Labour In Power: End of Term Report

A mission-led government? 

In his first speech after Rishi Sunak set the date for the 2024 General Election, Keir Starmer was clear in saying that there were three reasons why the public should vote Labour: to stop the chaos, because it was time for change and because it had a long-term plan to rebuild Britain.

To deliver on these, the government has spoken consistently about rejecting so-called “sticking plaster politics” in favor of an approach focused on the long term, which breaks downs Whitehall silos and delivers “the most ambitious and honest programme for government in a generation.” This mission-led approach to government was intended to introduce a new way of governing in order to bring about a decade of national renewal. These missions were to focus on five areas:

• Economic Growth
• Making the NHS fit for the future
• Make Britain a clean energy superpower
• Safer Streets
• Breaking down barriers to opportunity

In our conversations with civil servants across Whitehall, it is clear that the thing they crave most from ministers is clear direction. The missions were meant to provide this clarity to the civil service by connecting the government’s political priorities into one consistent narrative, something which could be relied upon while officials seek to coordinate delivery.

This approach is admirable. However, fundamentally rewiring how the government thinks and operates is arguably akin to turning an oil tanker around without a fully functioning control panel. It takes time and it takes determination. Labour has only been in government for a year so it can legitimately claim to not have had sufficient time, but there remains a question about how determined they are in the face of the political headwinds of the day to deliver on this long-term project.

Irrespective of the government’s guiding principles, what is clear is a growing frustration within Labour circles about the pace of reform and that the change that they are eager to deliver on seems stuck in the quagmire that is the Whitehall machine.

Many Labour MPs have told us that they feel the cause of the government’s seeming inability to “turn the tanker” can be found in shortcomings in the preparation for government work which they had previously thought had been further advanced than it proved to be, and was further set back by unhelpful distractions in the early weeks after assuming office.

Prior to the election there was broad agreement about the thrust of the missions, despite grumbles from some about a perceived lack of ambition. There was also broad consensus that whilst voters on the doorstep do not use the language of “missions” and “first steps,” the policies which underpin them do resonate and it gave the Labour Party a useful linguistic tool to describe the bigger picture which individual, often difficult, decisions laddered up to.

However, frustration remains that since entering government and despite having the missions and his oft-repeated “Plan For Change,” the Prime Minister has been unable to successfully articulate what his government is “for,” whose side they are on, and what exactly is the change that they want to deliver. 

The home front: “It's the economy...” 

Keir Starmer and Rachel Reeves have been clear in stating that without the foundations of a stable economy that is growing sustainably, the government will not be able to deliver on its missions. Their chances of re-election in 2028 or 2029 very much depend on it.

For those seeking to understand the intellectual argument underpinning Reeves’ approach, her Mais Lecture in March 2024 is a good place to start. Within this speech, which introduced “Securonomics” into our lexicon, Reeves argued in favor of a new economic approach which recognizes how the world had changed. This approach would be based on the three pillars of stability, investment and reform.

To this, Reeves argued that alongside providing stability, an active government should be focused on stimulating investment through partnership with business and reform to unlock the contribution of working people and the untapped potential through the economy. To assess the performance of the Labour government in its first year in office, we will look at each of these in turn.

Stability

From the day she was appointed as Shadow Chancellor, Reeves has made fiscal credibility her maxim. This should be seen as a reflection of the genuine fear within Labour circles during opposition about the Party being seen as weak or irresponsible on the economy, particularly in the aftermath of the Jeremy Corbyn years.

For years, Labour was hearing from focus groups with target voters that their individual policies were popular, but when they were put underneath the Party’s banner, support for them plummeted. This was due to an enduring fear amongst voters about Labour’s economic credibility and persisted despite the Conservatives’ calamitous handling of the economy. This was something which needed to be dealt with.

Upon entering the Treasury, Reeves sought to turn her rhetoric into tangible action. Labour strategists were eager to identify something which would grab the media headlines and demonstrate to voters that the Party meant what it said on the campaign trail about being trusted with the country’s finances. This is why, alongside a genuine desire to put the country’s finances on a stable footing, Labour majored as heavily as they did on the existence of a £22 billion “black hole.”

