FTI Consulting UK Public Affairs Christmas Snapshot 2025

January 

Tulip Siddiq resigned as Economic Secretary to the Treasury following controversy over financial ties to her aunt, Sheikh Hasina, the former Bangladeshi premier. British Prime Minister Sir Keir Starmer travelled to Kyiv to sign a 100-year treaty with Ukraine. Home Secretary Yvette Cooper announced plans for a nationwide review of grooming gangs.  

February 

Health Minister Andrew Gwynne was sacked by the Prime Minister for sharing abusive messages about constituents and colleagues via WhatsApp. The government announced cuts to international aid to fund an increase in defence spending to 2.5% of GDP by 2027, prompting the resignation of International Development Minister Anneliese Dodds. 

March 

Reform UK MP Rupert Lowe was suspended from the party following an interview with the Daily Mail in which he criticised Nigel Farage’s leadership of the party, describing Reform as a “protest party led by the Messiah”.  

April 

Parliament passed emergency legislation to enable the British government to take control of Scunthorpe Steelworks, preventing the closure of Britain’s last remaining facility of its kind. The Scottish government announced it had no plans to reintroduce the Gender Recognition Reform (Scotland) Bill following a Supreme Court ruling on the legal definition of a woman. 

May 

The 2025 local elections saw major gains for opposition parties. Reform UK won 677 of around 1,600 seats contested in the English local elections. The Liberal Democrats also performed strongly, gaining an extra 160 seats and taking control of Oxfordshire, Shropshire and Cambridgeshire County Councils. 42 Labour MPs signed a letter calling for changes to the government’s proposed cuts to disability benefits. 

June 

Chancellor Rachel Reeves confirmed that roughly nine million pensioners would receive winter fuel payments during the coming winter. Two Reform UK breakaway parties were announced: Advance UK, led by Ben Habib, and Restore Britain, led by Rupert Lowe. 

July 

Prime Minister Keir Starmer and German Chancellor Friedrich Merz signed the Kensington Treaty during Merz’s first official visit to Britain, which included plans for a direct train link between London and Berlin. Conservative leader Kemi Badenoch reshuffled her senior team. Jeremy Corbyn and Zarah Sultana officially launched their new political party, provisionally named Your Party. 

August 

Homelessness minister Rushanara Ali resigned following criticism over her handling of a rent hike on a property she owned. Conservative leader Kemi Badenoch announced that, if her party won the next general election, they would remove all net zero requirements on oil and gas companies drilling in the North Sea. 

September 

Prime Minister Keir Starmer reshuffled his cabinet. Angela Rayner resigned from the government and from her position as Deputy Leader of the Labour Party after admitting to underpaying stamp duty on her home in Hove – forcing Starmer to carry out another reshuffle, appointing David Lammy as Deputy Prime Minister, Yvette Cooper as Foreign Secretary and Shabana Mahmood as Home Secretary. Peter Mandelson was sacked from his post as British Ambassador to the US following revelations about his relationship with Jeffrey Epstein. US President Donald Trump arrived in Britain for his second state visit. 

October 

Lindsay Whittle won the 2025 Caerphilly by-election for Plaid Cymru, taking the seat from the Labour Party, who had held it since the Senedd was established in 1999. Lucy Powell won the 2025 Labour Party deputy leadership election. 

November 

Home Secretary Shabana Mahmood announced that the 41 police and crime commissioners in England and Wales would be scrapped from 2028. First Minister of Scotland John Swinney MSP confirmed plans for the Scottish government to issue its first bonds in 2026-27. Chancellor Rachel Reeves delivered the Autumn Budget, which scrapped the two-child benefit limit and increased the National Living Wage while raising revenue through stealth taxes including freezing income tax thresholds and new levies. 

December 

Richard Hughes resigned as chair of the Office for Budget Responsibility after an inquiry was launched into how details of the Autumn Budget were published 40 minutes before the Chancellor delivered her statement to Parliament. 

The optimism felt by the Labour Party following last year’s general election landslide evaporated in 2025 amid harsh economic realities, the continued rise of Reform UK and a lack of substantive delivery on its key manifesto pledge of change. The party now faces three critical vulnerabilities: parliamentary fragility, a leadership crisis and potential electoral collapse in the 2026 local elections. 

Despite a large majority in Parliament, Labour backbenchers have grown noticeably restless as the government has pursued a policy platform designed to stem the rise of Reform. This has triggered a number of rebellions from MPs on the so-called “soft left” of the party, particularly on welfare. July saw 47 Labour MPs defy the party whip on the Welfare Reform Bill, with particular criticism of proposed changes to Personal Independence Payments. The government’s forced climbdown on the Winter Fuel Allowance also cast serious doubt on the Labour leadership’s discipline, and the government’s longer-term capacity to implement difficult decisions. 

Despite the unprecedented levels of speculation in the run-up to the Autumn Budget, when it finally landed in late November, it was well received by the Parliamentary Labour Party, seemingly responding to earlier unrest. In particular, Labour MPs welcomed the government’s decision to lift the two-child benefit cap, lifting 250,000 out of poverty by 2029-30. While the budget did little to reverse the downward trend in opinion polls, it certainly placated Labour’s backbenches. 

Labour’s membership at large has, in turn, become increasingly disgruntled with the leadership of the Prime Minister. The deputy leadership election triggered by Angela Rayner’s resignation in September, following a stamp duty tax scandal, overshadowed this year’s party conference in Liverpool and set clear dividing lines for party members. Education Secretary Bridget Phillipson was positioned by the party leadership as the “Starmer” candidate, and Lucy Powell as the “anti-establishment” figure. Despite seemingly little to separate them ideologically, Powell’s decisive victory sent a loud message from the membership that it wants to see a bolder, more progressive agenda. 

As it stands, Labour finds itself consistently trailing around eight points behind Reform in the polls at around 19%, just one point above the Conservative Party and four points above the Green Party. How to reverse this decline is complicated by the fact that younger, urban voters are leaning towards the Greens as they seek a more socialist agenda, while older voters are overwhelmingly backing Reform. The data suggests that Labour’s attempt to occupy the middle ground has the party bleeding voters to both sides of the political spectrum, leaving Starmer’s government increasingly vulnerable. 

