Newsletter #29: Starmer takes on the scroungers

PLUS: Vladimir Putin is not your friend

Good morning.

This week, Labour continues their attempts to address Britain’s fiscal crisis, and Trump’s agenda runs into opposition at home and abroad. Plus, we take a look at the upcoming Runcorn and Helsby by-election as the first test of this parliament for both Labour and Reform.

This newsletter’s agenda: Starmer takes on the Scroungers (free); Runcorn & Helsby: Reform’s Big Opportunity (paid); Trump vs the Courts (paid); Vladimir Putin is Not Your Friend (paid).

Starmer takes on the Scroungers

Work and Pensions Secretary Liz Kendall kicked off this week with another announcement designed to curb fears over Britain’s increasingly dire fiscal situation: a series of cuts to the welfare system designed to save £5bn by 2030. Whilst £5bn is a drop in the bucket compared to the £127bn deficit, these cuts represent the biggest slash in welfare spending in any fiscal event since 2015. The measures include a tightening of the rules governing eligibility for Personal Independence Payments (PIP), a form of disability benefit, such that those who experience various minor challenges but do not experience any particularly severe individual obstacles will no longer be eligible. They also include a freeze on the ill health supplement to Universal Credit (available for those whose health situation renders them long-term unemployed) for existing claimants, and a 50% cut for new claimants.

That Starmer feels comfortable heading in this direction regardless of intense opposition from many on the Left is a sign of how far he has remade the Labour Party in his image. Despite abysmal polling and his growing personal unpopularity, he feels secure enough in his position to draw the ire of those who, until under a year ago, made up a large portion of the parliamentary party.

It is also a sign of just how much pressure there is now on Britain’s finances. This financial year, the government has already borrowed £132bn — more than originally forecast for the entire year, and £20bn ahead of schedule for February with another month yet to go. This puts FY 2024 as the fourth-highest borrowing period since records began in 1993, £15bn ahead of the figure this time last year. As the global economy slows and the government’s push for growth evaporates into the meaningless sloganeering, as it always was, Chancellor Rachel Reeves finds herself increasingly hemmed in by her own fiscal rules, having already lost £10bn of fiscal headroom since Autumn.

As Reeves gears up for the Spring Statement on Wednesday, the government’s aides and allies are still working to shore up their support on the back benches. Hurt by the removal of the winter fuel allowance and further upset by this week’s welfare reforms, many Labour MPs feel that Reeves is consistently making the wrong choices about how to bridge the fiscal gap, and most of those view her as the root of much of what they see as the government’s shortcomings. Reeves, for her part, is understood to be reluctant to further raise taxes from their current record highs, but with growth showing no signs of picking up, that leaves further cuts as the only way forward for the government. Next up on the chopping block? The NHS. I’m sure that will cause no further controversy.

As much as Reeves’ attempts to reclaim control over the budget have provoked anger to her Left, in the country at large, there is likely to be a bigger constituency who recognise the need for savings to be made and who are quite happy for those savings to come at the expense of benefits scroungers. Indeed, it’s less than ten years since David Cameron built a majority on attacking precisely that demographic.

If Labour have any blessings in this moment, most prominent among them is the continued leadership of the opposition by the laughably incompetent and effectively invisible Kemi Badenoch (as well as Mel Stride, who as we predicted has been a total waste of space as shadow chancellor). You can, if you try, find a Tory response to these announcements — but you really do have to try! Reform, meanwhile, have maintained a degree of strategic ambiguity, attacking the government for failing to tackle the growing debt but withholding fire on the specific cost-cutting measures. Undoubtedly, this is due to a recognition that many of the voters they need to pick up in this year’s local elections will be staunchly opposed to budget cuts, at least in the specific rather than the abstract, even if Reform in government would more likely than not go even further than Labour to balance the books.

Despite an overall ineffective response from the opposition, Labour’s economic policy has placed Starmer’s government at a very unhappy medium. Unable to drive growth through investment in either people or infrastructure as originally envisioned, and unwilling to pursue the kind of radical deregulation (including an easement of net zero targets) and substantial tax and spending cuts that might drive growth on the supply side, the government finds itself suffering all the political damage of making cuts without any of the potential financial upside. As things stand, it looks like the Government is on course to continue floundering, unable to find an alternative to creeping immiseration and unwilling to break out of the straitjacket of Reeves’ fiscal rules. This might be for the best, given the damage that any other Labour chancellor might cause — but with Reeves’ popularity continuing to tank, it might not be long before those alternatives become reality.

—Eurysthenes Contributor, Pimlico Journal

Runcorn & Helsby: Reform’s Big Opportunity