Labour’s first budget shows Starmer is coming for the populists

But the budget‘s most intriguing lesson was not what it told us about how Labour will govern (like Labour) — or how the Conservatives will oppose (irascibly). But for what it revealed about how, and what, Keir Starmer considers his mandate.

During the election campaign, Labour’s quintessential pitch was that Britain is broken and requires fundamental, far-reaching change. But Starmer’s one-word “change” slogan was buttressed by two intertwining vows: that Labour would shun frivolousness when it came to both government spending and tax. Starmer neither over-promised nor pledged to turn on the spending taps once elected. But, crucially — and in spite of it all — he vowed to deliver. 

Therein lay the risk that Starmerism would begin to eat itself in government. As Rob Ford, professor of political science at the University of Manchester, recently mused: “Raising taxes is unpopular. But so is failing to deliver improvements to a collapsing public realm.”

He added: “Labour have made, and in large part won, the argument that Britain is broken and needs fundamental change. But there is a glaring disconnect between that [argument] and the small potatoes the incoming [government] is currently offering as its [programme] for change.”

During the election campaign, Labour relied on two “growth” and “reform” fairies to coordinate its self-defeating mandate. But in government, we discovered this week, Starmer’s intent is more visceral.

“There is no point in electing a different government”, Andrew Marr writes in the New Statesman, “if it doesn’t try to take a different course”. Labour recognises that “change” is the centre of its mandate — and so the government will spend heavily and raise taxes to realise it. In other words: rolling tanks onto Tory lawns was prudent politics in opposition; but Labour was instructed in July to imagine greener pastures.

The choice behind Labour’s budget choice

This was the determinative choice informing Labour’s budget choices; and it means the challenge posed of the Conservative Party is even more profound. The budget’s pointed politics effectively compels the next Tory leader to defend those from whom Labour is extracting revenue in the name of change, specifically: businesses, private schools, non-domiciled taxpayers, private jet users and capital gains taxpayers. 

The largest part of Sunak’s budget aggression was directed at the employer NI hike — which, while not exactly popular, is only actively opposed by around a third of the public. Sunak’s broadside aside, Conservative spokespeople have attacked Labour’s “education tax” with similar affronted vigour. But, as Reeves reminded opposition MPs on Wednesday, “94 per cent of children in the UK attend state schools”.

The more Conservative MPs hiss and wail, the more focussed, Labour hopes, the government looks on “working people” — and the more Toryism begins to extract itself from the mainstream of public opinion that so demanded change in July. 

This said, underpinning the Conservative Party’s specific criticisms is the charge that Labour is risking public “trust” with its tax hikes. On this point, it would seem that some slight fiscal-rhetorical chicanery on employer NI to help fund public services isn’t, in terms of its ramifications for trust, the same as explicitly reneging on a pledge not to raise a tax the majority of the public pays (VAT, employee NI, income tax). Couple this with the fact that poll after poll prior to the election suggested voters expected tax rises from the next government, whichever party led it, and Labour has targeted its hikes in a way that voters could well accept — and even, with the right political framing, welcome. 

Still, this was a sharply political budget which identified its heroes and villains in traditional Labour terms. Commentators have duly posited a tacit us vs them economic populism at the budget’s political centre: Reeves, on Wednesday, vowed to protect “working people” from her tax hikes — at the expense, logically, of non-working people. 

But Labour has not argued that the so-called “villains” of its budget — (businesses, private schools, etc.) — are inherently self-serving or damaging to the health of the polity. Rather, this budget, Labour has sought to identify “a people” or “its people” — a perfectly proper, even indispensable, aspect of the politics of government (especially one with such a far-reaching electoral coalition). Rishi Sunak, as prime minister, lost sight of the Conservative base through his recurrent resets; eventually, both neo- and traditional Tories abandoned his party en masse, and in all manner of directions. 

At most, this budget was dressed in a light populist garb. But perhaps a government needs to indulge in a little economic populism to thwart its far more menacing associate, political populism. Some fiscal rules fiddling and anti-elite framing may be necessary to prevent the rise of those whose objectives stretch far beyond the economic realm — with implications for our liberal, democratic norms. 

A ‘hero’ budget

In the end, this was an uncomplicated budget because it was a focussed budget. Labour is going all in on the so-called “hero” voters who switched to them at the general election — and who will ultimately determine whether Starmer is a one or two term prime minister. 

Broadly, “hero” voters are traditional Labour supporters who were drawn away from the party by the saliency of Brexit — and whom Boris Johnson’s Conservative Party threatened to monopolise after its 2019 landslide. Along the way, they may have backed — or been tempted to support — UKIP, the Brexit Party or Reform. They are economically insecure and politically unsure; i.e. the epitome of Britain’s electoral volatility. In truth, when Starmer refers to “working people”, he is really referring to voters of this political profile — whose support he plans to sustain or capture.

And Starmer’s focus on his “heroes” brings Labour squarely into electoral competition with Faragism and Reform UK. 

Nigel Farage has made no secret of his intentions this parliament. After winning the constituency of Clacton, securing a parliamentary fiefdom at his eighth attempt, the Reform leader pledged he would soon be “coming for Labour”. What Farage meant by this is that he and Labour are, more than ever, jockeying for the same mode of voter. 

Reform came second place in 98 constituencies at the election; in 89 of these cases, it was second to Labour. Farage reckons he is perfectly positioned to exploit Starmer’s electoral precariousness. A rising Reform tide could well wash away Labour’s “monumental sandcastle”. 

So it is little surprise then that anti-populism has been the throughline of Labour’s actions since it seized the reins of government. Indeed, even before Labour’s July watershed, the party was thinking deeply about the threat posed by the Faragists at the gates. In her Mais lecture in March, then-shadow chancellor Rachel Reeves noted that “populists and protectionists the world over [are] offering false solutions to vast and complex problems”. 

She went on: “When mainstream politics cannot offer the answers to our predicament; when vast swathes of Britain are written out of our national story; when hope for the future is allowed to wither, and decline becomes a self-fulfilling prophecy; then we know the result. We see it all across the world: the rise of populists who offer not answers but recriminations.”

Then, at the King’s Speech in July, Starmer dismissed the “snake oil charm of populism”; and, after the summer riots, Labour’s focus was the same. “I know the populists are waiting in the wings with their easy answers and their snake oil”, Starmer said. “We can beat them by delivering change.”

And in his speech on Monday, framing Reeves’ budget statement, Starmer declared: “It’s time we ignored the populist chorus of easy answers because we saw what happens if you reject the constraints of economic stability and we’re never going back to that.”

It means the budget was a critical moment for Farage — and for Starmer’s capacity to stop him.