Intensifying these challenges are persistent rumours of a nascent leadership challenge, with Rayner and Health Secretary Wes Streeting touted as Starmer’s most likely successors. Any formal challenge will be unlikely to occur ahead of the May 2026 local elections, with Starmer uncomfortably positioned to absorb the blame for the anticipated defeats that Labour is expected to face across the country. 

The Labour Party’s honeymoon period is clearly over, with the government facing mounting pressure to deliver a bold agenda while managing difficult economic realities. As public patience wears thin and political headwinds intensify, 2026 will be a critical time to determine whether the party can redefine its purpose and recapture the confidence of the electorate. To have any chance of success, first it must recapture confidence in itself. 

Observers may look back on 2025 as the year in which the Conservative Party’s recovery began. After its worst-ever general election defeat in 2024, the party entered the year in survival mode. Today, the immediate decline has largely stabilised, though it remains some distance from looking like a government-in-waiting. 

At the heart of 2025 has been a critical tension: whether the Conservatives can rebuild themselves as a party of principle that voters will once again listen to and trust, or whether they are set to drift slowly towards irrelevance as Reform UK continues to consolidate the right. That question remains unresolved. While Reform’s momentum has plateaued slightly in recent months, it has continued to command public attention as the leading challenger in the polls and has been the principal beneficiary of Labour’s post-election slump, even as the Conservatives have begun to reassert themselves. 

Polling reflects this uneasy reality. The Conservatives remain in the high teens to low twenties, sometimes polling ahead of Labour or the Greens, but often falling to third or fourth place. Alongside this, there has been a modest improvement in the party’s economic standing, with polling showing the Conservatives once again more trusted than Labour on economic management, and a revival in Kemi Badenoch’s personal ratings. 

That revival has been the defining development of the year. Badenoch’s first 10 months as leader were difficult, marked by criticism over her relatively low profile and cautious pace. However, her party conference speech marked a clear turning point, from which point she appeared sharper and more self-assured in the Commons, adopting an increasingly ruthless approach. Her response to Rachel Reeves’ Autumn Budget delighted backbenchers and reinforced the sense among her supporters and colleagues that she has rediscovered the qualities – conviction, confidence and sheer force of nature – that first marked her out as a rising star. 

Internally, this has strengthened her authority. While Robert Jenrick remains an obvious standard-bearer for the party’s right and is still known to harbour leadership ambitions, Badenoch’s position has shifted. Although her immunity from a leadership challenge expired in November, there is little serious prospect of a move against her before May. 

Policy has also accelerated. With immigration now rising to the top of voters’ concerns, policies on withdrawal from the ECHR and mass deportations were well received by the party, as well as a new “golden rule” on public spending, abolition of stamp duty and repeal of the Climate Change Act. While Badenoch hopes this demonstrates that the party has internalised mistakes made in government, it is the economy where she increasingly senses a gap in the political market to establish renewed credibility, as Labour continues to falter and Reform struggles to translate rhetoric into solid policy. 

Yet the Reform challenge remains the party’s most significant blind spot. Despite recent progress, a clear strategy for reasserting itself as the leading party of the right remains elusive, with defections an enduring risk and speculation about electoral pacts only likely to grow as the threat of a second Labour term made possible by splits on the right looms larger. 

After what are expected to be difficult results in May’s local elections, the question that will define 2026 will be whether MPs hold their nerve and stick with Badenoch – whose position will be helped if the government emerges more damaged – or revert to the internal instability that came to define the party in recent years. 

Reform UK ends 2025 riding high at the apex of British politics, with Nigel Farage now increasingly treated as a serious contender to be Britain’s next premier. Opposition parties rarely succeed in setting the national agenda, but bucking political convention has long been Farage’s strength, reflected in Reform’s consistent position at the top of national polls. At times stretching into the mid-thirties – the highest levels of support in its history – Reform has left Britain’s two traditional governing parties grappling with profound strategic dilemmas, even as its polling momentum has slowed in recent months. 

Farage’s dominance remains both Reform’s greatest strength and its most obvious vulnerability. Reflecting this, the party has begun to cultivate a broader leadership bench, with figures such as Richard Tice, Zia Yusuf, Danny Kruger and Laila Cunningham increasingly visible. The latter is widely expected to stand as Reform’s London mayoral candidate, and this exercise in sharing the spotlight is set to continue into 2026, with Farage hinting at a more formal Shadow Cabinet outline after the May elections. 

The party’s growing influence is clearest on immigration, where proposals to withdraw from the European Convention on Human Rights (ECHR), enact mass deportations and abolish Indefinite Leave to Remain underscore significant shifts in Britain’s Overton window. The Conservatives have responded by hardening their own policy platform on the subject, while the elevation of Home Secretary Shabana Mahmood has been a deliberate attempt by Sir Keir Starmer to neutralise Reform’s appeal, unsettling parts of his own party. 

Economically, Reform remains more exposed. Its platform features ideological tensions on state intervention, particularly nationalisation, and between its instincts on taxation and its positions on public spending and welfare. This has become a focal point for Conservative attacks, particularly as Kemi Badenoch seeks to reclaim her party’s mantle as the party of economic credibility and a smaller state. 

Defections remain a live internal question. Farage is understood to be favourable to further senior Conservative defections, seeing them as validation of Reform’s claim to lead the right. Others within the party worry that absorbing too much Conservative baggage risks diluting Reform’s insurgent appeal and tethering it to a political brand it must ultimately discredit. This coincides with growing speculation about electoral pacts on the right, driven in part by donor concern that vote-splitting could hand Labour a second term in No 10. Whether such pressure intensifies will depend on whether Reform’s polling ceiling holds in 2026, or whether it can still stretch higher into a position of indisputable dominance. 

Business engagement has become another key subplot of 2025, with more companies beginning to explore cautious engagement, often through indirect channels. The party’s emphasis on preparing for government and its collaboration with the Centre for a Better Britain have opened alternative routes for policy input, reflecting Reform’s desire to avoid the corporatist trappings of the main parties while still signalling seriousness. With major Welsh, Scottish and local elections looming and its largest party conference yet expected in 2026, this engagement is only likely to deepen. 

