Starmer’s Rose Garden Reality Check

A far cry from New Labour’s 1997 optimism, Prime Minister Keir Starmer delivered a sobering address in No. 10’s rose garden yesterday. Warning for a ‘painful’ October budget, the speech raised the prospect of inevitable tax rises, reiterating the ‘fiscal black hole’ left behind by the Conservative government. 

Key Takeaways

1. Fiscal Gloom: Starmer repeatedly referenced a “£22 billion black hole” inherited from the Tories, managing expectations for potential tax hikes.
2. Manifesto Tightrope: Despite this bleak fiscal forecast, the PM affirmed Labour’s manifesto pledges on no increases on income tax, National Insurance, and VAT for now. 
3. Law and Order: Starmer reaffirmed his strong condemnation of the recent far-right riots and disorder, which revealed the ‘cracks in our society after 14 years of populism and failure’ 
4. Pensioner Squeeze: Confirmation of the controversial scrapping of winter fuel payments for millions, admitting he ‘didn’t want to deal with it’. 
5. Expectations Management: Clear attempts to brace the public for tough economic measures ahead.

The Budget Balancing Act

Starmer’s hint that October’s budget will be “painful” has provoked backlash from unions, as well as Conservative attacks on the prospect of tax rises. Nevertheless, the PM affirmed his manifesto pledges, and instead pledged that the burden will ‘fall on those with the broadest shoulders’, raising speculation on how that revenue will be raised. 

Potential targets include:

1. Inheritance tax reforms
2. Capital gains tax adjustments
3. Extension of income tax threshold freezes
4. Pension tax relief reductions

Riot Response and Prison Pressures

The PM appeared strong on his stance on the recent far-right riots, condemning their ‘extreme and racist nature’. Addressing their cause, he claimed they were ‘infected by a spiral of populism which fed off cycles of failure of the last government’, and revealed the ‘fundamental failure’ of prison shortages which hampered the government’s response. 

Winter of Discontent?

Starmer’s defence of scrapping winter fuel payments for around 10 million pensioners as a “difficult” but necessary decision may foreshadow what will be to come in the October budget, which has attracted scrutiny from Labour backbenches and the opposition. 

(To read more about the recent revision to the price cap by Ofgem, citing that energy bills in Great Britain are set to rise by 10%, bringing the average annual cost to £1717, and the implications of this for both the Labour government and the British populace, read Chamber UK’s article here.)

Political Fallout

Understandably, the sober nature of the speech garnered significant backlash. Figures from the opposition benches were quick to blast the PM, hinting at a feared U-turn in Starmer’s tax-policy. Former PM Rishi Sunak labelled it as the ‘clearest indication’ that Labour is planning to raise taxes, with Conservative leadership hopeful Kemi Badenoch accusing him of “taking the British public for fools”. 

The speech also raised concern from union figures. Sharon Graham, Unite’s general secretary blasted the ‘bleak vision of Britain’, arguing ‘austerity mach 2’ is ‘not the answer to the UK’s problems’. 

Final Thought 

Starmer’s speech was underscored by an ever-present blame towards the former Conservative government for the ‘fiscal mess’. The undoubtedly symbolic location of No. 10’s rose garden, a reminder of Tory lockdown parties, was a clear decision to set the tone for a new government of ‘service’. Time will tell, however, how long Labour’s fiscal strategy can be justified from the failings of the last government.

“I make big asks of you as well, to accept the short-term pain for the long-term good.”

Prime Minister, Sir Keir Starmer

To read more of Chamber UK’s analysis on the New Labour Government’s manifesto and policies for the year ahead, click here.