This decision set the tone for the first few months of the newly elected government. Not only was it used as the justification for controversial policies such as the increase in Employers’ National Insurance contributions and the scrapping of the Winter Fuel Allowance, but it also conversely led to questions about whether the figure itself was credible. More significantly, accusations were made that the government was talking down the economy and that the negativity was hurting the economy.

Economic growth has continued to be anemic and refuses to show any signs of being kickstarted. GDP figures are poor, borrowing is at record levels and business confidence is shaky at best. This has led to speculation about Reeves’ position and whether a perceived lack of political antennae in her team is actually the root cause of the difficult position the Party is in.

The Chancellor’s difficulties have somewhat turned into a self-fulfilling prophecy. Her spending plans have been further derailed in part by the wider economic climate, both domestic and internationally, but also by her own backbenchers who have forced rethinks in policies such as winter fuel payments and disability benefits—each of which have made the Chancellor’s task at the upcoming Budget even more difficult.

Investment

The second key pillar is investment. This is why one of her earliest announcements as Chancellor was to announce that the UK would be hosting an International Investment Summit. The premise was simple. Show international investors that Britain was under new leadership and that the government was unashamedly pro-business. This was a remarkable success, and the government was able to announce £63 billion worth of inward investment.

From the launch of the Industrial Strategy and the 10-Year Infrastructure Plan to the creation of the National Wealth Fund and the introduction of decade long R&D budgets, Reeves’ approach has been aimed at providing businesses with the long-term certainty they crave. The long-term benefits of this will take years to be felt rather than months, but the early signs from business are almost universally positive.

More broadly, the government has gone above and beyond at times to portray itself as being pro-growth and backing the “builders and not the blockers.” This was seen clearly with the decision to greenlight the third runway at Heathrow despite concerns from environmentalists and even Labour Mayor of London Sadiq Khan, and it has also been demonstrated through funding for projects like the new Oxford-Cambridge rail link and the new Universal Studios theme park in Bedford.

Long-term investment and sustainable economic growth hinges on more than fiscal incentives. It requires action across the entire business operating environment. Therefore, despite some challenges that the government continues to endure with business following last year’s Budget, her support for planning reform, investment in upgrading the electricity skills and a focus on the skills agenda are well regarded.

The government is also betting on the transformative impact that Artificial Intelligence can have in kickstarting economic growth, improving productivity, and making public services more efficient. Coupled with investment in projects like Small Modular Reactors, the government is demonstrating its desire to ensure the UK grasps the potential of the ongoing technological revolution.

Democratic politics is, however, inherently inpatient, and the political cycle does not always align well with the dividends of investment. That being said, whilst the government has had a difficult time on the stability front, it has done much better in terms of investment. They will be hoping that voters across the country will be able see, feel and touch the benefits of it by the time they head to the polls for the next General Election.

Reform

The third key pillar is Reform. Fitting squarely into the “Britain is Broken” mantra and Labour’s mandate for change, the government has shown that it is prepared to move fast and break things in a bid to fix the myriad of problems facing the country.

Through the Planning and Infrastructure Bill, the government is seeking to reform the planning system in order to accelerate the time in which it takes to build major infrastructure projects. Whilst the government has been forced to amend this Bill somewhat as a result of pressure from conservationists, it nonetheless represents a significant piece of reform.

On Net Zero, the government has passed legislation establishing Great British Energy and to enhance the borrowing powers of The Crown Estate to enable it to invest more in the UK’s green energy transition. The government has also instigated a series of reforms to the Contracts for Difference scheme to encourage greater investment into the UK’s renewable supply chain. These reforms are centered around ensuring Britain cements its role as a clean energy superpower.