Reform ultimately finishes the year satisfied, having defied its doubters by maintaining its prime position in the polls. Yet volatility remains the defining feature of British politics. The test for Reform will be whether it can convert this year’s dominance into durability – translating attention into institutional strength, populist clarity into policy credibility and insurgent energy into the discipline required to govern – as scrutiny from all quarters intensifies. 

Following the most successful electoral year in its history, Sir Ed Davey’s Liberal Democrats looked to consolidate their gains in 2025 after having returned as the third-largest party in the House of Commons following the 2024 general election. 

A new-look “liberal orange” branding did not stop the party sticking to its tried and tested formula in May’s local elections, one that has now seen them expand their presence seven years running. The party added 163 councillors and three county councils to its roster, finishing ahead of both the Conservatives and Labour for the first time. Taking control of more councils than the Conservatives, Davey set a target of exceeding the party’s presence in Parliament at the next general election. 

The positive results continued across the year, including the defection of several Labour councillors and a former London borough mayor. Despite these highlights, the party has struggled with its perennial Achilles’ heel: gaining national visibility. In contrast to the success of the insurgent Green and Reform parties, the apparent lack of national interest in Davey’s boycott of Trump’s royal banquet exemplified the party’s shortcomings. 

The election of Steff Aquarone by Lib Dem backbenchers as the MPs’ parliamentary chair ignited fears that MPs were unhappy with the party’s leadership. These concerns were swiftly quashed by the success of several preferred candidates in internal elections in November, including Josh Babarinde’s selection as party president. The rising star’s achievement persuading the government to take action on domestic abuse has been touted alongside wins on solar panels and free school meals as part of a strategy to demonstrate its capability to serve in government. 

Nonetheless, Davey will need to continue carefully managing his expanded cohort of MPs, to ensure his position remains secure. While there were few significant changes at a senior level, a post-conference reshuffle served as an opportunity to promote ascendants, with five new junior spokesperson roles. 

Conference season marked a chance to celebrate successes and build a compelling narrative. Davey declared a “no ceiling” ambition for the next election, positioning the party as the antidote to Reform. Davey’s new, aggressive style, which included taking the BBC to task over its under-reporting of the party, went down well with backbenchers and party members alike. 

Over the coming years, the Lib Dems will continue to look to improve their media presence, with the upcoming local elections set to be a crucial marker of success. The recent rise of Reform and the Greens, pushing the Lib Dems into fourth place in national polling, means that in 2026 the party will need to make some noise. Whether the electorate is prepared to listen is another matter. 

Green Party 

Following its breakthrough at the 2024 general election, 2025 was a strong year for the Green Party, with new leader Zack Polanski driving the party to previously unseen polling heights. Polanski, a London Assembly Member and former hypnotist, has pitched an “eco-populist” offer to voters disillusioned with both Labour and Reform UK, marrying wealth taxes and radical climate action with a sharper message on Gaza, housing and inequality. 

While the Greens now pose a serious threat to Labour in next May’s local elections, the biggest casualty of their momentum may be Zarah Sultana and Jeremy Corbyn’s embryonic hard-left project, “Your Party”. Despite Sultana and Corbyn’s somewhat fractious efforts, it is Polanski’s Greens, not Your Party, that are currently generating anxiety among urban Labour MPs and councillors. 

Scotland 

2025 was a relatively quiet year for the Scottish National Party (SNP), with the party stabilising under First Minister John Swinney MSP and preparing for the 2026 Scottish Parliament elections. Despite last year’s heavy general election losses to Scottish Labour, its prospects now look brighter than at any time since Nicola Sturgeon MSP left Bute House in 2023. Polls still suggest a hung parliament at Holyrood, but the SNP has benefited from Scottish discontent with the Labour government in Westminster. The SNP looks set to remain the largest party, likely needing a renewed deal with a strengthened Scottish Green Party. Reform UK is well placed to gain at the Scottish Conservatives’ expense but still looks unlikely to become the official opposition. 

Wales 

2025 was the year Welsh Labour tried to steady the ship. First Minister Eluned Morgan MS spent her first full year reasserting a more traditional “clear red water” approach and putting distance between her administration in Cardiff Bay and Starmer’s government in London, a tension laid bare when Welsh Labour MSs publicly accused the British government of “rolling back” devolution in early December. Polling for the 2026 Senedd election has Labour on far less secure ground than in 2021. Plaid Cymru has gained momentum, Reform UK has become a serious factor, and Labour’s third place in the Caerphilly by-election (won by Plaid, with Reform UK coming second) underlined the volatility of the map. Meanwhile, Senedd reform – expanding the chamber and introducing a more proportional system from 2026 – adds further uncertainty. 

Northern Ireland 

2025 was about consolidation rather than campaigning in Northern Ireland. The Executive spent the year grappling with pressures in health, public services and infrastructure, helped by extra funding from the 2025 Spending Review but still working within a tight budget. The Windsor Framework remained sensitive, with an independent review keeping post-Brexit arrangements – and the constitutional question – on the agenda. Debate has also grown over reforming Stormont’s institutions to reduce the risk of future collapses, but for now the O’Neill-Little-Pengelly administration has endured, with parties more focused on extracting concessions from London and watching Dublin than on bringing the institutions down again. 

Generating economic growth was the government’s self-described defining mission in 2025, a goal that will shape the agenda of the entire parliamentary term. However, as the year progressed, it became clear that this would be no easy achievement. Rather, it would be one, as the Chancellor declared at November’s Autumn Budget, that would need to be built “patiently, and stubbornly, by the people who take risks”.  

Patience, however, is in increasingly short supply, and the promise of sustained economic growth that is felt in people’s day-to-day lives has yet to clearly emerge. The Office for Budget Responsibility (OBR) predicts inflation-adjusted GDP growth in 2025 will hit 1.5%, with forecast growth of 1.4% in 2026 and an annual growth rate of 1.5% over the following four years. This would constitute a technical success but hardly a transformative set of figures – which, over the medium term, would be lower than the previous OBR assessment. 

