Brexit and the waning days of the United Kingdom

[Sheilbh]

So what are the conditions that are forcing Labour to do such unpopular things? Are things just really dire and require extreme sacrifices?

If so I hope Labour is front loading those and have some time to put itself in a stronger position come 2029. The opposition to Reform obviously needs to get organized either way.

So I think one really important bit of context which it's only fair to give is that there are very real constraints on the UK. We are not America. We don't issue the world's reserve currency. There was massive spending during covid which was necessary and also on subsidising energy consumption after the Russian invasion of Ukraine. So debt to GDP is pretty close to 100% and bouncing around. We're also back in a world where inflation exists so interest rates are not high by historical standards but far higher than they were in the 2010s. Also for a lot of boring technical reasons in the same way as debt for the UK was unusually cheap in the 2010s (to do with inflation, structure of gilts etc) the increased rate of inflation is immediately passed through to the UK government. Plus we're going through quantitative tightening. All of that means there are constraints - not least that debt costs are, I believe, currently the third biggest spend in the UK budget (after the Departments for Health and Education) - our debt cost is about twice the defence budget.

However I have limited sympathy for Labour on that because they won an election in 2024 and it does feel like a lot of their assumptions were made in the 2010s when debt was cheap and never really re-freshed.

But I think the big reason is a lot of self-imposed constraints and a strategy that isn't working.

On the self-imposed constraints point, Rachel Reeves set herself a narrow set of "fiscal rules". These were that the current budget is to be on a path to balance or surplus by the end of this Parliament(2029/30), net financial debt (i.e. netting off funded pension obligations etc) should be falling as a share of the economy by the end of this Parliament and there's broadly a cap for certain types of welfare spending (excluding pensions and "economically sensitive" welfare like housing and unemployment benefit - again look at who counts and who doesn't). So that's the framework Labour have to operate within (with Reeves as Chancellor) - but to an extent it doesn't hugely matter as all Chancellors since Gordon Brown have had fiscal rules and to a large extent they can kind of flex how the sums are done most of the time.

This is where the "populism is the problem" issue comes in. Because one of Labour's first decisions in government was to change the law to make the Office of Budget Responsibility more powerful/important (to be totally honest I think the OBR should be abolished because I think it is structurally pro-austerity, is not able to incorporate lots of policy areas into their forecasts and is one of Osborne's biggest legacies ). The OBR is basically an institution to independent monitor and check the UK government's sums in fiscal policy - under Labour's law the OBR will have the power to make assessments on any government announcements which involve tax or spending commitments of more than 1% of GDP - if the government tries to do that without the OBR producing a forecast then there's a "fiscal lock" blocking the change. The OBR also does its assessments for the annual budget.

A particular problem is how the two interact. So the fiscal rule is based on what the position will be in 2029-30 so is based on the OBR's forecast for the economy in five years time, while the OBR is assessing the fiscal event right now. Again this is why previous chancellors have always tended to be a bit more flexible in their rules (I think Brown's was that the budget would be balanced and debt falling within a "fiscal cycle", which would be helpfully defined by Gordon Brown ). But it also means that the "headroom" or amount Reeves can spend each year fluctuates wildly based on OBR forecasts for 2029-30 and also doesn't really pay enough attention in my view to external shocks. I mentioned that Reeves' headroom fell by £10 billion between October and March - I think 90% of that was just Trump winning and trade war. But the impact was Reeves had less to spend than she thought.

The other big self-imposed constraint was Labour made a promise not to raise taxes on "working people" in the election - that rules out a lot of taxes. Broadly that covers VAT, National Insurance and income tax - which is about two-thirds of revenue. So any tax rises has to fall in the remaining area - and it has. So Labour have increased employer's National Insurance contributions - basically a payroll tax - so not taxing working people, but literally a tax on working people. That came into effect on 1 April and unsurprisingly there are growing concerns that payrolls and vacancies look like they're declining particularly in the low-paid but high volume sectors like hospitality, retail etc. Obviously that then has an impact on the economy which feeds into the OBR forecast.

