The Insider

Starmer needs a new mission—or a new chancellor

After this week’s welfare rebellion, the Starmer-Reeves vision of filling fiscal black holes seems to be running out of road

July 02, 2025
Protesters demonstrating against the proposed welfare cuts. Image: Vuk Valcic / Alamy Stock Photo
Protesters demonstrating against the proposed welfare cuts. Image: Vuk Valcic / Alamy Stock Photo

Keir Starmer’s problem isn’t that his big programme of change is being thwarted by his MPs. Rather, there isn’t a big Starmer programme of change, and no great project with his MPs. He won a landslide majority on a mission which amounted essentially to restoring stability and competence after a decade of massive Tory turbulence.   

As a result, his army of backbench MPs have found themselves with little of substance to do. To their consternation, almost the only seriously controversial legislative reforms they have had to vote on turned out to be tax rises and spending cuts to balance the books once more devoted to health and defence, where extra spending was practically unavoidable to prevent the collapse of the NHS and Nato.

Welfare cuts are especially difficult for Labour MPs given their beliefs and social pressures. Even Blair faced revolts on the uprating of benefits. But beyond a hard core of hard-left MPs such as Jeremy Corbyn, there wasn’t then a complete breakdown between ministers and backbenchers, not least because there was a massive shared agenda of other reforms; and a strongly growing economy—so there were very few cuts and lots of big spending increases all round.

It is all so different today. Weak growth, big deficits and huge welfare pressures—particularly the surging cost of disability payments post-Covid—have made big, sustained welfare cuts unavoidable if there are not to be big, sustained tax increases. 

This week’s welfare rebellion showed that a critical mass of Starmer’s backbench MPs don’t want their legacy of controversial changes to be largely about welfare cuts. They faced a huge backlash over the cut to winter fuel allowance soon after the election, and this week they rose en masse to prevent the same again. 

Moreover, the Corbyn legacy of “no hard choices” is still rampant on both Labour’s soft and hard left. Many soft-left ministers, led by Angela Rayner, covertly agreed with the rebels and were happy to leave Rachel Reeves in the lurch. Starmer’s personal authority is very weak, not least because he is deeply unpopular. So the revolt became uncontainable and the climbdown total. It is deeply revealing that the final surrender was negotiated by Rayner with only hours to go before the crucial vote.

The fact that the tax increases to pay for abandoning these welfare cuts will be announced in a budget still months away made the situation even harder for ministers to manage. I suspect there will be rebellions on the tax increases too, as they become immediately unpopular.

To expand on the crucial context, these cuts and tax increases aren’t part of the government’s “big picture”. They have become almost the entire picture.

Attlee, Thatcher and Blair all used landslide majorities to carry through fundamental reforms. Their reformist legacy was huge. Thatcher maintained her authority for more than a decade, even securing a parliamentary majority for the hugely unpopular poll tax before her MPs finally turned against her once it proved impossible to implement.  

The explanation for the parliamentary strength of Attlee, Thatcher and Blair isn’t hard to fathom. In each case they got elected on programmes of big change—nationalisation and the welfare state for Attlee, privatisation and a smaller state for Thatcher, public service and constitutional modernisation for Blair—and their MPs mostly saw themselves as part of the mission. They believed in the mission even in periods of unpopularity, although each of these leaders went on to win at least one more election.

By contrast, Starmer has so far progressed only one fundamental reform with his landslide majority, the assisted dying bill, and that isn’t even a formal government measure, although it would never have got into the first session agenda without his personal support.

Euthanasia is hardly an epochal mission for a reformist government.

It is too soon to be writing Starmer’s obituary. But the Starmer-Reeves partnership and its vision limited to filling fiscal black holes appears to be running out of road. We are only one year into this government. Something big will have to give. I suspect a new chancellor may not be long away.