FTI Consulting UK Public Affairs Snapshot: The three Labour governments: Scenario planning from a landslide government to a hung parliament

In the case of a Labour landslide, the new administration would be keen to prove themselves as an able, capable administration in the first 100 days.

They would seek to embark on the delivery of their manifesto immediately. The Shadow Leader of the House of Commons, Lucy Powell, has already been tasked to put forward a cross departmental plan of what legislation will be prioritised in the first King’s Speech.

Alongside this, the Shadow Chief Secretary to the Treasury, Darren Jones, has been tasked to provide a blueprint for how Labour’s five missions framework – key to delivering on the party’s election pledges – would be implemented across government.

Labour is keen to score an early win with its trade union partners, so one of the few clear commitments for its first 100 days is to introduce an employment bill known as Labour’s “new deal for working people”. This is likely to be an early test of Labour’s relationship with at least some businesses who may be significantly impacted not least by challenging proposals to ban zero hours contracts.

It is also expected that Starmer would move quickly to reassure international partners that a change in government will not lead to a radical change in British foreign policy. However, in a landslide scenario, Starmer is likely to feel emboldened to make an early start on resetting the relationship between Britain and the EU.

Labour is already concerned about the imbalance in party alliances in the House of Lords having the potential to frustrate its plans, with its 175 Peers dwarfed by the Conservatives’ 269 Peers.

To address this, the party is already rumoured to be drawing up lists of names, ready to appoint dozens of new peers during the early days of a Labour administration. This would pave the way for wider reform of the House of Lords later down the line, although this won’t be an early – or even first-term – priority.

These potential difficulties aside, there is typically more goodwill handed to a new government, particularly if the electorate has handed it a strong mandate. With a clear majority, Starmer would be in an authoritative position and would have the political capital needed to be bold and decisive from day one. 

Ultimately, if the Labour Party achieves a landslide victory at the next General Election, it would govern for the full first term and internal thinking would quickly turn to winning a second term. 

If Labour wins a small majority – fewer than around 30 seats – the power dynamic would dramatically shift. While Starmer would be welcomed as Prime Minister by the Labour Party and given the opportunity to deliver, his task would become more difficult.

A victorious party in this scenario would enter government united and know they must be focused and work smart to get their legislative programme through. But worries about potential leadership challenges and splits on policy would be in the background.

With a small majority, Starmer would need to avoid making hard or controversial asks of his Parliamentary party. It is likely his fiscal responsibility rules would be challenged by a coalition of the hard and soft left in the party, who are currently quietly unhappy that Labour has not committed to further public spending and would see the opportunity to influence a change of policy in this scenario.

The left-wing Campaign Group has been disappointed that Labour’s tight grip on selections means that its numbers are likely to be unchanged or indeed diminished, with only a couple of new MPs aligned to the group’s ideology likely to be elected and, at the same time, a greater number leaving or being pushed out of Parliament for various reasons.

Despite this, in a situation where Labour does not have a substantial majority, this group would be emboldened and would likely attract the support of some MPs who would see their cause as pointless under a landslide victory.

It is not obvious who would lead the group, with some key figures on their way out of Parliament, but we may see the likes of Rebecca Long-Bailey and Richard Burgeon back in the spotlight once again.

All Labour MPs would know they wielded more individual power in this scenario too, and rebellions within a political party against the leadership tend only to grow throughout a Parliamentary term.

After the initial honeymoon phase, an MP may decide to put their head above the parapet and vote against the whip. Done once, it becomes that much easier to do so again, and this is something that the Labour leadership would be acutely aware of.

The threat of resignations from those in government over policy disagreements and members of the frontbench rebelling against the whip would also become more dangerous.

Should Labour’s standing in the polls fall, a leadership challenge would be highly likely, or indeed Starmer himself may decide to stand aside.

In this scenario, the next election would feel very much in play for both parties, particularly if Labour managed to pass some key legislation and ask the country for a mandate to do more. A lot will depend on how the Conservatives respond to losing power and what direction they take. 