However, there are some green shoots emerging. There is broad consensus that inflation will fall and move closer to the Bank of England’s 2% target in 2026, paving the way for further interest rate cuts. The government’s planning reforms and public infrastructure investment are also expected to begin delivering the economic returns promised. Borrowing, too, is likely to fall, and the Chancellor will continue to emphasise that the Autumn Budget increased spending while also increasing the government’s fiscal headroom. That was, admittedly, achieved by backloading the most significant tax rises, and therefore remains a problem deferred, rather than a problem solved. But the bigger prize here is a larger headroom, which leads to happier markets, lower bond yields and less debt interest for the government. 

Nevertheless, major structural issues remain. The government has not yet addressed Britain’s weak productivity, wage growth is slowing and spending power is expected to stagnate as millions more move into higher tax brackets. The fractious nature of the Labour backbenches means that significant structural reforms, which may solve problems but are politically contentious, were deferred this year, and there is increasing concern that the appetite for such reforms is only diminishing.  

There are, of course, broader challenges that no government would be able to avoid. Global uncertainty around tariffs will continue into 2026, while geopolitical conflict continues to exert pressure on financial markets. Domestic politics, however, will be a more pronounced risk factor in 2026, with increasing speculation that the Prime Minister will face a leadership challenge after the May local elections. If that comes to be, gilt yields would be likely to spike and, as recent history shows, such movements can change the economic outlook considerably. 

Upon entering government, the Labour Party proudly presented itself as both pro-business and pro-worker. Having undertaken a significant charm offensive to convince corporate Britain that a Starmer administration would work closely with the business community and protect its interests, the reality of the government’s first 18 months in office has proved to be slightly different.  

The Chancellor’s decision in the 2024 Autumn Budget to raise employer national insurance contributions cast a lingering cloud over business relations in 2025, from which the government has struggled to escape. Despite constant reassurances of its continued commitment to partnership with the private sector, there is a prevailing sense that much of the business community is unconvinced. 

Meanwhile, the trade union movement remains an important – and often overlooked – stakeholder for the Labour government and has continued to lobby ministers on pay settlements, with industrial action this year from rail workers, doctors and, in a significant incident, refuse workers in Birmingham. In short, Starmer has faced the perennial challenge of centre-left administrations: treading the line between two camps who both have the potential to cause significant upset.  

That clash between trade unions and the business community has played out throughout the year through the debate on the Employment Rights Bill, which is nearing Royal Assent. Having agreed to set a six-month qualifying period for unfair dismissal protections – the previous proposal for “day one” unfair dismissal rights was a major sticking point for business – the Bill now looks likely to be on the statute book by early 2026, with measures to be implemented gradually after further consultation with stakeholders. That will represent a significant win for the unions. For the government, meanwhile, getting what is a flagship piece of legislation over the line will be a source of significant relief. 

More broadly, the Bill will mark a radical reset of Britain’s industrial relations framework, reshaping much of the UK’s employment law and strikes regulations. It is a major rebalancing towards workers’ rights and likely to form a central plank of Labour’s re-election campaign in 2029.  

Rebuilding trust with business will be a key priority for the government in 2026. The expansion of business engagement teams in Whitehall reflects how seriously this is taken at the top, but the reality is that trust is likely only to return if economic indicators improve and, crucially, are felt to be improving. 

Financial services remains the cornerstone of the government’s growth agenda, with ambitious reforms outlined this July in the Financial Services Growth and Competitiveness Strategy, alongside the Chancellor’s Mansion House speech and Leeds reforms. The principal objective is to maintain Britain’s competitive position as a global financial services hub. There is a recognition across government that without this strength, growth will remain elusive, and they will be unable to deliver on the rest of their agenda. 

Efforts to deepen Britain’s capital markets have dominated activity in the sector, with initiatives like the introduction of a concierge service to support and attract investors, the introduction of long-term asset funds (LTAFs) to stocks and shares ISAs, and the reduction of cash ISA limits from 2026 – all part of a strategic move to direct investment towards higher-yield opportunities. 

The big lever of change, however, is pension consolidation, and the push for pension schemes to invest in domestic infrastructure. With the Mansion House Accords and the creation of the Sterling 20, alongside the Pensions Schemes Bill currently making its way through Parliament, the government hopes pension funds will provide the jump-start to growth. 

Public markets also remain in the spotlight. Five years on from Lord Hill’s review, a new government Listings Taskforce has been set up to encourage more companies to list on the London Stock Exchange (LSE). A new prospectus regime is being introduced, and the Chancellor announced a three-year stamp duty holiday on newly listed company shares in this year’s Autumn Budget. 

The government is also seeking to address growth and the transition from private to public markets, launching a new “Scale-up Unit”, led by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), the establishment of a new private stock market (PISCES) and the entrepreneurship package announced in the Autumn Budget. 

The regulators, spurred on by the Prime Minister’s Christmas 2024 letter, have kept the foot on the gas to support growth. The FCA has demonstrated measurable progress, rolling out almost all 50 of the growth-driving measures outlined in its response to the letter. This includes consulting on SMCR reform, tokenisation of funds, the introduction of consolidated tape and launching a stablecoin-specific cohort in the regulatory sandbox. The PRA has also progressed banking remuneration and insurance special purpose vehicles reform. 

While the government and regulators continue to pursue sector efficiencies, only time will tell if these reforms can strengthen Britain’s position in the global financial ecosystem and drive growth. 

Throughout 2025, the government has placed greater emphasis on visible delivery across science, technology and innovation, with ministers increasingly framing technology as a central mechanism for achieving the government’s economic and public service objectives. Under pressure to enable faster economic growth, there has been an effort across Whitehall to shift from policy development towards implementation. 

Artificial intelligence has remained the government’s flagship technology priority. The publication of the AI Opportunities Action Plan at the start of the year set out ambition to strengthen Britain’s AI foundations, accelerate adoption across the economy and position the UK as an “AI maker” in an increasingly competitive global market. 

Delivery has since focused on the creation of AI Growth Zones, intended to catalyse data centre development and drive regional growth. Data centres have been identified as critical national infrastructure, underscoring their economic and strategic importance. Amid this drive for growth in AI, pressure has grown from Parliament, civil society and some industry members for clearer statutory oversight of frontier AI systems.  