I'd add to all of this that I think Starmer and Reeves are institutionalists and that's a big issue for them - again why I think the wrong analysis on populism hurts them. So a lot was made in the run-up to the election of Reeves being a serious person, used to work in the BofE, used to work in the Treasury, big endorsement at party conference from Mark Carney etc. I think in her case (and also Starmer's), I don't think it's helped because I think they are too much like civil servants and not democratically elected and accountable politicians. I don't listen to it because I loathe George Osborne, but he and Ed Balls have a podcast - Osborne used to be Chancellor, Balls used to be Gordon Brown's closest aide. They have mentioned that a number of policy decisions made by Reeves are things that the Treasury presented to both Brown and Osborne as options but were overruled because they'd be politically disastrous - for example, the winter fuel allowance cut. I think that's indicative of the problem that I get the sense the Treasury is running Reeves, rather than it being her Treasury (in the way it was Brown's or Osborne's).

I think on the front-loading point they have tried to do this and I think there was a strategy - but I could be wrong. My theory is that Labour's strategy was going to be: Year 1 - "it's so much worse than we thought, we're going to have to make tough decisions" with some cuts and tax rises, Year 2-4 traditional social democratic budget increases and capital spending, Year 5 - "it was tough, but worth it here are some tax cuts and progress on public services". You can look at charts of consumer and business confidence and they collapse when Labour comes into office in 2024 - I think Reeves and Starmer went so hard on "it's so much worse than we expected" that they literally talked down the economy, meaning the cuts and tax rises needed to be bigger than expected, meaning the impact of the other spending increases elsewhere and capital spending has been blunted (especially as the OBR keeps cutting the "headroom") etc.

So while I think there are real constraints I think fundamentally it's mostly because of choices Reeves and Starmer made politically - those fiscal rules, the tax commitment, weakening the power of the Chancellor and fucking up their strategy by accidentally panicking consumers and business. This is why my fear is that they're basically locked into a cycle now that can't be broken until there's a new voice in the room - in my view by getting rid of Reeves but, possibly, Starmer too

[Sheilbh]

And there we go U-turn by Starmer - which is right but not far enough in my view - the thread by Telegraph Political Editor and picked up elsewhere:

Ben Riley-Smith
@benrileysmith
🚨 EXCLUSIVE 🚨

Keir Starmer has caved to welfare rebels and agreed existing disability claimants will **keep** their benefits.

Huge concession. Agreed in talks with Labour rebel leaders today.

Under original plan, 800,000 people who currently get the Personal Independence Payment would have lost out.

I understand Starmer has agreed that [existing] claimants will be unaffected. Only new people getting PIP get the lower amount.

It loses the Treasury around £1.5bn of the original £4.6bn welfare cuts package, IFS says. Ouch.

So more pressure for tax rises this autumn.
Full story below. Other tweaks to the overall package have been agreed.

One leading Labour MPs critic said "major concessions" had been won in talks. PM personally involved.

Source: "We wanted to unite around something better. We are getting there."

Fellow rebels now being told to back down and vote for the bill. So defeat on Tuesday likely to be avoided.
The maths...

The original welfare cuts package was meant to save the Treasury £4.6bn annually by 2024/25

Allowing all existing PIP claimants to be unaffected by the cuts would drop that to £3.1bn (per the IFS).

So that move alone blows a new £1.5bn black hole in Rachel Reeves's numbers.

[NB: There are other changes in the updated package. So to be confirmed when taken all together what the overall cost change will be.]
The expectation among the rebel leaders - not the usual left-wing critics - is that enough Labour MPs who backed the blocking amendment will fold.

Will that prove true? Very likely. But some critics are already coming out tonight saying they will vote against the legislation all the same.

Expect many of the Socialist Campaign Group to still oppose the cuts.

I can't help but think there's a pattern starting to form - not a million miles from Boris Johnson either: he announces a radical but unpopular policy, gets loads of grief from voters, then having taken a big hit to your popularity and made his loyal MPs go around defending it, he reverses it getting neither the upside of the policy or the popularity

(Reminds me a bit of Scholz on Ukraine - come out strongly against providing x weapons, gets loads of complaints from everyone else, eventually sends x weapons just late enough to have taken the hit to your credibility but too late to make a difference.)

