Labour's Looming Losses

Why the next Labour government will be very unpopular, very quickly

Source Matt Goodwin - 27/03/24

Labour is heading back to power. In the polls, this week, the party’s cruising at altitudes they’ve not enjoyed since the 1990s —with an average 19-point lead over the hapless Tories. At by-elections, too, Labour’s enjoyed upswings in support it’s not seen for decades. Both suggest the party is on course for its first big majority since the 2000s and, along the way, a complete redrawing of the political map. On these numbers, Labour will not just be swept back to power but reestablish itself as the dominant force across the Red Wall, Scotland, the big cities, university towns, and beyond. Coming off the back of 2019, Labour’s worst result since 1935, election night 2024 would feel like the start of yet another political revolution.

But be careful what you wish for. Look closely at the economic, social, and political trends sweeping through Britain and you’ll find lots of reasons why the euphoria and celebration after a Labour victory will be short-lived. Far from starting a new era of Labour dominance, far from tapping into a new zeitgeist, à la Tony Blair and New Labour in 1997, the next Labour government will soon look out-of-touch with much of the country, becoming very unpopular, very quickly.

For a start, look at the dire state of the economy. Labour will inherit a toxic combination of low growth, the highest debt for sixty years, high taxes, and an impatient, angry electorate that’s suffered the sharpest and most sustained decline in living standards since the 1950s. It will be seriously constrained by the aftermath of a trilogy of shocks —the global financial crisis, the Covid-19 pandemic, and the inflation-induced cost-of-living crisis— all of which sent debt soaring to levels not seen since the 1960s. The enormously high cost of servicing this debt will dramatically reduce the amount of fiscal space Labour will have to repair the economy and respond to similar shocks in the future. Consider this: in 1997, when Tony Blair was elected, public sector debt as a percentage of GDP was 36% —today it is 98%. From day one, then, Keir Starmer and Chancellor Rachel Reeves will be given a truly awful fiscal inheritance and have much less room for manoeuvre.

The picture on living standards also looks bleak and will remain so for years to come. On average, in the aftermath of the next election, British households will be visibly worse off than they were in 2019; average disposable income will be lower at the next election that it was at the last. Much of this will, inevitably, be blamed on the incumbent Labour government. And the squeeze will only get harder, not easier. Taxes, already at a record level, having jumped by more under the Tories in this parliament than at any other time in the postwar era, will almost certainly have to be raised even higher, meaning Labour breaking its promises not to raise taxes, while the party will also need to impose further spending cuts.

Which brings me to public services. ...

The bleak state of public finances will further erode Britain’s already collapsing public services, from a lack of money for local councils and social care to cuts to other unprotected services —courts, prisons, HMRC and further education. Core public services, like the NHS, are already visibly collapsing. And voters have noticed. Since the depths of the Covid pandemic, in 2020, the share of the country that thinks NHS services are “bad” has spiralled from 19% to 70%. And it’s not just the NHS. The Institute for Government has shown how, in 2023, with the exception of schools, nine core public services were all performing worse than they were in 2010.

And that’s before we get to the fact further spending cuts are built into current forecasts, which suggest a £20 billion cut to day-to-day spending on many public services. Given existing problems with NHS waiting lists, councils going bust, delays in the criminal justice system, and a disintegrating social care system, it’s not entirely clear where or how these cuts will be delivered. Meanwhile, growing demographic pressures —like the fact 6.5 million extra people will be coming into Britain over the next twelve years— will pile further pressure on our already stretched public services, not to mention exacerbating the housing crisis.

The unfolding financial crisis in our universities will also increasingly dominate the headlines, with more than a few universities already perilously close to going bust. This is why universities are recruiting ever-rising numbers of international students who pay higher fees, a short-term fix to a much deeper problem. Only this week, The Times reports Britain’s most prestigious universities now get 57% of their fee income from overseas, up from 49% at the time of the Brexit vote. Which brings me to another issue that will play havoc with a Labour government: immigration.

Already the third top issue for voters and a source of considerable public concern, most voters want to see both legal and illegal migration slashed. But Labour has no serious plan for reducing either. I’ve yet to meet a single security analyst who thinks Labour’s plan to ‘smash the gangs’ in France, while having no serious Rwanda-style deterrent, will work. Smashing one gang only to watch it be replaced by another, pushed on by endless demand, is equivalent to a game of Whac-A-Mole. Net migration rates of at least 350,000 a year, meanwhile —twice what they were during the Blair years—remain baked into the official Office for Budget Responsibility (OBR) forecasts, generating even more concern among an electorate that is already becoming visibly more sceptical about mass immigration. In fact, I’d not be surprised to see net migration under a Labour government soar even higher than the record 700,000 we saw last year. And nor is Labour trusted on this issue. When voters are asked which party they think is best able to manage immigration, not even one in five choose Labour (the most popular answer, as it so often is in today’s politics, is “none of them” —many voters have just given up on all the big parties).

And then comes Keir Starmer and the Labour Party. In sharp contrast to the Blair years, the blunt reality, as I pointed out during a talk in the City of London this week, is that Starmer is simply not setting the country on fire. There is no mass public enthusiasm for the Labour leader, no excitement, no passion. Just look at the polls. Deltapoll, this week, give Starmer a net approval rating of … zero. Redfield and Wilton give him an approval rating of just +6. And while YouGov might describe him as “Britain’s most popular politician” they give him a ‘net favourability’ score of minus 18! (compared to minus 50 for Rishi Sunak).

And look at the Labour Party, too. While we hear much from the media class about how Keir Starmer has turned the boat around the British people appear far from convinced. Labour might be cruising in the polls as the only viable alternative to the Tories but when you ask voters what they think of Labour their replies are not exactly convincing. Only one in four think Labour is “in touch”. Only 18% think Labour is “strong”. Only 22% think Labour is “trustworthy”. Only 26% think Labour is “competent”. Only one in three think Labour is “united”, which will almost certainly fall further as a growing conflict in the Middle East continues to expose tensions within the party. And only 24% think Labour “has a clear sense of purpose”.

Put it this way: if we’re seeing these numbers now then what on earth are we going to see when Keir Starmer and Labour are presiding over a stagnant economy with low growth, high and very expensive debt, collapsing public services, soaring immigration, and a visibly fraying multicultural society? Contrary to what much of the media and expert class suggest, for all these reasons I think the incoming Labour government looks set to be one of the most unpopular governments in recent history. Labour might well be riding high in the polls, for now, but dig into the data and you’ll find no mass support for either the party or its leader, while many of the deeper currents that are swirling beneath British politics look set to dramatically restrict the party’s room for manoeuvre once it enters office. We are living in a somewhat unique time in that everybody in politics is unpopular while most people out there in the country are expecting things to get worse, not better.

Everybody can sense, rightly in my view, that nobody in frontline politics has the answers to the massive problems facing Britain today, from collapsing public services and sluggish growth to the enormous demographic pressures bearing down on the country. Even worse, whatever you might think of Britain’s experiments with Brexit, Boris Johnson, and Liz Truss, what worries me is how they have revealed the elite class is not even capable of entertaining or managing any serious change of direction from the status-quo. What is Britain’s growth strategy for the next ten to thirty years? How are we going to revive productivity? Who is going to come clean with the British people about the dire choices we face because of our incredibly bleak fiscal outlook? And who is willing to break with the elite orthodoxy when it comes to issues like the NHS, or mass immigration? These are the questions we need to discuss as a country yet much of our political class appear unable to lead or join that conversation. And I very much doubt the next Labour government, which will likely be beset by serious problems from day one, will yet prove me wrong.

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