The government’s legislative programme has been active. The Data (Use and Access) Act received Royal Assent in June, introducing reforms to Britain’s data protection and data-sharing framework, aimed at unlocking greater economic value from data while maintaining public trust. 

The Cyber Security and Resilience (Network and Information Systems) Bill, which was introduced to Parliament in November, will also seek to strengthen cyber risk management obligations across critical national infrastructure and supply chains, reflecting heightened concern about systemic vulnerabilities. The introduction of age verification across high-risk sites has prompted questions about the effectiveness of Ofcom protections and enforcement of the Online Safety Act.  

Following Liz Kendall’s appointment as the new Science, Innovation and Technology Secretary in September, renewed emphasis has been placed on strengthening the UK’s research and development investment environment, amid concerns about companies pausing or relocating investment overseas. 

Industry responded positively to additional funding from the Department for Science, Innovation and Technology (DSIT) to support science and technology research, with a significant proportion channelled through UK Research and Innovation (UKRI). Further commitments in the Autumn Budget to increase public R&D investment to £22.6 billion by 2029-30 were also welcomed as a signal of long-term intent. 

Sustaining confidence in the year ahead will depend on faster and more consistent delivery across areas of regulation and investment. 

With Labour seeking to position itself as the party of business in the run-up to the July general election, the party’s historic support for workers has experienced a narrative shift. The Prime Minister and Chancellor’s core focus is on ensuring economic growth that benefits both industry and its workforce. However, with the asks of both groups often at odds, the government continues to balance the tightrope between being pro-worker and pro-business with varying success.

Attempting to consolidate its support for workers, the government published the Employment Rights Bill in October 2024. Gaining the reins of government with the pledge to deliver the “biggest overhaul of workers’ rights in a generation” and “make work pay”, the much-anticipated proposed legislation seeks to expand day-one rights, end “fire and rehire” practices and ban “exploitative” zero-hours contracts. The legislation will alter the business landscape for employers and workers alike, and both groups have offered criticism that the proposed bill does not go far enough. Workers have pointed to the omission of the floated “right to switch off”, while SMEs have argued that the increase in red tape will prove too high an administrative and financial burden, which only adds to business’ wider concerns following the Autumn Budget.

Throughout 2024, the public has experienced increasing frustrations over strike action. Despite this, the government has sought to extend the olive branch to a number of these highly influential groups, including the Trade Union Congress, Unite and the RMT. In September 2024, as the first Prime Minister to address the Trade Union Congress in 15 years, Starmer stated that the government would work with both businesses and unions to “rewire” the British economy. He also pledged to repeal the Strikes (Minimum Service Levels) Act 2023, introduced by the previous Conservative government, which requires certain striking workers to provide a minimum level of service.

Weeks into the job, the new Secretary of State for Health and Social Care, Wes Streeting, negotiated with junior doctors in England and ended the 20-month row over pay and conditions. Furthermore, in July 2024, the government chose to accept the independent public sector pay review bodies’ recommendations of 4.75% to 6% increase in pay for staff across the public sector. This accounts for more than 40% of “government overspending”, which the Chancellor, Rachel Reeves, has argued left a “black hole” of £22 billion. Despite resolving these strikes, the public has voiced dissent over the settlements, with the pay awards undoubtedly contributing to an acute strain on public finances.

This year, the Prime Minister has maintained a high degree of personal involvement in foreign affairs, positioning himself at the centre of Britain’s effort to reset its global posture. Most notably, Starmer has sought to establish the UK as a credible bridge between Europe and the United States, rebuilding strained ties with European partners while cultivating a pragmatic relationship with US President Donald Trump. 

Trade policy has proven one of the most challenging elements of this agenda. The US upended decades of relative stability in international trade policy with a sharply protectionist turn in April. “Liberation Day” saw President Trump announce sweeping tariffs on almost all goods coming into the US. While rates varied between trading partners, Britain was not exempt from meaningful new barriers to accessing the US market. Starmer was among the host of global leaders rushing to the White House to try and secure more agreeable trading terms. By leaning on their personal relationship and a clever deployment of the King and Royal Family, Starmer was able to secure the first post-Liberation Day trade deal of any major economy.  

Although the lack of details in the US-UK Economic Prosperity Deal (EPD) leaves a lot of room for uncertainty, Britain has avoided some of the most punitive measures applied to exporters from the EU, vindicating the Prime Minister’s strategy. Business leaders have welcomed the progress that has been built on the EPD through sector-specific agreements, including the US-UK pharmaceuticals agreement announced in December, which is expected to provide partial relief from American protectionism. 

However, speculation that the Tech Prosperity Deal (TPD) reached between the UK and the US to cooperate further on AI and quantum is on hold has also heightened concern that the early momentum behind deeper transatlantic tech alignment may be stalling. 

Beyond trade, the government has intensified diplomatic engagement across Europe, the Indo-Pacific and key emerging markets. The ongoing war in Ukraine has tested British leadership, particularly amid escalating Russian aggression and intermittent signals of wavering American commitment. The Prime Minister has sought to position the UK as a central advocate for the “coalition of the willing”, while maintaining direct bilateral engagement with the US, underscored by President Trump’s historic second state visit to Britain in September. 

Ongoing conflict in the Middle East exposed tensions within the domestic political landscape this year, particularly within the Labour Party. Internal divisions over the government’s approach contributed to the rise of the Green Party in the polls, while the UK’s formal recognition of the state of Palestine in September marked a significant diplomatic step intended to assert Britain’s position.  

Overall, the past year has underlined the necessity of sustained international engagement in a world increasingly shaped by geopolitical fragmentation and trade barriers. As conflict persists in Ukraine and transatlantic relations remain crucial, the government will need to balance strategic diplomacy with economic resilience to safeguard long-term British interests. 

Commissioned as Labour entered Downing Street in 2024, the publication of the Strategic Defence Review (SDR) in June signalled a conceptual shift towards a defence posture built on “warfighting readiness.” Ministers cast this not as a technocratic update but the foundation of a broader national effort to recapitalise the armed forces to meet the challenge of an increasingly volatile world. The SDR’s central message was unequivocal: Britain must think, plan and act like a nation preparing for sustained strategic competition. 