Whilst controversial with some, the government will be pleased with the progress it has made on the Employment Rights Bill. Again, whilst a series of government-tabled amendments have been added to this Bill, it still represents what is being described as the biggest upgrade to employment rights in a generation. The Prime Minister remains adamant that improved rights at work are not a barrier to economic growth but actually contribute to it, with more secure work bringing increased productivity at work and consumer confidence outside it.

Recognizing that excessive bureaucracy and slow-moving regulators have often been a barrier to economic growth, the government has also taken decisive action in this space. The Competition and Markets Authority have been given a new strategic steer, regulatory bodies have been instructed to prioritize growth and all government departments have been asked to justify the existence of the quangos they are responsible for.

As with investment, the benefits of these reforms are unlikely to be felt immediately. The challenge is therefore for the government to demonstrate to ordinary voters how their reform agenda will deliver tangible benefits to their lives.

And though the government can point to a number of achievements on the domestic policy front and solid beginnings on others, concerns persist that change is not being felt fast enough and that is the anchor that threatens to be a drag on the entire project. 

The international arena 

While the government’s performance on the domestic front has often been criticized, the Prime Minister’s record on the international stage tells a different story—one marked by successes under considerable global pressure.

In an era defined by geopolitical instability, the Prime Minister has had to navigate an unusually turbulent international landscape. Faced with challenges including a volatile global trade landscape, and a shift in the approach to critical global issues such as Ukraine, the UK leader has managed this complex terrain with commendable poise and pragmatism.

Beyond Washington, the UK’s broader trade strategy has yielded meaningful dividends. Landmark agreements with the EU and India signal a new chapter in Britain’s post-Brexit economic identity. These deals are not only important for boosting GDP over the long-term and unlocking new markets, but also for restoring the UK’s international credibility after years of uncertainty and fractious diplomacy. Moreover, the government’s efforts to reset relations with European partners should not be underestimated. After years of acrimony following Brexit, a more collaborative and stable relationship with the EU is a vital component of Britain's foreign policy revival.

However, a central dilemma remains: while these international achievements may impress global observers and market analysts, they seldom resonate with domestic voters. Foreign policy victories do not often translate into electoral gains, especially when economic pressures and public services remain key concerns at home. The government’s task, therefore, is to make these global wins feel tangible for everyday citizens and to frame them as such—be it through job creation, lower prices, or investment in local infrastructure. 

The internal challenges of change 

“Country first, party second” was a mantra Keir Starmer used repeatedly in the run up to the General Election. It was intended as a demonstration of how much the Labour Party had changed from the Jeremy Corbyn years, and how it was ready to put itself back in the service of the British people and usher in a new era of pragmatic, patriotic politics.

It could also be seen as a measure of how Keir Starmer approached the role of Labour Party leader. It is no secret that he does not enjoy managing internal Labour Party dynamics, wanting his energy to be focused on doing the job of Prime Minister. Starmer is no political animal. As such, he has always been happy to effectively subcontract those elements to Labour Party figures who continue to wield significant influence.

Unfortunately for Keir Starmer, since becoming Prime Minister, it will have felt like at least half his inbox is dominated by party management issues. MPs bemoaning the unpopular decisions taken by his Chancellor; the suspension of seven Labour MPs within weeks of the election; backbench forced U-turns on the Winter Fuel Allowance and the Welfare Bill; defeats in local elections and a Parliamentary by-elections, and now suspending four further MPs for “persistent knobheadery,” an injudicious term used by “Labour insiders” which has further incensed a fractious parliamentary party.

Starmer’s seeming unwillingness to engage on the politics is becoming increasingly problematic as backbench MPs raise complaints that his political operation is too remote, only speaks to favored members of the Parliamentary Labour Party and that their role is limited to being lobby fodder. The result: parliamentary rebellions, suspensions and an unhappy party, questioning the moral purpose of its own government and increasing challenges on his authority to govern from its various wings.

