buried the winter fuel allowance error so publicly himself.
To put it crudely, Starmer's greater engagement has seen a slight tilt leftwards in different policy areas. The more involved he has been, the more backing Bridget Phillipson has received on her academy reforms. Similarly, he has been pushing back against the cancellation of net zero as a political distraction: see the use of 12,000 predicted new green energy jobs planned for Lincolnshire as a way of combating Reform.
This has immediate policy results. Soon we should see an intermediate package of extra help for families in poverty – more money for the household support fund, perhaps, and for breakfast clubs and school meals. That is not enough to make up for the two-child benefit cap, likely to be abolished when the poverty strategy is announced this autumn. But it is a direction-of-travel signal.
In the Spending Review, we should expect the announcement of the commercial competition to build Britain's new, small modular reactors to be followed by some serious funding, including for the Acorn carbon capture project in Aberdeenshire, vital for Scottish Labour MPs stung by Reform's rise there.
The way ahead begins with those policy reversals over winter fuel and the child benefit cap, then moves towards big infrastructure announcements across the north and Midlands of England. Summer will be difficult, but ministers believe the headroom exists to make the autumn feel a little easier.
Though cabinet members tell me the Spending Review will be 'tough, not terrible', none of the above cancels the brutal spending squeeze on non-priority departments, including, crucially, local government and housing. The Environment Secretary, Steve Reed, is, by all accounts, having a horrible time. Angela Rayner is still fighting – one of her allies reminds me: 'Never forget, Angela is a trade union negotiator.'
Downing Street is open to suggestions for ways to raise more money. Rayner's leaked tax memo had useful suggestions but would only have raised a few billion a year. The New Statesman has discussed ways of expanding National Insurance, a gambling or banking tax, and the case for a major rating revaluation – economically strong, politically dangerous. In cabinet, some want tax rises to focus minds towards 'on your side, not their side' politics. That leads, inexorably, to sensitive discussions about wealth.
Louise Haigh, the former transport secretary, free to speak openly at a recent conference held by the think tank Compass, urged Reeves to 'deliver a proper wealth tax. When the wealthy don't pay their fair share, everyone else picks up the tab.' Such a tax, she argued, would reward work, close loopholes and give Labour the means to invest: 'We must acknowledge that our tax system is perverse. It punishes earned income but barely touches the real driver of inequality – wealth.'
There is a fight ahead on tax and spend, as in a Labour government there should be. But it is practical, not ideological. As one senior figure puts it: 'This isn't Healey and Benn.' Crucially, there is no sign of a serious challenger to Starmer from inside the government. Ed Miliband to his left, has a deep personal loyalty. Rayner, hugely popular inside the Labour family, would struggle to reach voters outside it. Wes Streeting, for all his energy and eloquence, doesn't have the union or constituency support to take colleagues in a Blairite direction. Only Andy Burnham, a mayor not a cabinet minister, has made serious public criticisms of the government, speaking at the same conference as Haigh.
And there is underlying agreement. After the local elections hammering, ministers and advisers from very different Labour factions say that living standards are their key test. 'This is becoming a more lively cabinet, but it is a pretty loyal cabinet,' one member says, adding: 'We have time, but it is a long, slow haul and we have to own our past policy mistakes.'
It is also, of course, a cabinet of politicians who watched the Tories destroy themselves in successive leadership fights which offered easy answers to deep problems. It's a cabinet able to make its own mistakes, no doubt, but unlikely to make that one. Now that Starmer has at least a brief break from the pressure of overseas crises, some of the incoherence that his government has suffered from should begin to clear.
Anger in the country will not abate quickly and will probably get much worse during 2025. But it won't be answered, this time, by major factional feuding, a putsch or a deep division in the cabinet.
[See also: Rachel Reeves should fear the bond market vigilantes]
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