However, such ambition does not come cheap and the Ministry of Defence (MoD) is one of the few Whitehall departments with the luxury of a growing budget. In February, the Prime Minister announced defence spending would climb to the equivalent of 2.5% of GDP by 2027 – numbers programmed into June’s Comprehensive Spending Review. Within weeks, Starmer went further, signing up to a new NATO target of 5% of GDP spend by 2035 – 3.5% for core defence and 1.5% for wider security.  

How those larger sums will be made to add up is tomorrow’s problem, but the symbolism is consistent with the SDR’s newly minted “NATO first” doctrine. This demands a cultural and organisational reset within the MoD, embedding alliance thinking into every layer of planning. It also marked a quiet farewell to the previous government’s Indo-Pacific “tilt”, re-anchoring British strategy firmly in the Euro-Atlantic theatre. By recommitting so clearly to NATO, London hopes to steady transatlantic nerves at a time when Washington’s seemingly erratic approach to European security continues to test the established post-war order. 

This NATO pivot was designed to complement the thawing of relations with Brussels, which, in May, saw the signing of a new UK-EU Security and Defence Partnership, establishing a new framework for structured cooperation on shared threats. This also opened the door to British participation in EU defence procurement initiatives – something stymied in November when negotiations failed on Britain’s entry into the €150 billion SAFE defence programme, neutering potential for deeper industrial collaboration. 

And therein lies the rub. September’s Defence Industrial Strategy focused on overhauling procurement to speed delivery, strengthen supply chains, accelerate technology adoption and drive regional economic growth. But in a world where even a growing defence budget must still contend with fiscal reality, such ambitions demand trade-offs: readiness versus innovation and sovereign capability versus value for money. Tough choices are still needed. 

Publication of the Defence Investment Plan – the critical missing piece of the jigsaw in which MoD will set out how it intends to spend its money over the coming decade – has been unceremoniously booted into 2026 amid widespread rumours of unrest among military chiefs that political rhetoric and its budget are irreconcilable. For business, continued uncertainty risks undermining the “wartime pace” of industrial mobilisation that ministers claim to champion. In 2026, closing that gap will be essential. 

This year has seen some significant policy movement across home affairs and justice, as the government attempts to juggle the twin pressures of tougher border security and a stretched justice system. 

Immigration has long been a political pressure point for governments of all stripes, and the current Labour government is no exception. The appointment of the straight-talking Shabana Mahmood as Home Secretary in September marked a turning point, injecting a new sense of momentum to the issue.  

Mahmood dominated headlines in November with a new package of reforms under the government’s “restoring order and control” strategy, signalling a major overhaul of the asylum and refugee system. Her proposals – including ending hotel accommodation for asylum seekers by the end of the Parliament and streamlining the deportation of foreign offenders – were a strategic effort to take on Reform UK and address growing public frustration with the current immigration and asylum system.  

The Border Security, Asylum and Immigration Act 2025, which received Royal Assent earlier this month, was another attempt to signal that the government’s tougher stance on immigration is more than just rhetoric. The new Act establishes the Border Security Command and repeals the Safety of Rwanda Act 2024 along with key provisions of the Illegal Migration Act 2023. Meanwhile, the Crime and Policing Bill, introduced to Parliament earlier this year as part of the government’s “safer streets” mission, is expected to continue its passage into next year before receiving Royal Assent. 

The government’s drive for reform also reached the Ministry of Justice (MoJ), where the system continues to struggle with chronic pressures from a growing Crown Court backlog to a prison overcrowding crisis and rising accidental releases. 

Against this backdrop, Justice Secretary and Deputy Prime Minister David Lammy has taken bold steps to tackle unprecedented delays, though not without controversy. His recent announcement to replace jury trials for offences carrying sentences of under three years with new “swift courts” represents a major shift from long-standing practice and sits at odds with his earlier warnings against curtailing juries. It also goes further than the recommendations in Sir Brian Leveson’s independent review of the criminal courts. Despite this, the move signals the government’s determination to act on the mounting challenges facing the justice system. 

Despite a flurry of legislation and high-profile announcements this year, managing Britain’s domestic affairs will remain a delicate balancing act for the Labour government in the year ahead. 

This year, the Labour government began implementing its “clean energy superpower” mission. Despite significant decisions aimed at achieving 2030 clean power, the government has been rowing in the face of a political storm around the eyewatering costs of energy bills.  

Radical steps have included the creation of Great British Energy and NESO’s work on connections reform. Meanwhile, revisions to national policy statements and the Planning and Infrastructure Bill are intended to cut red tape and streamline planning to facilitate energy and grid infrastructure projects more speedily. 

The government’s decision in July to reject a zonal pricing electricity market for reformed national pricing was a major moment. The outcome will define the future of GB’s power system, ahead of the first Strategic Spatial Energy Plan in 2026, which will determine how demands on generation, network and system all need to be managed to forge a new low-carbon economy.  

However, for the levers pulled, it is the stubbornly high cost of living, partially fuelled by energy bills, and a desire among voters to see it urgently resolved, that is a major factor pushing the electorate to consider insurgent alternatives like Reform UK. All the while energy costs rank as one of the top issues for business, acting as a barrier to the private investment so desperately sought by the government. 

The political debate over how to simultaneously reduce costs, decarbonise, connect renewables and deliver a grid fit for AI will only intensify throughout this Parliament. While funding for measures such as the Warm Homes Plan has been protected, recent decisions including “Transitional Energy Certificates” to allow limited oil and gas production, the British Industrial Competitiveness Scheme and the cutting of clean subsidies to reduce energy bills in the Autumn Budget show how strongly political demands for cheaper bills now feature in decision-making.  

The cost of bills is also taking on central importance due to consumers facing rises from multiple directions. Some of the most pronounced have been in water bills, with Ofwat approving hefty rises over the next five years and the CMA even allowing five water companies to go further as industry struggles to tackle pollution and upgrade outdated infrastructure. This is in spite of a government call to announce the scrapping of Ofwat for a new, powerful integrated regulator for water. Yet, while radical, such a reform will not help the situation for billpayers today, nor Labour’s position in the polls.  

