Labour government – one year on

Policy progress and stumbles

Keir Starmer’s Labour government has begun translating its ‘plan for change’ into actual delivery. But it’s a mixed picture all round.

• Growth: While 0.7% growth in Q1 2025 allowed the government to claim it was delivering, a dicey global picture and gloomy mood music from the Treasury last summer chilled the overall outlook. If the economy can’t grow faster, all the government’s plans are in jeopardy. Yet most of the government’s pro-growth policies to date will only deliver a slow and steady rise in growth, rather than an immediate boost.
• Diplomacy: Starmer has proved himself to be a wily statesman. In strengthening European relations and support for Ukraine, while seemingly securing the favour of President Trump, he has walked a diplomatic tightrope with apparent success. Controversies like the Chagos Islands deal and the reparations row have been unhelpful distractions.
• International trade: Thanks in part to the above, and to Trade Secretary Jonny Reynolds’s focus on deal making, the government has signed a ‘Common Understanding’ agreement with EU to reduce post-Brexit trade friction, a Comprehensive Free Trade Agreement with India, and a targeted pact with the US to reduce duties on automotive and aerospace goods.
• Clean energy:Ed Miliband has had a good first year: Great British Energy has been established, several huge solar farms have been approved, significant investment is going into Sizewell C, and grid reforms have been accelerated. But it’s not all glowing: GBE is still little but a name, and perhaps most importantly, energy bills are still going up.
• Infrastructure investment: The Spending Review signalled a refocusing, after years of short-termism in relation to capital, on long-term infrastructure investment. A bullish stance on backing ‘builders not blockers’, backed by updates to the National Planning Policy Framework to streamline the approval process, have won the attention of developers.
• Employment rights: A priority for internal Party stakeholders, the Deputy PM has made delivering the Employment Rights Act a high priority for government. But with policies watered down from pre-election promises, the legislation has left unions unsatisfied and employers nervous.
• Industrial strategy: While it remains to be seen whether strategy will turn into delivery, business groups have largely welcomed the Government’s flagship Modern Industrial Strategy.

Political blunders

The transition from opposition to government has been tough for a Labour Party out of power for 14 years. A lack of experience, and a sense that No10 has failed at times to grip the agenda, and an inability to articulate how the ‘change’ Labour promised will be deliverede, all led to a short honeymoon for Starmer, whose personal polling ratings have collapsed.

• Failure to prepare for government: The delay to the appointment of former senior civil servant Sue Gray as Keir Starmer’s Chief of Staff in opposition meant that crucial ‘access talks’ didn’t begin until after her September 2023 start date. Combined with an early general election, this meant that Labour entered power with Ministers, Spads and civil servants far less prepared than they should have been.
• Instability at 10 Downing Street: Sue Gray lasted less than 100 days as Chief of Staff at Number 10 before being replaced by Starmer’s campaign chief, Morgan McSweeney. Other comings and goings across both communications and policy have meant it’s taken nearly a full year to reach what feels like a settled team at No10 – yet cracks are showing again in the aftermath of the welfare bill debacle.
• A focus on process over delivery: Labour’s big announcements during its first six months in power felt like a stream of process stories about the machinery of government. It failed to sell ‘national missions’ and ‘milestones’ as meaningful instruments of change – leaving the media and public feeling short-changed, and the ‘honeymoon’ period quickly evaporated.
• Party management: The rebellion over welfare reform showed that Starmer cannot take backbench loyalty for granted. Its outcome showed MPs that they can take on the PM and win. Ultimately, the combination of a lack of foresight, distracted leadership, poor messaging and internal consultation, confused sequencing, and a total failure to anticipate the strength of feeling in the PLP on a touchstone issue led this disastrous episode for the PM and Chancellor.
• Political missteps: These issues are compounded by what looks like a consistent lack of political judgement at the top of Government. The teams at both the Treasury and No10 somehow failed to spot the bear trap they were walking into by messing with the Winter Fuel Payment. They misread the mood of business ahead of the budget, in relation to the employer NICs increase alongside other cost-hiking measures. And they misjudged their ability to sell welfare reform to a PLP not willing to embrace change. All of this has had an effect in the wider country, as shown by woeful polling numbers.

Next steps – priorities for Year Two

Despite the clear challenges the government has encountered, there are reasons to be hopeful. The lack of an effective Conservative opposition gives the PM some breathing space, and while both the economic and global circumstances will constrain the government’s ability to deliver to some degree, much of its recent announcements such as on infrastructure and industrial strategy point in the right direction.

• Take on Reform while keeping the left: Local elections, byelections and polling all indicate that Labour’s main rival at the next election looks more likely to be Nigel Farage’s Reform UK than the official Conservative opposition. Yet Labour is also losing more support to the progressive left than it is to the populist right. This is already influencing Government policy, and we’ll see more signs of that in year two. But in order to really shore up its support, Labour needs to figure out who and what it is for.
• Win back the PLP: By no means is a leadership challenge on the horizon, but a PM still needs the full confidence of his parliamentary party to be effective. After the debacle of the last two weeks, the PM will be working flat out to remind them of the scale of his victory and persuade of his ability to deliver a pragmatic change agenda which fits with Labour values.
• Turn strategy into delivery: Ensuring that Whitehall is prepared to pivot now from strategising – whether on support for growth industries, rebuilding the NHS, or delivering 1.5 million new homes – will be vital to showing meaningful progress – and meeting promises – by the end of this Parliament.
• Avoiding unforced errors: Easier said than done, but recent weeks and a spate of U-turns have shown again the need for teams at No10 and the Treasury to get better – fast – at spotting the political bear traps before their principals walk straight into them.