It’s still only a few months since the election, and so this Parliament must still feel very long. There’s plenty of time to get things done, plenty of time for things to pan out and plans to pay off, before going to the country in 2028 or 2029.
But that sense of having plenty of time is, at least in part, an illusion. As we noted in the wake of the lacklustre King’s Speech, legislation takes time to draw up and pass, and its consequences take even longer to play out.
The Government has, for example, probably missed its chance to deliver a really substantial increase in housebuilding by the end of the parliament; the recent NESO report says that wholesale planning reform is the only way to hit the Government’s self-imposed deadline of Net Zero by 2030, but the Planning and Infrastructure Bill isn’t expected until next summer.
Likewise, it seems very unlikely that Rachel Reeves will stick to her current position that the Budget was a plan for the entire parliament. Why? Because the Chancellor front-loaded the spending and then pencilled in several years of thin gruel later on – the sort of diet-that-starts-tomorrow strategy with which observers of the previous government will be familiar.
Politically, this is backwards. Any politician with an actual plan that involves a few hard years puts those hard years at the start; that gives any painful reforms the maximum time to bear fruit, and creates space for more voter-friendly policymaking as the election draws near.
That consideration also applies to party management. The immediate aftermath of an historic victory is Sir Keir Starmer’s moment of maximum strength. He has a mandate, a lot of his MPs are new and owe him their jobs, and the next election is sufficiently remote that MPs are more inclined to take a bit of pain.
That tolerance will wane as the next election looms, especially considering that (in terms of individual seat majorities) this is the most marginal parliament since 1945. Labour MPs will demand goodies, goodies not currently included in what Reeves insists is “envelope for spending for this parliament”. The Chancellor told the Treasury Select Committee:
“We’re not going to be coming back with more tax increases, or indeed more borrowing. We now need to live within the means we’ve set ourselves in the budget and those allocations of spending totals.”
Is that wise? The headline is that she isn’t planning on raising taxes in the Spring, but the quote is about the entire parliament. Even if the Government hadn’t just exhibited a flexible attitude towards promises on taxation, it would be implausible.
(So too, sadly, is the eminently laudable plan to end the freeze in income tax thresholds; will a Labour chancellor in pre-election mode and needing to find money for spending pledges, really forgo a relatively painless way of raising the cash?)
All of that might be manageable if there was a realistic prospect of real growth across the parliament, which might generate the revenues needed to fund whatever it is Starmer’s backbenchers are demanding in 2026.
But the OBR forecasts that the Budget “temporarily boost output in the near term but leave GDP largely unchanged in five years’ time”. Businesses are – despite the Chancellor’s cute suggestion that they could simply absorb the extra costs from the NI and minimum wage hikes through “lower profits” – clear that the result will be wage suppression, reduced hiring, and higher prices.
All of that to raise revenue which is mostly being eaten by revenue spending (pay deals for public sector workers, the NHS day-to-day operating budget, etc.) rather than capital investments that might pay for themselves. Hence the Prime Minister being unable to tell even a story about all this pain leading somewhere good.
Hence, the illusion of time. Whilst at present it might feel to ministers as though they have almost five years to sort things out, the real deadline might be more like two: the point at which the next election starts to feel real, and the front-loaded spending juice of this Budget starts to run out.
At that point, Starmer and Reeves could find themselves trapped once again between their commitment not to raise taxes and their thin manifesto, which did not commit Labour MPs to any dramatic or challenging changes in policy direction – all whilst the relentless rise in unreformed entitlement spending places more and more pressure on government budgets.
Such a moment of crisis, if it comes, will probably be the critical test for Kemi Badenoch’s leadership. If the Conservative Party has done the work, it might be the first opportunity it has to fight its way into the conversation and present itself as a credible alternative.
But danger attends that opportunity. If the moment is missed – if the Government is really struggling but the Tories aren’t able to capitalise on it – then that might be the point at which restive MPs start sketching out their letters to Bob Blackman.
