Labour's Shambles: A Government in Disarray

Labour's first anniversary has been marred by a series of self-inflicted wounds, with the party's leaders, Keir Starmer and Rachel Reeves, bearing the brunt of the criticism. The controversy over the welfare reform bill, which was gutted of its content and failed to save any money, has shredded the authority of both Starmer and his chancellor. Reeves, who took a hard line in pressing for cuts, must own her share of the blame, but Starmer bears more responsibility for the debacle.

Key Takeaways:

• The Labour party's visceral resistance to cutting disability benefits led to a rebellion, which was inevitable but ignored by Team Starmer.
• The welfare reform bill was gutted of its content, resulting in no savings, and was driven through by ministers despite opposition from Labour MPs.
• Starmer failed to stand by his chancellor, Rachel Reeves, in parliament when challenged to do so, exacerbating the sense of a leader with no political touch.
• Labour's leader, Keir Starmer, is facing a crisis of authority, with his MPs no longer trusting him, and the party is now facing a diminished government that is struggling to carry through difficult reforms.
• Reeves' fingerprints are visible at the scene of the incidents that Labour MPs believe to be foundational errors, including the now-reversed move to means test pensioner winter fuel payments.
• Starmer's failure to back Reeves immediately has sparked concern among investors, who see a darkening economic picture and a chancellor who will need more tax revenue.
• The Labour party has lost its hold on the implicit promise to protect voters from the leftish instincts of its MPs, and investors are now seeing a soft-left reasserting itself.
• The party's leaders are facing a series of tests, including whether Starmer will postpone moves to scrap the two-child cap on welfare payments to larger families.

Statistics:

• Labour's victory in 2019 was its clearest since 1966, built on the implicit promise that the leader would protect voters from the leftish instincts of MPs.
• The Labour party has lost votes to abstention and parties of the left, as well as to Reform UK.
• Investors are now seeing a darkening economic picture, with Labour's soft-left reasserting itself and the party's leaders facing a series of challenges.

Sources:

• Robert Shrimsley's opinion piece in The Financial Times, June [no date provided]
• The Financial Times (online edition)
• Politics Robert Shrimsley