[Admiral Yi]

Do youse guys not have ways of running it up the flagpole to see if anyone salutes?  Or focus groups?

[Sheilbh]

Do youse guys not have ways of running it up the flagpole to see if anyone salutes?  Or focus groups?

Over-confidence. It was announced about 6-9 months ago. There was a public consultation and unease on the backbenches but they've got a majority of 150+ so it shouldn't be a problem. Plus they got them to back cutting winter fuel allowance despite Labour backbenchers hating it (I think here they underestimated the impact of making them do that, defend it for 6 months and then u-turning).

But I get the sense Number 10's political operation isn't good (Osborne always used to repeat LBJ's first rule in politics: learn to count) - Starmer is not very political which I think is a problem in a Prime Minister. Until earlier this week Starmer was still dismissing it as "noises off". By all accounts Number 10 and the DWP had spoken to lots of rebels and thought it was manageable until the last day or two - they seem to have been consistently surprised at the scale of the rebellion and perhaps especially by a front bench resignation over it. I also think the fact that the rebellion kept growing even after they said it would be a matter of confidence surprised them.

There's been calls for Starmer to get rid of his "chief of staff" (nonsense role) Morgan McSweeney. Trouble is that would be a second chief of staff Starmer would get through in just over a year (the first ousted in a power struggle with McSweeney) - to lose one is unfortunate.... Plus it seems from the outside like McSweeney is the guy with some political vision, with some idea of what to do with power. Without him I'm really not sure what the point in Starmer would be.

Edit: Also and I'm not sure on this it may just be that there's been a better, more impressive organisation by rebels than normal - that can happen where it kind of snowballs very rapidly to catch a government by surprise.

[Valmy]

Damn. And it was so vital that Labour do well after 14 years in the wilderness and after how disasteously the previous decade had just generally gone for Britain.

This is just such a weird era, every country seems to be declining at the same time.

[Sheilbh]

Yeah I mean I think there's a lot going on that's basically structural and affects everyone. I'd say that an awful lot of the point I've had in this thread is that there's not much exceptional about Britain (or England) good or bad. Looking at empire or English nationalism or the psychopathologies of the Tory party misses the point that our politics look more European than ever (radical right polling at 30%, traditional left and right around 20-30%, Liberals holding at about 15% with a hard left at about 10% - literally interchangeable with most of Western Europe) and that the causes are the same in the UK, Europe and, in large part, in the US. I'd even argue against the disastrous decade - for Britain the key point is 2008. We've not yet managed to find an alternative business model post financial crisis. I do think a lot ultimately boils down to China's rise.

But it's general - the West's in relative decline. The order it's prospered from and created holds less sway or legitimacy or power to enforce itself on the world which is a challenge for the West. As they did benefit from it, even if that order was not liberal, rules-based or of the world but instead an American led order created from positions of power in 1945 and 1990 (not to say what's coming next will be any better, what went before wasn't) - and America's less willing and less able to uphold that system.

Populations everywhere are ageing with a lot of economic challenges especially for developed welfare states - and low levels of family/social responsibility. Plus we've had huge, very expensive and socially disorienting shocks in covid and the energy shock (for Europe). Those have had huge impacts on government balance sheets and we draw a veil over it because basically everyone agrees it was necessary but we are now kind of paying for it.

Our economies have free-flowing capital all around the world which make national development, or taxing of wealth (that isn't property) challenging because that capital is global while political, democratic power and accountability isn't. We've also had a generation or two of leaders who understood power and their role around statements of common values or purpose with stakeholders (even concepts like "stakeholder democracy" - always struck by Peter Mair's point that in the 90s at exactly the point democracy triumphed there were over 500 different definitions of it propose in political science literature at the time, each seemingly more denuded of popular sovereignty than the last) at forums like Davos instead of being about what resources we consume, where they come from, where they're transformed, who owns the production etc which was key to a previous generation of politicians.

