FTI Consulting UK Public Affairs Snapshot: From Promise to Pressure: A Reflection of Labour’s First 100 Days in Government

“Politics can be a force for good… that is how we will govern”, Keir Starmer declared in his first speech as Prime Minister. Entering Downing Street as a Prime Minister whose campaign centred on wanting to be a leader who, above all else, would ‘steady the ship’, Starmer’s first 100 days as Prime Minister has not been entirely plain sailing.

Assuming power amid the ongoing war in Ukraine and escalating tensions in the Middle East, Starmer’s government set a decisive tone with the King’s Speech in July. With 40 bills, the highest number in a King’s or Queen’s Speech since 2005, it was clear Starmer was ready to hit the ground running.

Despite a sense of optimism following the King’s Speech, the day before the summer recess Chancellor Rachel Reeves delivered a downbeat update to the House on the UK’s financial situation. In one of the more memorable moments of Labour’s first 100 days, she said the Labour government had inherited “a projected overspend of £22 billion”, a “fiscal black hole” she accused the previous Conservative government of covering up, which they deny. It became clear the strategy was to lay out the status of the inheritance left by the outgoing Government, to prepare the British public for difficult choices ahead. By the Labour Party conference some optimism had been injected into remarks on the economy as part of the strategy to move onto showing the British public how they are going to grow the economy, but partly in response to concerns from business that the initial narrative was too negative.   

As for the Prime Minister, his first major test in the House of Commons came in the form of the SNP amendment to scrap the two-child benefit cap, a position supported by many Labour MPs and members. This was a test too for Labour’s whipping operation, and it arguably fell short with seven Labour MPs ultimately having the whip withdrawn for voting against the Government. Whilst no Government likes a rebellion on its backbenches, Downing Street will have been pleased at the opportunity to demonstrate a strong approach to discipline early on, and indeed to fire a shot across the bows of the remaining rump of hard left MPs.

A further, much larger test was to come. While Parliament was adjourned for summer recess, Britain found itself on the brink of a crisis with civil disruption and rioting taking place in multiple locations after the murder of three young girls in Southport. A significant challenge to the new Prime Minister so soon after taking office, Starmer’s response was swift and firm, avoiding any bombast. This situation was compounded however by a crisis in prison capacity which civil servants had already briefed Labour heavily on in the days running up to the election, acknowledging the likelihood of a change in Government. Whilst the last thing Starmer would have wanted to do was accelerate the Conservative’s early release scheme, it was largely accepted he had no other choice and managed to lay the blame for the situation squarely at the feet of the previous Government. 

Meanwhile, rumbling on in the background was the backlash to the scrapping of the Winter Fuel Payment for millions of pensioners. Reeves argued the decision was one she did not want or expect to make, but claimed it was a “necessary and urgent decision” to “fix the foundations of our economy and bring back economic stability”. Though many Conservatives quietly agreed – at least with the principle if not the cut-off point – this decision sparked division internally, culminating in delegates at Labour’s annual conference voting in favour of a Unite the Union motion calling on the Government to reverse its winter fuel payments decision.

Despite this non-binding vote and campaigners staging a protest at the Labour Party Conference chanting “save the winter fuel”, Starmer shows no sign of reversing the policy and indeed his approach may well shore up his reputation as somebody who is unafraid of making bold decisions.

Away from the serious business of government, Starmer and his top team faced a swathe of negative coverage on gifts and donations. Whilst politicians receiving donations is not new, Starmer and several of his Ministers have been accused of hypocrisy and not living up to the standards he vowed to bring into government, with donor Lord Waheed Alli receiving a pass to 10 Downing Street following donations to the Starmer family and Angela Rayner, and Reeves appointing a donor to a senior civil service position. Whilst the donations were properly declared, Starmer has paid back £6,000 worth of previous donations, and announced a tightening up of the rules on Ministerial hospitality. The Conservatives, meanwhile, have been pleased by Labour’s recent “freebiegate” debacle, and are quietly delighted that attention on Shadow Ministers has been less potent.

Inside of government the biggest challenge for the Prime Minister has been internal disagreements spilling over into a briefing war against the Prime Minister’s Chief of Staff Sue Gray. In a battle with those loyal to Morgan McSweeney, architect of the Starmer project, there was only going to be one winner. Gray stepped down from her role a mere three months into government and just weeks before the International Investment Summit and the Budget. With McSweeney replacing her, Starmer will hope his operation has not lost too much in the way of professional government experience for the sake of a more harmonious Downing Street.

Leading up to the Budget, Labour have sought to reset the dial and bring attention back to their agenda for government with the release of the Industrial Strategy Green Paper and the International Investment Summit taking place on the same day. The Green Paper sets out the Government’s vision for industry, marking out a 10-year plan supporting Labour’s core mission to deliver economic growth. High level at present, it seeks detailed views from business on how best to address barriers to growth in the UK. 

Looking to shore up investor confidence, the International Investment Summit has been viewed as a major success for Labour, with several key announcements stemming from the event including a £1bn boost to Stansted airport and a £279m investment from Eli Lilly into the UK to launch the first ‘Lilly Gateway Labs’ innovation accelerator in Europe. Whilst there were bumpy moments in the immediate build-up to the event, largely due to comments made by Transport Secretary Louise Haigh about P&O Ferries, Business Secretary Jonathan Reynolds managed to rescue the situation and avoid an undignified sideshow. 

The next pivotal event for the Government is the Budget. Labour has a tightrope to walk and will need to decide how bold to be. There is increasing speculation that the Office for Budget Responsibility can be persuaded of the merits of adjusting the methodology for calculating government finances, which means that Reeves will find herself with some much-needed fiscal headroom. But tax remains the elephant in the room.

Recent attention has turned to an increase in employer National Insurance Contribution (NIC), which will cause significant debate, including around whether this breaks a manifesto commitment. Alongside this there are also continued rumours of changes to the capital gains tax regime, reforms to carried interest, and the closure of tax loopholes for non-doms – all attractive to Labour’s core vote, but potentially damaging to wealth creation. What emerges on the 30^th will reveal much about this Government’s appetite for moving fast and taking risks.

After the Budget and the election of the new Conservative leader, this frenetic period of change is likely to settle down a little if not entirely as the new normal beds in. As Labour look back on their first hundred days they will take comfort from a flying start in the form of a busy legislative programme and a strong finish with the overwhelmingly successful Investment Summit. They will prefer to forget some of the part in the middle, with the donations row clearly having embarrassed Starmer and regret that his top team could not work together. Arguably no initial assessment is complete without waiting for the Budget, so we will have to wait a little longer to see the full picture of this Government’s start in office.

After the Budget all attention will turn to delivering progress against the missions, which will matter above all when it comes to the most important assessment – that of the British people.