In years to come, this government’s actions on energy-environmental stewardship may mark its most long-lasting legacy. However, as money bites, the question will be how resilient green plans prove to be in 2026 to the imperative to reduce costs for voters now. 

2025 marked a pivotal year for health care and life sciences, defined by two interlinked government ambitions: to improve NHS care and boost investment in British life sciences. Despite significant investment, a challenging fiscal and geopolitical environment has nonetheless resulted in a mixed outlook for 2026. 

The Department of Health and Social Care emerged as 2025’s Treasury champion, securing a £29 billion boost for day-to-day NHS spending. This investment has driven NHS productivity growth beyond the government’s 2% target. Overall waiting lists continued to fall throughout the year, while record numbers of treatments were delivered, even if certain key targets continue to be missed. 

It was in this bullish context that Health Secretary Wes Streeting unveiled the 10-Year Health Plan this summer, setting out three headline shifts: from hospital to community, from analogue to digital and from sickness to prevention. These reforms aim to create a sustainable NHS while addressing rising economic inactivity. 

Streeting’s controversial plan to axe NHS England and absorb its functions into the Department of Health and Social Care faced setbacks when it was reported that the cost of redundancies was not considered in budgeting projections. In November, it was reported that job cuts at the NHS would go ahead, after the £1 billion needed to fund the redundancies was approved by the Treasury. 

Complementing health care reform, and as part of the government’s identification of life sciences as a “growth-driving” sector in the Industrial Strategy, ministers published the Life Sciences Sector Plan this summer. Backed by £2 billion in funding, this initiative aims to accelerate R&D and drive Britain to become Europe’s leading life sciences economy by 2030. It included more detail on how the government will deliver its planned £400m public-private investment to promote the UK as a destination for clinical trials. 

Despite the government’s ambitions for the sector, 2025 saw competitiveness issues peak as a succession of life sciences companies withdrew investments in Britain. This was in the context of difficult and protracted negotiations with the pharmaceutical industry on a new long-term repayment rate under the Voluntary Scheme for Branded Medicines Pricing, a debate deferred in December when the 2026 rate was cut as talks continue. This exposed the contradictory pressures on the government as it was forced to weigh up the direct cost of medicines to the NHS against the attractiveness of Britain as a market for pharmaceutical research. 

These challenges were compounded when US President Donald Trump announced his intention to introduce sweeping global tariffs. The announcement in December that a US-UK deal had been struck to allow British pharma exports to escape these tariffs, in return for a 25% hike in medicine spending in the NHS, was certainly welcomed by industry. Yet questions persist on how exactly this commitment will be funded, with any attempt to divert critical funds away from health provision likely to meet political challenge. 

Overall, the NHS and investment in health care is the drum on which the government has so far chosen to bang its achievements loudest. That may in part explain why the ambitious Streeting – perhaps the most confident frontbencher in front of the media – is at the centre of persistent briefings about a leadership challenge against Keir Starmer, despite his vociferous denials. 

However, a winter flu crisis coalescing with a resident doctors’ strike suggests it could be a difficult end to the year. As we enter 2026, therefore, the health care and life sciences landscape stands at a critical juncture. The coming year will reveal whether the government’s genuine policy ambition can overcome practical challenges to deliver meaningful improvements in patient care and industry competitiveness.  

Housebuilding and planning reform remained central to the government’s growth agenda in 2025 as ministers reiterated and doubled down on their commitment to tackle the housing crisis. Following the resignation of Angela Rayner in September, Steve Reed took over as Secretary of State for Housing, Communities and Local Government, bringing with him a wave of energy with his somewhat contrived “build, baby, build” agenda. However, despite early momentum through changes to the National Planning Policy Framework, the 1.5 million homes target is now being openly criticised as unrealistic by some industry leaders and analysts. 

The flagship Planning and Infrastructure Bill, introduced in March 2025 and trailed as the biggest overhaul of the planning system in a generation, has now received Royal Assent. Backed by a £48 million uplift in the Autumn Budget for planning capacity, the government hopes to cut red tape and accelerate project delivery. Once on the statute books, the reforms will be implemented in stages, with the year ahead focused on secondary legislation, new guidance and operational rollout. 

However, the debate on planning reform is far from settled. The final legislation was watered down in response to pressure from environmentally minded MPs, fuelling speculation that ministers could revisit more controversial changes later. While the government has ruled out another major planning bill – for now – ministers have signalled that further legislative changes could come. Indeed, in December, the government brought forward a newly revised National Planning Policy Framework aimed at addressing viability concerns and speeding up housebuilding. Tensions between pro-development “Yimbys” and those advocating for stronger environmental safeguards are therefore likely to remain in 2026. 

The Renters’ Rights Bill was another significant piece of legislation this year, aiming to stabilise the rental sector and improve security for tenants, but has faced significant backlash from landlords. As part of a broader plan to enhance housing stability and affordability, the Chancellor announced £39 billion of investment in social and affordable housing over the next decade. The commitment, welcomed by the industry, gave a substantial mandate to the new leadership at Homes England. With Amy Rees CB now at the helm, the agency is positioning itself to play a pivotal role in translating this long-term funding into measurable delivery on the ground. 

Looking ahead, the English Devolution and Community Empowerment Bill continues to progress through Parliament and will likely become law by next summer. This legislation will grant combined and mayoral authorities enhanced planning powers to deliver housing and support local economic growth. Meanwhile, the Pride in Place programme – a £5 billion regeneration initiative launched in September – aims to give local areas greater control over local investment. In many ways, this programme represents an effort to blunt the rise of Reform UK by delivering visible change in the “left-behind” regions of the country. 

With the legislative groundwork now taking shape, the priority for ministers will shift firmly towards delivery. With local elections looming next May, the government will be judged on whether a reformed planning system begins to bear fruit. 

Transport policy in 2025 has picked up speed. A central pillar of the Plan for Change, the government has shifted beyond signalling ambition to the far more complex task of implementing it. With Transport Secretary Heidi Alexander emphasising the need to “get Britain moving”, the focus has been on translating manifesto commitments into policy. 