It's a cliche but I think the Gramsci line is right: the crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

And I think one profound and destabilising change is that from Sri Lanka beating the Tamil Tigers to Israel's success against Hezbollah and Hamas (and, indirectly, Assad) and, on their terms, Russia in Ukraine - I think we're moving into a world where war is a tool that can achieve political ends. I think that's a profound shift for leaders not just in the West but also in, say, China. I don't necessarily mean China (but there too) but I feel that it could be likely that we see more attempts to end frozen or intractable conflicts like the Tamil Tigers or Israel with Hezbollah and Hamas etc by force.

In my view - as in the interregnum Grasci was writing about - from a democratic point what we need is a politics capable of a vision of the future (not just nostalgia for what's gone) - which I don't yet see anywhere in the mainstream parties. Plus leaders who can talk in terms of hope and, to nick FDR's line, I think are willing to try bold persistent experimentation.

[Josquius]

The problem for Labour is that it's not a choice. They need to do both - which I think is possible.

Define do both.
1: Targeting Reform voters by fighting for them on a ground of Reform's choosing. Trying to go "Look, we are bigots too!".... No. This is incompatible with keeping the left. Its a losing approach.
2: Targeting Reform voters by fighting for them on the core of what actually matters for them. Reform is making inroads in down at heel forgotten towns by blaming refugees for all their problems despite there being basically no refugees?
Identify and fix the problems that are making people desperate for a scapegoat.

(incidentally read this one the other day about my town - https://www.ft.com/content/58020bbd-2686-44c4-8901-3abc85ba228c?accessToken=zwAAAZeuOUGikc9YAgu9JoZExNOJATq8hboijA.MEYCIQDIkc80RnBZqUR32DKIxLZ10IWCTJqgSdZWUGFxoPelFAIhAPPJbAo-Y0zr6_y_H-tnOOKw6vIyZbF8eOC3ooplr6n3&segmentId=e95a9ae7-622c-6235-5f87-51e412b47e97&shareType=enterprise&shareId=a756f4f6-d849-43cb-a4bb-cfa5256898e0  )

I think there's about 100 seats where Reform is second - of those, about 90 are currently held by Labour. Similarly there's 40 seats where the Greens are second - of those, 39 are currently held by Labour (this is why I think it'd be mistake for the Greens to have two rural, Tory beating MPs as their leaders). There's also Scotland with the SNP second in about 30-40 Labour held seats. Part of this is just winning a massive landslide but I also think that all of those parties challenging Labour are change parties - and my view is that the same things that drive people to vote Green will be driving people to vote Reform and vice versa.

What things?
I can imagine some stuff,  general belief in the system being broken, etc... and of course for the rural little-England Greens there's huge overlap. But thinking more of your textbook urban Greens here, they're quite the polar opposite of Reform.
Want to appeal to Reform voters by being mean to refugees? You turn off the Green voters by being mean to refugees.

It's why I think the analysis really matters and I think the focus of parts of the left, a lot of the media, the Rest is Politics kind of discourse, Starmer has basically that the problem is populism. The way to fight back is to reinforce and strengthen the existing institutions and more technocratic forms of decision making. My view is that populism is the symptom not the cause of a lot of the problems we're facing. Those existing institutions and technocratic forms gave us two failed wars, a global financial crisis, a decade of austerity, almost twenty years of flat-lining productivity, decaying high streets etc. So the risk is, as Tony Blair's put it, that the mainstream parties become the parties of the status quo and at a time when that's not delivering for many, many people - they're going to vote you out. All elections boil down to "time for a change" v "more of the same" and mainstream parties everywhere need to be thinking about how they can imagine, communicate and deliver change (and it may involve slaughtering some sacred cows).

Yes, I've heard this before and it makes sense.
We are currently at 0. This is a situation with a lot of problems.
Someone coming in and promising change can enjoy huge success.... Though with Reform this offered change takes us to -5 rather than the +5 we need to be shooting for. All people see though is change and the surface promises of unicorns and rainbows donkeys and roast beef.

