Keir Starmer lays ground for unpopular moves, though pay-off is uncertain

Good morning. Keir Starmer delivered his first big keynote speech since becoming prime minister and it had pretty much the same theme as every remark and set-piece event the government has made in the 55 days since it took office: things are bad, things are tough, the last government left a huge mess behind, bigger even than Labour thought and it is going to take a lot of time, energy and effort to fix things.

Some of this is simple crude politics: if the new government is to be re-elected, it is going to be on a “we are sorry for the inconvenience, please bear with us while we try to fix this” ticket rather than a “it’s morning in Britain” one.

Some of it is just true: when Labour came into office in 1997, the party inherited a public realm in need of repair but a strong economy. When Labour left office, it passed on to the Conservatives an economy in bad shape following the financial crisis but with public services in good order. Now it is back in office, the economy still hasn’t recovered from the financial crisis and the public realm is in a bad state, too.

But one big problem for Labour is the crude politics of “don’t touch the major revenue raisers”, and the policy imperatives “keep your promises and aims on improving public services and achieving growth” are not necessarily aligned.

(I never promised you a) rose garden

Watch the hands, not the mouth: although the text of Keir Starmer’s speech is very familiar, in some ways that is the least important part. “Tax rises and some spending cuts are coming in October” is the message — the Budget on October 30 will be very tight indeed, ahead of a comprehensive spending review in the spring.

What are the big things that Starmer and Rachel Reeves have actually done? They have decided to spend £9.4bn on public sector pay awards that meet the recommendations of the UK’s independent pay review bodies in full. They have funded that in part by scrapping some capital projects and by means-testing the winter fuel allowance.

As it stands, in the Budget they will similarly have some large and new spending commitments. Given everything Starmer has said about prisons, you would assume they will be high up the list — funded partly by tax rises, partly by spending cuts.

The winter fuel allowance is a New Labour era benefit from a time when pensioners were the demographic most likely to be in poverty in both real and absolute terms. Thanks in large part to the triple lock and other measures to fight pensioner poverty introduced by the Conservatives, Liberal Democrats and Labour party last time it was in office, pensioners are now the least likely demographic to be in poverty. As the triple lock continues to do its thing — increasing the state pension to the level of the more generous provision in other countries — it makes sense for specific measures introduced by Gordon Brown to fight pensioner poverty — such as the free television licence — to fall away or to become means-tested.

But restricting the winter fuel payments to only those eligible for the pension credit will create real hardship for those who are just above the threshold (I was struck yesterday by Starmer signalling that the winter fuel allowance might yet be cut off at a slightly different point to the pension credit).

Now, it may be that there are similar measures to the winter fuel allowance where there are potential savings to be made and a good policy case to do so, but I think it is unlikely. In any case the winter fuel allowance change looks to be a painful moment for pensioners and the Labour government in the autumn. It is unlikelier still that there are areas it can cut spending without causing both a) hardship in the country and b) political difficulties for the Labour party.

Not all the capital projects Labour has scrapped are created equal. There is the decision not to go ahead with building the A303 tunnel under Stonehenge, an environmentally costly project whose return on investment has never been a slam dunk or anything like it. And then there is the decision to axe funding for a new exascale supercomputer at the University of Edinburgh, a move that flies in the face of the new government’s supposed focus on growth.

And again, it may be that there are many more poorly designed A303 tunnel schemes that Labour can cancel without losing very much sleep — but again, I doubt it.

Starmer’s big message yesterday was that things will get worse before they get better. But the problem is that many of the ways things may “get worse”, such as cancelling capital projects and introducing taxes on wealth and assets, may get in the way of his hope that things will, eventually, get better.

Now try this

I saw Alien: Romulus and well, it was a bit of a mess, really. David Jonsson is absolutely terrific in it, and is far and away the best thing about the movie. But the film as a whole is a mess, laden with unnecessary references and callbacks that stop it ever becoming something in its own right. I enjoyed talking it over on the FT Weekend’s Life and Art podcast a lot more.

Top stories today

• Brace, brace | Business groups have urged the government not to raise taxes on UK plc in its efforts to close a £22bn hole in the public finances, after Keir Starmer warned that those with “the broadest shoulders” would be targeted in the Budget. Britain’s richest taxpayers have already been stepping up efforts to redraw their tax affairs ahead of the fiscal event, which tax experts expect to boost levies on capital gains and inheritance. 

• That’s the way it is | Starmer has sought to defend his government against allegations of cronyism in the appointment of senior civil servants, insisting he was intent on getting the “best people into the best jobs”.

• Berlin bilat | The UK prime minister plans to kick off efforts on a new treaty with Germany as he holds talks in Berlin with Chancellor Olaf Scholz. The meeting is part of Starmer’s goal to reset ties with Europe. It will focus on a bilateral treaty on trade, defence and security, innovation and technology, the environment and illegal migration, which London hopes to finalise early next year.

• Cashing in | Rupert Lowe, a newly elected MP for anti-net zero party Reform, is the owner of a firm specialising in heat pumps – a flagship clean heating technology, DeSmog’s Sam Bright reports. Lowe previously claimed that there is a “cult of climate change”.