Inside Keir Starmer's messy reset

New Statesman​

27-05-2025

Photo by Tolga Akmen/EPA/Bloomberg
The Labour Party, Harold Wilson once observed, is 'like a stagecoach. If you rattle along at great speed everybody is too exhilarated or seasick to cause any trouble. But if you stop, everybody gets out and argues about where to go next.'
In some areas, at least, Labour is rattling along. Government officials point to three trade deals in two weeks as evidence of a more 'agile' Britain on the world stage. But Keir Starmer's direction has remained unclear – so everybody is arguing about where to go next.
A 'reset' was what aggrieved MPs demanded after Labour's election humbling: a U-turn on the winter fuel payment cuts, the loosening of Rachel Reeves' fiscal rules and higher taxes on the wealthy. When Starmer responded by vowing to go 'further and faster', some were moved to invoke the popular definition of insanity.
But the Prime Minister is no longer doing the same thing. The means-testing of winter fuel payments was a policy born in the Treasury – one that cabinet ministers such as Ed Miliband and Liz Kendall grasped immediately would prove toxic. Yet it was Starmer rather than Reeves – away at a G7 meeting in Canada – who announced the U-turn. Though No 10 and the Treasury emphasise that the decision was a joint one, here was a moment rich in symbolism. For MPs it was a reminder of Starmer's other job title: First Lord of the Treasury.
The Prime Minister, as Andrew Marr first reported, has also let it be known that abolishing the two-child benefit cap is his 'personal priority'. That stance has prompted reports of tensions between Starmer and his chief of staff Morgan McSweeney who has long been mindful of public support for the policy (and the £2.5bn cost of abolishing it). Sources downplay talk of a rift, noting that the policy is under formal review by the child poverty taskforce (which will report this autumn).
But the impression is again of a Prime Minister asserting his authority. 'I don't know where this 'just fucking do it' energy has come from but I like it,' said one Labour MP, recalling Tony Blair's sudden pledge in 2000 to raise health spending to the European average (which so enraged Gordon Brown). Call it a messy reset.
At times after entering office, Starmer appeared indifferent or outright hostile to Labour MPs' opinions. Seven lost the whip last July after voting for an SNP amendment backing the abolition of the two-child cap. Critics of the winter fuel cuts – an 'almost suicidal' policy, one new MP told me back in August – were greeted with lectures on fiscal responsibility.
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No 10's imperial phase continued at the start of this year. The foreign aid budget was reduced by 40 per cent to fund higher defence spending (prompting the resignation of Anneliese Dodds, one of Starmer's original allies, as international development minister). The largest welfare cuts since George Osborne occupied the Treasury in 2015 were announced by Reeves. Tory MPs watched with envy at the decisiveness of a government with a majority larger than any since Blair.
But a Downing Street chastened by defeats is now sounding a more emollient tone. 'It's a tough time to be a Labour MP, they're having to decide all the time to take money off somebody and to give it to someone else,' reflects one source.
What has changed? A leadership that defined its priority as winning over the country could not remain obstinate as voters revolted. Nor, as welfare rebels threaten to eradicate the government's 165-seat majority, can it remain dismissive of the party (with concessions to prevent defeat anticipated).
Labour's 'soft left' – the tribe from which Starmer himself originally hailed – is rediscovering its voice (a development some in No 10 welcome). It was Louise Haigh, the former transport secretary, who led public calls for an 'economic reset' after the local elections. Angela Rayner and Gordon Brown have, in different ways, shown what that could look like. On 3 June, Renewal, the social democratic journal now published by Compass (which helped anoint Ed Miliband in 2010), will hold an event to celebrate its relaunch. Its attendees will be much like the typical Labour member: someone who voted for Starmer in 2020 and is increasingly attracted by Rayner.
The Prime Minister, who welcomed conflict with the radical left as a chance to define himself, has baulked at all-out war with the soft left. So another reset is underway. But it remains fraught.
When he announced the winter fuel U-turn, Starmer cited an improving economy (GDP growth was 0.7 per cent in the first quarter, the highest of any G7 country). But even if this trend continues – and economists fear it won't – it will do nothing to help cabinet ministers, such as Rayner, locked in fierce disputes with Reeves over the 11 June Spending Review. 'The envelope has been set,' a Treasury source says, confirming that there will be no leeway (unprotected departments were told to model real-terms cuts of between 5.8 per cent and 11.3 per cent).
Ministers believe that Reeves will once again need to raise taxes and revise her fiscal rules at the Budget this autumn but the word that the Chancellor so loathes – austerity – will be brandished against her in the coming weeks. Over all this looms a familiar question: what defines Starmer? A winter fuel U-turn seemingly driven by polling rather than values has further muddied the waters.
Friends of Starmer reject the charge that he lacks what Tony Blair called an 'irreducible core'. It is, they say, his belief in the dignity of work and the innate worth of every human being (one informed by his parents, and his late brother who had learning difficulties). In opposition he told aides that he wanted to be able to look voters in towns such as Burnley in the eyes in five years' time and tell them that Labour had made 'a genuine difference to your lives'.
But in the heat of government, even allies fear this message has been lost. 'We haven't done enough to articulate what Keir's about,' concedes one senior No 10 source. After Brown U-turned on the abolition of the 10p tax rate – an event Labour MPs have recalled in recent weeks – he spoke of how 'it really hurt that suddenly people felt I wasn't on the side of people on middle and modest incomes – because on the side of hard-working families is the only place I've ever wanted to be. And from now on it's the only place I ever will be.'
By then, the political damage was done but Brown still conveyed genuine remorse. As Starmer seeks to reset his own premiership, can he find the language he needs to do the same?
[See also: Angela Rayner has fired a warning shot at Keir Starmer]
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