T
I think you can get into definitional debates in a few ways which I don't think are particularly helpful. So there was a big MRP poll in the Times today and while I really don't believe it because I think in many areas anti-Reform voters would informally coalesce

I hope so. It certainly happens with the anti-tory vote.
But I do think you'd need actual Reform success for the threat to truly stand out here.
Also as Labour alienates the left there are a sizable number on that side who will not hold their nose and vote for the centre. Many of these people are an absolute gift to Reform and will even work to win more voters for Reform

There are millions of people who rely on PIP - just like there are millions of pensioners who get the winter fuel benefit.

I'm not sure what you mean

[Tamas]

There will be a Prime Minister Farage, it's a certainty, just like PM Boris was. You can only delay it.

[garbon]

There will be a Prime Minister Farage, it's a certainty, just like PM Boris was. You can only delay it.

I wonder if it will be like the Russel T Davies show where Emma Thompson played the Farage analogue.

https://en.wikipedia.org/wiki/Years_and_Years_(TV_series)

[Legbiter]

Like who is the Ur-heimat voter in British politics at this point? 

Conservatives in my foggy understanding (MID 2010'S) were disgruntled well-off pensioners who wanted to to quietly consume their grandchildren. 

Labour is in charge of, for instance; both the white urban underclass and suicidality inbred Pakis waging unceasing tribal war on Norf FC. Their policies are incidental tosh.

Lib Dems are rural high IQ white people hence have the best overall policies.

Reform are Tory white people? 

[Sheilbh]

Define do both.

There's about 90 Labour seats where Reform are in second place and about 40 where the Greens are second place (this would expand if we include the Gaza Independents).

The strategic challenge for Labour is not that they have a choice but that they don't. Same for the Tories with Reform and the Lib Dems. Tilt to the centre or consolidate your right/left is an easy dilemma. The problem for Labour is that they might face what the Tories are - it's an extreme example which I posted earlier but Devon County council over the years:


I've some ideas on how Labour should think about trying to do it. But I think for both Labour and Tories, in my view, it's missing the challenge to frame it as a choice - when the reality is what they're facing is a collapse in trust and pincer movement.

For the Tories losing the Midlands to Reform ad the South to the Lib Dems, for Labour losing the largely regained "Red Wall" to Reform, Scotland to the SNP and cities to a Green/Corbyn/Gaza Independent coalition (which might not happen).

To an extent this is where I think the last 40 years of mainstream political practice needs to change - I think the lessons of micro-targeting from the Clinton campaign, then Blair and perfected online by Obama's team don't work anymore (on their own). In the same way as the standard comms approach of a grid and a line to take etc from those decades don't work any more - in both cases I think undermined by social media. The thing that strikes me about Trump, Farage - but also Corbyn, Sanders, Melenchon - is that they're broad spectrum politicians. Their speeches, rallies, comms etc are not a pointillist picture of policies expertly designed to six soccer moms in Milwaukee or Mondeo Men in Braintree and binding those different groups together. It's broad brush for everyone to see politics. I think the mainstream parties need to learn again how to do that type of politics. I also this is why you often get a contradictory media critique from people on the centre: that the media are simultaneously reporting too much on them and not covering them enough ("why don't they cover that he said/did/thinks x").

What things?
I can imagine some stuff,  general belief in the system being broken, etc... and of course for the rural little-England Greens there's huge overlap. But thinking more of your textbook urban Greens here, they're quite the polar opposite of Reform.

They're really not. Voters don't have particularly strong fixed opinion on issues, they are vastly more heterodox in their attitudes than people who are involved in politics or follow politics closely. It's why in the 2010s there's a surprising number of Lib Dem-UKIP swing voters.

They're both change parties, they're both anti-system. There was some really interesting polling by More in Common after the "island of strangers" speech and Greens and Reform voters are the ones who are most likely to feel that you can't generally trust people and to feel disconnected from society. There's an interesting book I don't entirely agree with on class which basically argues that part of what's going on is a downwardly mobile graduate class (loads of debt, can't get on the housing ladder, lower "graduate premium", more routine and semi-routine jobs requiring degrees) that is radiclising, which formed Corbyn's base and a lot of Green voters or the left populist wing of politics; and there's an economically precarious, in his phrase, petty bourgeoisie that powered UKIP and now Reform. I think they're two sides of the same coin.