Nowhere has this been clearer than rail. Renationalisation remains a cornerstone of the transport agenda and, more generally, a totemic issue on which Labour as a government defines itself. The Railway Services (Public Ownership) Act 2024 provided the legal basis for the phased transfer of operators into public ownership, with South Western Railway the first to be nationalised in May 2025. 

The Railways Bill, currently progressing through Parliament, lays the legislative foundations for Great British Railways as a publicly owned body overseeing both infrastructure and passenger services. New branding, unveiled in December, has served as a further sign of momentum. The Chancellor’s decision at the Autumn Budget to freeze rail fares for the first time since 1995 has also reinforced the government’s intention to link renationalisation with affordability. 

On roads policy, the government has attempted to pair the future of mobility with economic growth, positioning Britain at the forefront of a rapidly developing global market. One notable development is the accelerated timeline for autonomous vehicle (AV) trials, now slated to begin on London’s streets as early as spring 2026. The government has seen AVs as a test case for British innovation.  

Looking to the skies, 2025 has been marked by discussions about increasing aviation capacity while decarbonising the sector. The government has put airport expansion as a central tenet of its economic growth plans, driving national competitiveness and connectivity while generating jobs. This has seen major approvals or signals of support for expansion at Heathrow, Gatwick and Luton. Notably, the Chancellor has spearheaded much of this herself, stressing the potential for economic growth. Parallel to this, ministers have established the UK Airspace Design Service to modernise airspace planning and regulation. The sustainable aviation fuel mandate introduced in January 2025 is supported by market mechanisms to guarantee demand and unlock investment in domestic production capacity, framing decarbonisation as both an environmental and growth strategy. 

Across transport, 2025 has represented a shift from political vision to the early stages of system transition. The Transport Secretary has delivered visible progress on key manifesto commitments while avoiding major disruptions. Yet the real test is still to come. With multiple reforms advancing through Parliament, 2026 will be defined less by headline announcements and more by the extent to which they are translated into positive action. 

2025 has been a year of recalibration for education, driven by a sense that schools, colleges and universities must equip young people not only for exams, but for a rapidly shifting world.  

At the forefront in this movement has been the government’s Curriculum and Assessment Review, completed in November, which proposed a slimmer, more focused national curriculum. The new curriculum emphasises core subjects for mastery, while providing students with more choice in sciences and the arts. 

New Year 8 Maths and English tests aim to identify gaps early, and a phased “enrichment entitlement” promises exposure to arts, outdoor education and life skills such as resilience. The reforms, slated for gradual implementation through to 2028, reflect the government’s desire to broaden opportunity while maintaining rigour, striking a delicate balance between excellence and equity. 

Skills and vocational education have also been under intense scrutiny this year. The government’s Growth and Skills Levy, replacing the apprenticeship levy, is set to widen funding for training and front-load resources for 16-19 education, especially in STEM and digital subjects. At the same time, new funding rules mean Level 7 apprenticeships will only receive government support for learners aged 21 and under from 2026, limiting employers’ ability to use the levy and shifting costs back to organisations for older starters. 

At the same time, Skills England, the new sector-specific body, is spearheading efforts to close persistent gaps in AI, advanced manufacturing, health care and clean energy. Together, these initiatives aim to better align education with economic need and future-proof the workforce, though debates persist about funding adequacy and employer investment. 

Universities, meanwhile, confront a severe financial squeeze. Reliant on domestic and international tuition fees, with shrinking teaching grants and frozen fee caps, many institutions face deficits, course cuts and staff reductions. Government policy has sought to stabilise the sector through inflation-linked tuition fee caps, targeted maintenance support, and regulatory oversight, with the overarching aim of maintaining a world-class, financially sustainable higher education system. Universities UK has called for more robust intervention, warning that without it, the sector risks compromising quality and accessibility. 

The year’s reforms reflect a consistent theme: preparing Britain for an uncertain future. From nurturing proficiency in the classroom and equipping students with technical skills in high-demand sectors, to safeguarding university sustainability, policymakers are attempting a careful balancing act between ambition and realism. Persistent challenges including skills gaps, underinvestment by employers and financial pressure on higher education remain, but the trajectory is clear: a national education and skills system increasingly focused on resilience, relevance and readiness for the decades ahead. 

2025 has brought some significant challenges for the Secretary of State for Culture, Media and Sport, Lisa Nandy, not least relating to the BBC. Following the revelation that the BBC had edited two parts of a speech delivered by US President Donald Trump, so that he appeared to explicitly encourage the Capitol Hill riots of January 2021, Prime Minister Keir Starmer MP quipped that the BBC “must get its house in order”. However, with the BBC now facing legal action from Trump, only time will tell how much damage has been done to its reputation – and the extent to which the government can, or will want, to insulate itself from any transatlantic fallout.  

Looking ahead to 2026, the government faces significant challenges in balancing the interests of the creative industries with those of the fast-growing AI sector. Alongside the ethical debate on how much influence AI should have, copyright concerns are central to this ongoing challenge. In December 2024, the government launched a consultation on “copyright and artificial intelligence”, which sought industry views on how the creative industries and the AI sector can work “in partnership” with each other. The consultation closed in February 2025, and the government is expected to respond by March 2026.  

Meanwhile, the intersection between tech and freedom of speech sparked a particularly divisive debate in British politics this year. The 31-month jail term awarded to Lucy Connolly for inciting racial hatred on X led to a global debate erupting between left and right, with tech giant Elon Musk arguing that the Online Safety Act (OSA) was at risk of “seriously infringing” free speech in Britain. 

Sport governance has also seen major reform in 2025. The Football Governance Act received Royal Assent in July this year, establishing the Independent Football Regulator (IFR) to “safeguard the future of the national sport (football)”. The live entertainment sector, too, has seen significant change, with the government’s announcement that it plans to ban the resale of tickets for live events above the original cost, which was welcomed by many across the industry. 

Given its consumer focus, matters of culture, media and sport will undoubtedly remain at the forefront of some of the most fast-moving debates of 2026, with the government tasked with determining how best to protect creative talent while navigating an increasingly digital and AI-driven economy.