In 2024, progressive voters chose Labour as a plausible alternative to the chaotic Conservatives. Many have been disappointed. Starmer’s government has started to make some important real changes which will make life better for most people. But a lot of this takes time, and people are impatient. There have been mistakes; communication has been disastrous; they have failed to articulate a clear vision of the future, and public support has been leaking away towards the easy, but improbable solutions of populists, to the right and left.
There is no real alternative
However, all the alternatives look far worse. The Conservatives remain the only party with sufficient parliamentary strength to begin to form a government. But a decade of chaos destroyed their credibility, and they are now lurching unsteadily to the right. There is only an outside chance that the Liberal Democrats could muster enough experienced people to run a government on their own.
And neither of the two other alternatives have a credible body of people and experience. Despite the polling, Reform has already shown that it has difficulty mustering enough people capable of competently running a handful of local councils, let alone a government. The Greens’ recent transformation appeals to many progressives, but four MPs and a single council is not a base for government.
So, for progressives, the only short-term option is to back the present government, with or without the current leadership, and hope to steer it in a more positive direction.
In the medium term, electoral reform looks increasingly necessary to give voice to a wider constituency, but it is unlikely to happen before the next election.
A checklist for this budget
So, although the government has done good things, this budget will shape the future, not only of our economy, but of our government. If it goes wrong, it does not mean the fall of the government, which still has a historic majority in Parliament, but it may well determine the survival of both Reeves and Starmer.
So here is a shortlist of tests to consider as Rachel Reeves delivers the speech of her life.
Wealth
The concentration of wealth in the UK has reached historic proportions. This is unacceptable, and it breeds inequality, division, and instability. It is driven mainly by ownership of real estate and land, and by inheritance, which will be a major force in the next decade as the baby boomers die and leave their assets to their lucky children. A wealth tax has many problems, but without some attempt to tackle this inequality, the budget will be a failure.
Age
Overwhelmingly, the concentration of wealth in Britain is based on age. Of course, for those dependent on our meagre state pension, life is not easy. But there is a very large group of retired people who have become wealthy by the accidents of the housing market and past pension models. The Resolution Foundation proposed one measure to address this: raising income tax by 2p in the pound, and lowering National Insurance (NI) by 2p. Working people would see no change, but pensioners and private landlords, who pay income tax, but not NI, would pay more. Since NI is a tax on work, reducing it would have a positive economic impact, and it would raise a significant sum.
Child poverty
The current level of child poverty is unconscionable, and the government’s measures to address it, like free school meals, are positive but marginal. The quickest way to address it is to abolish the two-child benefit cap – an immoral and implausible policy introduced by the Conservatives to stop the poor from breeding. In fact, it merely drives children into poverty. In the long run, across the lifespan, poor children cost the state more in economic underperformance and bad health. Abolishing this would be an investment in the future.
The green agenda
Political resistance is growing to policies directed towards sustainability and net zero, and especially to the cross-subsiding of investment in greener technologies. But the effects of climate change are already evident in flooding, fires, hurricanes and drought. So, the long-term costs of failing are huge. Any moves to reduce support for energy efficiency and sustainability would be a grave mistake.
Local government
Since 2010, the purchasing power of local councils has fallen on average by 20% in real terms, and more in the poorest areas. Most of the money has to be spent on statutory services – social care and special educational needs – which are uncontrollable, and which most people do not see. This has led to huge cuts in the services which affect most people, and undermined confidence in local government itself. Council tax is regressive, unfair and outdated, but no party has dared propose revaluation or replacement. Anything which reduces the income of local government would be disastrous.
Higher education
The government’s drive to reduce net migration at any price has hit overseas student numbers in higher education. But overseas student fees, often at very high levels, are critical to the survival of many universities hovering on the brink of insolvency. Overseas fees cross-subsidise home students, and contribute £19bn to Britain’s export earnings. And if they are allowed to stay, overseas graduates can bring high level skills to a workforce that desperately needs them. Rumours that the Chancellor will tax universities on their overseas fees risks inflicting real damage on the key drivers of a knowledge economy, and one of our biggest and most successful export industries.
Conclusion
There are many other issues. It won’t signal a return to the EU single market and customs union, which have cost us 5%+ of our GDP. But will it stimulate growth? Will it reduce the nation’s ‘debt’? Will it encourage businesses to invest? Will it simplify our hugely complicated tax system? All those matter. But if the budget fails on the six we have listed, it probably seals the fate of the Starmer/Reeves partnership.
Most progressives recognise that, unlike some of his predecessors, Keir Starmer is a decent, well intentioned, and competent administrator. His government has done, and continues to do, a lot of good things. And it is widely recognised that he has restored Britain’s image on the international stage. He might have made a good foreign secretary. But he is not a skilful politician, he has not managed No 10 well, and his government’s communication strategy has been woeful.
Some think that the test for Starmer is next May’s elections. The judgement day may be coming sooner than that. But the latest poll of Labour members shows the most popular replacement as Ed Miliband. Are we sure that is what we want?
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