Want to appeal to Reform voters by being mean to refugees? You turn off the Green voters by being mean to refugees.

I have a different view on the policy issue and what's right. But I think there's a valence issue here too I think it's a priority for Reform, I don't think it massively is on the left. The issues that I think really hurt Labour on the left were the winter fuel payment, disability benefit cuts and Gaza. And I think Reform voters basically agree with Green voters on the first two and there's even a fair bit of overlap on the last.

Yes, I've heard this before and it makes sense.
We are currently at 0. This is a situation with a lot of problems.
Someone coming in and promising change can enjoy huge success.... Though with Reform this offered change takes us to -5 rather than the +5 we need to be shooting for. All people see though is change and the surface promises of unicorns and rainbows donkeys and roast beef.

Yeah but also it reflects a deeper malaise. People have, in different ways been voting for change since at least 2016 - I'd argue since 2010 - and it's not happening. I think the bigger problem is that the circuit of voters to parliament to government to the state to voters' day-to-day lives has broken down. Ministers keep entering office and finding they can't do anything - the levers of state in high office are not connected to anything. And voters keep having the same experience when they go into the voting booth. I think in a democratic society it's dangerous. I think Starmer has got to the point of thinking a lot of this but it's another u-turn (having spent the first six months setting up or expanding the powers of 17 quangos and farming out policy on most issues to a set of commissions and independent reviews), but there's still no sense of urgency or explanation of what it's for.

I hope so. It certainly happens with the anti-tory vote.
But I do think you'd need actual Reform success for the threat to truly stand out here.
Also as Labour alienates the left there are a sizable number on that side who will not hold their nose and vote for the centre. Many of these people are an absolute gift to Reform and will even work to win more voters for Reform

I think the Reform success is here and will be seen more with polls increasing.

I think there's two challenges and in these types of seats I think there is minimal overlap. I think the seats where the "left" are most disgusted with Labour are overwhelmingly seats with large Muslim populations (that's already where we saw the largest fall in Labour's vote in 2024 and the election of Gaza independents).

The tactical voting element will be in seats where there's a reasonable Tory or Lib Dem presence and the question will be whether they can hold their nose and vote Labour to block Reform. 2024 had a lot of anti-Tory tactical voting - and 2019 had a fair bit of anti-Corbyn tactical voting - so I don't think the risk on this is the threat to the left but that people's desire to get Labour outweighs their opposition/dislike of Reform and Farage.

I'm not sure what you mean

I don't think it's about left or moderates or how the parties coded. They took away money from 80% of pensioners. They wanted to take away money from and re-assess millions of disabled people's entitlement to PIP. There is a reason that, according to Labour campaigners, the winter fuel payment was the number one complaint on the doorstop in the local elections - and why Labour MPs have cited what they're seeing in their constituencies in rebelling against PIP cuts.

It affects lots of people who will complain to other people, who'll be concerned about it, who'll moan to canvassers, write to their MPs etc.

I'd also add that as these are the first two big spending decisions (to show you can be tough - only to unwind them under pressure) everything else is seen as zero-sum. Every other spending increase - defence, public sector pay, capital investment on infrastructure - will be put in the balance with: they're doing this because they took money from the elderly/disabled or instead of making those payments.

[Sheilbh]

By the by on the tactical voting and the desire to kick Labour out v stop Reform - interesting polling on negative preferences. It's currently about equal

[Valmy]

Seems like ranked choice voting would solve a lot of this tactical voting.

[Sheilbh]

Yeah I was a bit of a fan of that - and it's the Electoral Reform Society's preferred method - but I'm less convinced. Ironically because I heard someone from the ERS speak about it

I'm more hostile to it than I was, but if there were electoral reform now I'd actually go for the French system but have it as instant run-offs (a bit like the old mayoral systems here).

The flip side is I think there is arguably something positive in both of the main parties having lost trust and now need to either win it back or be destroyed.