After a terrible anniversary week, is Keir Starmer finished?

Times

2 days ago

At the Spectator summer party, one of the biggest events of Westminster's social calendar, much of the conversation centred around one man — Nigel Farage.
The Reform UK leader and his allies adjourned to a private terrace overlooking the Spectator garden and private security cordoned off the stairs. There they sipped Dom Perignon while cabinet ministers and senior Tories including Kemi Badenoch and Robert Jenrick circled the garden below.
When the news broke that Jeremy Corbyn, the former Labour leader, was planning to found a new party there were cheers from the Reform terrace. A new Corbyn-led hard left party meant yet more pain for Starmer — and a bad end to a truly terrible anniversary week for the prime minister.
Senior Tories were disparaging about Farage and his coterie of supporters. 'They're so cocky,' said one shadow cabinet minister. Labour ministers said Farage offered 'no answers'. But both parties were alive to the threat posed by the man standing a few yards from them.
At a cabinet meeting on Tuesday Starmer expressed his pride in his government's achievements after a year in power, listing off what he views as the successes. Free school meals, increasing defence spending to 2.6 per cent of GDP, trade deals with the US, the EU and India. The list went on.
But within a few hours he was forced to make an extraordinary retreat in the face of a mass rebellion by Labour MPs over the government's welfare reforms, leaving a £5 billion hole in the exchequer.
Then it got worse. On Wednesday Rachel Reeves, the chancellor, broke down in tears at the dispatch box, prompting a frenzy in the bond markets.
As the dust settles this weekend, some cabinet ministers are asking the question: is it terminal? Will Starmer, who secured a landslide majority at the last election, lead Labour into the next election? 'It feels like it's done,' said one.
Certainly the polling is bleak — and far worse than that for any party in recent political history that won a landslide just twelve months before.
Research by YouGov for The Times this week found that just one in five voters (21 per cent) think that Labour has done well in office so far and less than a third think they are any better than the previous Conservative government.
Across a range of issues the party's voters are deeply dissatisfied with the government's performance. On the cost of living, 62 per cent of those who backed Labour at the election say the government is doing badly, while 46 per cent are unhappy with the government's handling of the NHS.
On Starmer himself: 69 per cent of voters think he's weak, 65 per cent say he doesn't care about people like them and 49 per cent say he's dishonest.
Anthony Wells, head of European political research at YouGov, said: 'Labour's problem is that despite their landslide victory last year there was never any great enthusiasm for them in the first place — people were voting against the Tories. So as they have made some unpopular decisions they have not had any goodwill in the bank to fall back on.'
Yet concerns about whether Starmer can survive need a reality check — Labour does not have the same appetite for regicide as the Tories or the same mechanisms for removing a leader.
Even his most ardent critics concede that there there is no obvious successor who is capable of uniting Starmer's fragmenting electoral coalition.
Angela Rayner, the deputy prime minister, appeals to those on the left of the party but there are questions about whether she could command broader support. Wes Streeting, the health secretary, has the same problem the other way — he can appeal to those in the centre but has more limited appeal to those on the left.
The YouGov polling also shows that all the plausible Labour alternatives, including Rayner and Streeting, are seen as more likely to be worse than Starmer.
The speculation about Starmer's future stems in part from the knowledge that things are likely to get much worse. As difficult as the first year has been, the challenges of the second will eclipse them — the biggest of which will be the budget.
At the cabinet on Tuesday, before the week's calamitous events, Reeves sounded a warning to ministers. At that stage the government had only made a partial about turn on welfare, protecting all existing claimants at a cost of £2.5 billion.
Reeves said the compromise came at a cost, and that money would need to be raised. She said the last budget, painful as it was with £40 billion worth of tax rises, represented the 'low-hanging fruit'. The next budget would be more challenging.
The tax rises are likely to be big. The cost of the change in direction on welfare and winter fuel payments came to around £6 billion, but economists are much more concerned about the anaemic levels of economic growth and a potential downgrade in forecasts.
Some put the figure that needs to be raised as high as £30 billion, which would require huge tax rises.
Cabinet ministers privately acknowledge that the benefits U-turn means all options for raising tax are now on the table. That includes potentially breaking the manifesto pledge not to raise income tax, national insurance or VAT, although ministers are loath to do so. A tax raid on pension savings is also being considered.
Paul Johnson, director of the Institute of Fiscal Studies, said it would be very hard for Labour to find the money necessary without touching those 'big three' taxes.
'I don't really think there is [a way of doing it],' he said. 'We don't really know what kind of levels of money the chancellor will need to find but if we are looking at £30 billion, which is quite plausible, I can't see a way in which she raises that kind of money without hitting people on middle incomes as they did with the national insurance increase.'
One minister said that while they would prefer spending restraint over tax rises, they appear to be unavoidable. They said that all options would need to be considered. The Times has been told that the government will not reopen the spending review despite the scale of the gap in the public finances.Another minister was philosophical. The reality was that on many occasions the government had to choose between 'bad choices or very bad choices'. That, at times, government is effectively a Sophie's choice, with no good options on the table.