(Bloomberg) — Keir StarmerThe Labour Party probably hoped that its first British election victory in nearly two decades would provide a political honeymoon, at least until the summer. But in less than a month, the challenges of governing a fragile nation have quickly sapped any lingering sense of euphoria.
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Minister of Finance Rachel Reeves delivered the first reality check on Monday, warning that tax rises would be needed in the October Budget to plug a £22 billion ($28 billion) hole she said she had found in the public finances. Some in Labour saw that as a risk of betrayal after a campaign promise not to impose surprise tax increases on people reeling from a cost-of-living crisis.
The mood turned sombre again as riots led by far-right activists broke out in parts of England after false information spread on social media that the suspect in the fatal stabbings of three girls in north-west England was a Muslim asylum seeker. With authorities bracing for further violence this weekend, Starmer held a press conference on Thursday to outline a more robust police response.
The turbulent week left some Labour MPs, jubilant about taking office, nervous about what lay ahead — and how Starmer and Reeves would respond. The public order also exposed what some Labour officials had been worried about, even as the party basked in its landslide election victory: that growing agitation on the political right would cause problems.
“Between the riots in Southport and elsewhere, and the suggestion of tax rises around the corner, Keir Starmer is already facing his fair share of political problems,” said Scarlett Maguire, director at pollster JL Partners. “Without clear delivery on the economy, the NHS and immigration, the pervasive anti-politics mood in the country could be even harder to repair.”
During the six-week election campaign, Starmer and Reeves made no secret of the economic and political mess they expected to inherit. According to one ally, the prime minister did not want or expect a honeymoon, seeing the “chaos” left by the Conservatives as something that required immediate action. A realist, not a romantic, was how another ally described Starmer.
Reeves’ intervention was also a calculated move to demonstrate her seriousness and willingness to make difficult and unpopular decisions, according to Labour aides who asked not to be named. Centrist voters, who Labour targeted in the election campaign, want responsible government, not impossible promises, an adviser said.
The Bank of England’s first interest rate cut since early 2020, a more positive economic outlook and strong performances by British athletes at the Paris Olympics also gave the government reason to cheer.
Nevertheless, the reaction to Reeves’ speech has sullied the mood among some Labour MPs. She insists her complaints about undeclared overspending by the previous Tory government are legitimate and has expressed private shock at the actions of her predecessor Jeremy Hunt. Yet the questions she faced during her broadcast on Tuesday focused less on whether there had been a Tory cover-up and more on whether she had been dishonest with voters over Labour’s tax plans.
Some lawmakers are also concerned about her decision to cancel the winter energy bills of some 10 million pensioners to fund pay rises for young doctors. One lawmaker said her first revenue-raising move should not have targeted such a key voter group, but the wealthy.
Labour staff were alarmed when journalists unearthed old remarks by Starmer and Reeves suggesting they would not raise taxes or scrap pensioners’ winter payments. One said the Chancellor should have taken a more elegant line on tax during the campaign so she would not be accused of dishonesty later. A Reeves ally said she had genuinely had no specific plans to raise taxes before taking office, and still hoped any increases would be limited.
Certainly, some of the reaction to Reeves’ speech is a by-product of Labour’s landslide victory and the spread — geographically and economically — of constituencies it now holds. One adviser said the speech struck the right tone and was consistent with a strategy to expose the problems the Tories have left behind, though they were also surprised by the number of policy changes announced in one go.
There is a debate among employees about whether Reeves should communicate her strategy more clearly to avoid surprises.
Some within Labour believe criticism of Reeves would have been fiercer if the fallout from her speech had not been swept off the front pages by the Southport killings and the far-right violence that followed.
In his press conference, Starmer accused “thugs” from outside the community of hijacking families’ grief for political ends. Police, he said, would share intelligence to “restrict their movements before they can even get on a train, just like we do with football hooligans.”
There was more violence as protests unfolded across the UK over the weekend, including in Sunderland, Liverpool and Hull, where several police officers were injured. On Saturday, Starmer held an emergency meeting with ministers to discuss the unrest, offering support to police and reiterating a pledge to prosecute those responsible, according to a statement from the prime minister’s office.
The risk for Starmer and Labour goes beyond the images of burning police cars, stone-throwing rioters and the perception spread on some social media that the government has already lost control.
Labour built an election campaign strategy that targeted centrist voters, and it worked. But the Conservatives’ implosion also left behind the right-wing Reform UK party, led by Nigel Farage in a strong position to make life difficult for Labour with populist, anti-immigration messages that appeal to some voters, including in areas where recent rioting has taken place.
Starmer’s reference to the “understandable fears” some people have about social tensions was a nod to that risk. While clear, some far-right activists have voiced support for Reform — and Farage posted a video on X in which he echoed online conspiracy theories about the Southport killings.
There are growing concerns in Labour that some of the government’s early policies are playing into Farage’s hands. A plan to release some prisoners early because of overcrowding — a situation Starmer blames on the Tories — could backfire in the current political climate, aides say. They are examining how it can be managed in a way that reduces the likelihood of violent reoffending.
While improving the economy was the key measure of success for Starmer’s government, successfully tackling crime and borders would be almost as important, one of the aides said.
Starmer’s strategy of blaming the Tories for the unpleasant choices he has to make is not likely to change any time soon, and most in Labour agree that this is still the right approach. But this week also illustrated that the problems are now for the government to solve, and the prime minister will ultimately be judged by the policy decisions he and Reeves make.
(Updates with details of further protests, Starmer’s meeting with ministers from paragraph 16)
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