The last scenario, Labour winning more seats than any other party but failing to win a majority, brings with it the most uncertainty and instability, given the weak position in which the party would find itself.

In the immediate aftermath, if Labour were the largest party, a road to government would need to be agreed. Rishi Sunak would likely remain in No 10 for a short period while Labour considered its options. Such a process didn’t take long in 2015 – only a week – but there is no set timetable.

Labour’s options would be to seek either a full coalition agreement with another party, a confidence-and-supply arrangement where other parties agree to back Labour’s budget and King’s Speech, or they could go it entirely alone and seek support from other parties and MPs on an issue-by-issue basis.

As with the first two scenarios, the King must approve the formation of the government in whatever option Labour moved forward with. While unlikely, it is possible that two or more of the other parties could put together a majority and seek permission from the King to govern, even if Labour were the largest single group of MPs. 

While a formal coalition deal would provide the most certainty and stability, the Liberal Democrats are the only party with whom Labour could conceivably do such a deal, with Starmer having ruled out a pact with the SNP.

However, despite the allure of government, the recent memory of electoral obliteration following the last coalition remains at the front of Liberal Democrat minds, so it is unlikely that they would opt for such an arrangement again.

Instead, it is expected that a confidence-and-supply arrangement would be the preference for both Labour and smaller opposition parties, although an issue-by-issue option may also be considered.

While these arrangements on the face of it don’t bring the added complication of ministers from other parties being appointed, each bringing with them their own policy agendas, smaller parties would still be keen to negotiate a win on their most pressing issues.

Constitutional issues could come front and centre, with the Liberal Democrats pressing for electoral reform and proportional representation, and the SNP doing everything in their power to secure some sort of movement on a second independence referendum in Scotland.

Electoral reform has become more popular in Labour in recent years, so this may find some favour, but the SNP will be left wanting.

Overall, both a confidence-and-supply and an issue-by-issue arrangement would make for unstable government, with Labour reliant on securing support from other parties to pass any legislation. It would likely result in a period of stagnation, with few bills managing to pass through the Parliamentary process.

In this scenario, Labour may look to use non-legislative powers to their maximum, relying on regulators and using ministerial powers.

As for Starmer, his future as Leader of the Labour Party, and the future of the government more broadly, would be significantly weaker, with a heightened risk of leadership challenges if enough MPs feel that he is making the wrong compromises as a result of appeasing other parties.

Likewise, if at any point a coalition or confidence-and-supply arrangement could no longer command the confidence of the House of Commons, Starmer would have to advise the King that another General Election was necessary.

Starmer could also proactively determine that getting through some key legislation and demonstrating a Labour government’s priorities might be a positive platform from which he could call another election to seek a stronger mandate, rather than cling on to power without the authority needed to wield it.

Labour has faced a difficult couple of weeks, and while polling consistently points to a strong Labour majority at the election, the outcome is still difficult to predict given the extremely large swing Labour would have to secure on polling day, whenever it comes.

A large majority would provide certainty, with the party able to implement its manifesto, stick to its fiscal rules, and turn its attention to winning a second term. A small majority would hand a disproportionate amount of power to Labour backbenchers and could provide a platform for the rise of the left of the party once again. A hung parliament would see a period of stagnation and uncertainty, with a second election potentially being called.

In any scenario where Labour forms the government, very few ministers will have had any experience of government. As such, successful business engagement on policy issues, particularly those on which Labour wants to legislate, will be key to ensuring that new ministers don’t create bad legislation with unintended negative consequences. Existing relationships with Civil Service officials are also vital, as they provide a bridge of continuity between one administration to the next.

To help businesses prepare for whatever comes next, FTI Consulting’s UK Public Affairs team offers bespoke seminars to delve deeper into understanding the inner workings of the Labour Party and its policies, focusing on what a Labour government might mean for individual businesses. To learn more, please click here.