For British Prime Minister Keir Starmer the turn of the year will mark a grim end to a dismal 12 months for his government and its supporters.
There are warnings of further misery with even hospitality emerging from its busiest period unhappy with Chancellor Rachel Reeves’s treatment of its businesses. The industry is furious that on the one hand, the Chancellor committed to helping the retail and hospitality sectors while on the other, a property tax revaluation will hit restaurants especially hard. From April, business rates will soar by 76 per cent for an average pub and 116 per cent for a hotel, whereas large supermarkets will pay four per cent extra and distribution warehouses, seven per cent.
In many cases, hospitality in Britain was already struggling under higher costs, fallout from the pandemic and people reducing their alcohol intake. Young people in particular are altering their lifestyles, spending more time in gyms and healthy pursuits, and drinking less.
Labour’s critics say Reeves and her boss Starmer are not listening. They see the moves as further evidence that they simply do not get business, despite overtures to the contrary before they came into office; or rather, that they go out of their way to please some businesses – the large, trendy ones, hence the lower rise for online storage depots – but not others.
Starmer has failed to make any personal headway even after the budget in November that went down well with Labour’s core and the financial markets.
Instead he is back to where he was, arguably in weaker shape. It is a pattern that has typified his administration, of stepping forward only to quickly reverse. Try as Starmer might, he seems incapable of getting off the bottom and lifting his dismal approval rating.
He has four months to turn it around, before voters go to the polls in local council elections and show what they think of his reign so far. Starmer is not the only party leader whose fate might hang on the results.
For the Tories, Kemi Badenoch has every reason to feel nervous. But Badenoch inherited a party on its knees after its resounding national election defeat. Starmer’s position could not have been more different. Yet somehow he has contrived to throw it away.
He has picked fights that are ultimately not worth winning. One, with the farmers over inheritance tax, saw the latest climbdown on Tuesday. The Government announced it would raise the inheritance tax relief threshold for farmers from £1 million to £2.5 million following months of protest.
Another battle with the non-doms is now under review by Reeves, but not before many relocated, with the UAE a favourite destination. His own backbenchers forced a capitulation over welfare reform.
In an effort to appease those supporters and to boost her own low popularity, Reeves gave them a “Labour Budget”, but in doing so she slapped on £26 billion worth of tax increases. Those in receipt of social security payments might have been delighted, but a large swathe of the population was left disenchanted – made, as they see it, to pay more for no discernible gain.
Starmer promised positive change, but YouGov research shows that 35 per cent of the British people believe their finances will worsen in 2026. Significantly, that figure has risen – the last time they were asked it was 30 per cent. A substantial portion think they will stay the same, while the number who predict an improvement has fallen, from 23 per cent to 19 per cent.
Starmer has also failed to tackle problems that attract headlines of the wrong sort and blight the UK’s towns and cities. He has made little headway in tackling illegal migration. There has been plenty of talk but not much action and not enough to stop migrants coming across the Channel.
Similarly, on housing, he pledged to build 1.5 million homes during his five-year term, saying so in the Labour manifesto, but again has been found lacking and that target resembles a pipe dream. Meanwhile, Britain continues to suffer from an acute shortage of affordable housing.
He has endured forced resignations, including that of the deputy leader and deputy prime minister, Angela Rayner. Far from consigning Rayner to political oblivion, Starmer is making noises about welcoming her back to his Cabinet. Why? Because she speaks for a substantial number of Labour MPs and enjoys a following in the party, and in the country, that makes her a threat.
He is right to do so, since an emboldened Rayner is said to be “on manoeuvres” – Westminster code for plotting a coup – the latest manifestation of which is the news that she will publish her memoirs.
Rayner is not alone. Others are also thought to be jockeying for position, among them Wes Streeting, the Health Secretary, Andy Burnham, Mayor of Greater Manchester and “King of the North”, and Energy Secretary and former party leader Ed Miliband. Another name being canvassed is a newcomer, Al Carns, the Armed Forces Minister and an ex-Marine.
There are so many as to erode Starmer’s standing even more. They can scent blood. This is where Starmer finds himself as we enter a new year, with enemies circling, vulnerable and with that local election date looming.
All is not lost, however. Another theory is emerging, which is that Starmer may actually wish to see as many as possible lining up against him, on the basis that none of them commands sufficient muscle to unseat him, and they serve to make him seem strong. Divide and rule, in other words.
There are those, too, who maintain that the next 12 months will see Labour deliver, that the past year was tricky but it was preparing the ground for a better period ahead. That was what Morgan McSweeney, Starmer’s chief of staff and election strategist, told an “end of term” meeting of the government’s special advisers. It was meant to be a private session but his 10-minute speech was leaked.
McSweeney chose not to begin with the present but with 2029, when the next general election is due. “Let me start where this journey ends,” he said. “In 2029, Britain is a country that has been changed by a Labour government. A country where effort is rewarded, where the state is competent and fair, where communities feel safe and where parents believe their children will have a better life than they did.”
His view was echoed by the Labour Party chairwoman, Anna Turley, who told Trevor Phillips on his Sky News show that Starmer will “absolutely” still be in charge a year from now. Turley acknowledged that “things are still hard” for Britons, but struck a positive tone. She said the government has “taken a lot of difficult decisions this year” to “stabilise the economy”, but we are now “starting to see that recovery”.
“As we go into the new year, I'm really optimistic about delivering the kind of change that people voted for last year, and to see them starting to see and feel it in their pockets and in their local communities,” she said.
Turnaround beckons
There are glimmers of hope. Barring disaster, Reeves should have no reason to repeat her fiscal shocks, she has left herself plenty of economic headroom; demand in services appears to be holding up; the build-up to her Budget was so deadening that there is bound to be a bit of a lift once it is over. Rates have come down, which should boost consumer spending and borrowing and encourage the property market; the government is helping to reduce energy bills; and productivity, possibly aided by the on-streaming of AI, could, for once, be showing signs of improvement.
There are caveats galore attached and the last year has shown that the best-laid plans can be torn up – who will ever forget Donald Trump’s tariffs scorecard?
It may be something, it could be nothing. But as we enter a new year, Starmer can be forgiven for having a spring in his step.
