‘It has been bumpy’: Starmer reckons with plunging approval ratings

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After five months of plummeting public support and growing corporate anger, chancellor Rachel Reeves could hardly be blamed for wanting to share some good news on behalf of Britain’s Labour government. 

“Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes,” Reeves told business executives this week at a frosty conference of the CBI, the employers’ organisation, appearing to draw a line under last month’s £40bn tax-raising Budget.

But Reeves’ comments were subsequently “clarified” by a person close to the chancellor, who said her comments had not completely excluded the possibility of future tax rises.

Jonathan Reynolds, business secretary, added to the confusion when he said Reeves had meant “there will not be a further ask of the business community comparable to what we had to do at the beginning of this parliament”.

Reeves knows well the danger of setting false expectations on tax: the British public seems to be tiring of Prime Minister Sir Keir Starmer’s administration, whose landslide election win on July 4 now seems a distant memory.

Neither Reeves nor Starmer gave any indication before the election that the biggest tax-raising Budget in a generation was on its way, or that the heaviest burden would fall on business with a £25bn tax increase on employers’ national insurance payments.

A recent online parliamentary petition demanding a new general election and claiming that Labour had “gone back on the promises they laid out in the lead up to the last election” has gone viral with 2.6mn signatories, although doubts have been raised over whether all are genuine.

The petition was started by pub landlord Michael Westwood, who has said he is “fed up”. Elon Musk — the owner of X, world’s richest person and a regular critic of Starmer — expressed amazement at the public response, saying on his social media platform: “Wow”.

Starmer remains unmoved: “I will be judged by how the country feels in five years’ time, not at Christmas,” he told colleagues last month. He has denied misleading voters, arguing that he inherited from the previous Conservative government a hitherto unknown £22bn fiscal hole.

But the prime minister and chancellor have a lot of ground to claw back; Starmer, never particularly popular with voters in the first place, has seen his approval ratings collapse. “It has been bumpy,” said one Labour MP.

Another senior Labour official admitted the party was ill-prepared for power despite promising a technocratic reprieve from the turbulent years of Tory rule: “There was nothing there: no plan, no personnel.” Starmer’s former chief of staff Sue Gray was widely blamed and eventually forced to quit.

Starmer and Reeves point to successes — planning reforms, an international investment summit, a Budget that “laid the foundations” for growth — but their allies admit they need to raise their game.

“Keir needs to be decisive,” said one Labour person close to the centre of power. “He deliberates and thinks things through. That’s a strength until it becomes a weakness. He needs to work out what’s working, who is working. What does he really think?”

Labour MPs also wonder about Reeves’ political judgment, notably after her early decision to strip 10mn pensioners of their winter fuel payments, a decision that still reverberates as temperatures drop.

“She used up a lot of political fuel with that announcement,” said one Labour MP. “She seems on the ball when she meets with MPs, but you don’t see much political nous from her in public.”

The prime minister’s attempted fightback has begun at the centre of government. In the coming days he will appoint a new cabinet secretary to complete a major overhaul of the way Downing Street operates.

Jonathan Powell and Liz Lloyd, veterans of Tony Blair’s Downing Street, have been brought in to oversee national security and domestic reform, respectively. Starmer’s team says the prime minister will prioritise both areas.

James Lyons, a former Sunday Times journalist and TikTok communications chief, has been hired to bring some order to the “grid” of announcements that sets the rhythm for government. 

Starmer will next month launch a public dashboard enabling voters to monitor his administration’s progress on a range of new pre-election targets and to put pressure on Whitehall to deliver.

Meanwhile, Reeves has been attempting to assure business leaders that she will not be coming back to them for more taxes after her “once in a parliament” Budget and that the Treasury’s focus will now be on growth.

“We took the tax decisions early to give the Treasury head space to focus on the growth levers,” said one ally of the chancellor. “Over the next six months the focus will be on growth”.

The chancellor has said that over the chaotic final years of the last Tory administration, the Treasury became a department for preparing Budgets. Now it has to prove it can be an economics ministry too.

Reeves has some work to do. Rupert Soames, CBI chair, noted this week that making it more expensive to hire workers was “directly in conflict” with Reeves’ aim to get more inactive people into jobs.

The chancellor’s agenda in 2025 will include a push to generate growth from overseas trade, even as the Treasury braces itself for the economic fallout of Donald Trump’s return as US president and possible trade wars.

Reeves says she wants an ambitious reset of Britain’s trade relations with the EU — difficult to achieve in practice — while she will travel early next year to Beijing for talks on financial services co-operation with China.

But Mel Stride, Tory shadow chancellor, said: “Unfortunately, through talking the economy down and pushing ahead with punishing tax increases for businesses the chancellor is creating a very brittle economy. 

“Under those circumstances I am afraid to stand up and pledge that Labour won’t introduce yet further tax rises in future might be seen by many as rather optimistic.”

Data visualisation by Clara Murray

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