Despite the commanding size of the majority and the fact that this government is quite likely only a fifth of the way through this Parliament, it is looking increasingly inevitable that more changes will be necessary for the Prime Minister to deliver on his election promises. Key longstanding advisers have left his side in recent months, with a view taking hold that the Prime Minister should be prepared to look again at his own team and make political appointments that prioritize improving relations with the entire parliamentary party. Meanwhile, think tanks are being asked to help sketch new paradigms for Labour in government, from policy to personnel to performance.

Despite a Spending Review that has pumped money into the NHS, Net Zero and Housing; despite a change to the Fiscal Rules that allow for much more infrastructure spending; despite the roll-out of economic strategies broadly welcomed by those on the receiving end; things won’t change quickly.

In the meantime, Labour leaks support to the left—angry about issues ranging from the leadership position on the situation in Gaza to cuts in welfare and foreign aid98to the right, with the Reform Party on immigration, small boats and general sense that nothing works properly in this country anymore. The reality is that these tensions—along with the alarming fall in his poll ratings—are in part a reflection of the public wanting to see change more quickly.

The question for the PM is how? Hamstrung by a faltering economy which significant structural issues, an increasingly disillusioned parliamentary party, an insurgent opposition party making electoral strides along with a potential new party emerging on his left flank and a story for his premiership that is short on both prose and poetry, it might not be long before the adjective “beleaguered” is attached to the Prime Minister—a difficult position from which to recover. 

The road ahead 

Heading into government, Labour strategists earmarked the third year of this Parliament as the pivotal one. It was viewed as long enough for some of the tough decisions they would have to make early on to begin paying dividends, but far enough away for the next General Election to change track if things were not going as intended.

Given the turbulent political times, Starmer does not have the luxury to wait that long. Whilst they are only whispers at the moment, there are nonetheless conversations ongoing about whether the Prime Minister will even be in post come the next General Election. Labour’s performance in next year’s local, Senedd and Holyrood elections is being viewed as a possible metric against which his future will be judged.

Given the scale of the challenge, there is consensus—from the Prime Minister down—that change is wanted more quickly. So why doesn’t it just happen? The question is not whether the Prime Minister understands the scale of his political problems, those at the center including the Prime Minister and Chancellor are well aware of the need to balance resolving the economic difficulties with some short-term wins. They are also well aware of the way they are viewed and the criticisms made around political management and communication.

In the short term, as we come out of the summer period expect to see staffing changes in No 10 reflecting the need to better manage their relationships with their MPs and other key political stakeholders. This will also include a greater emphasis on engaging with their parliamentary party to reduce the likelihood of future rebellions which suggest that the Labour Party have not necessarily turned the page on the chaos of the Conservative years.

We also expect to see clearer communication about the kind of country the Prime Minister wants to see—the “vision” that has been sorely lacking, with a strong focus on improving the lives of the lower-paid and language around those that “put a lot in and don’t take a lot out” of society. The government will, however, be hoping that this does not descend into a battle to define what a “working person” is and isn’t.

But further challenges to change await. The 2025 Budget will be a difficult one, economically and politically. Tax rises seem inevitable, with the question appearing to be who will be hardest hit. The prospect of community tensions through a long, hot summer fueled by the immigration debate and public services under pressure consumes Downing Street, with very real concerns about the potential for widespread disorder and how best to respond. Language around law and order will harden, with further reform of public services in response to “the new realities” also likely to feature.

The budget represents a “known known.” Potential civil unrest belongs in the “known unknowns” box. And in the “unknown unknowns” category lies possible industrial relations strife, where the inevitable demands for public sector pay rises will rub up against the harsh reality of the economic situation. Labour’s successful banking of the Employment Rights Bill is unlikely to be enough to fully inoculate it against the pay claims of those who feel they have fourteen years of pay frustration needing a release—the current dispute with British Medical Association may be a portent of battles to come.

So where does this leave the Prime Minister and his government? To paraphrase a line from the acclaimed musical Hamilton, which tells the story of how the Founding Fathers of the United States struggled to build a new nation, “Winning is easy. Governing is harder.”

Materials presented by Edelman’s Public & Government Affairs experts. For additional information, reach out to Alex.Williams@Edelman.com