Keir Starmer Is Channeling His Inner Margaret Thatcher

(Bloomberg Opinion) — Which UK political party threatens to decimate the civil service, slash welfare payments for the disabled, crack down on independent regulators and take a chainsaw to overseas aid to pay for more guns and bombs?  The Tories in their worst Donald Trump mode? The wild radicals of the populist Reform UK party? No: Meet Keir Starmer’s hard-faced — and broke — Labour government. 

The bleak international climate and a stuttering domestic economy provide the context for Labour’s severe new look. On Friday, the Office for National Statistics announced a 0.1% decrease in gross domestic product in January. Following an October tax-increasing budget that targeted business, growth has flatlined. Chancellor of the Exchequer Rachel Reeves will likely be forced to cut spending in her March 16 economic statement to meet her fiscal rules.

Defense spending is rising to 2.5% of GDP — and 3% shortly after — to counter the threat from Russia. Overseas aid, long cherished by Labour’s idealists, has been cut by 40% to pay for the increase.  There’s no money left to build a New Jerusalem at home either.

Guided by two ruthless realists — No 10 Chief of Staff Morgan McSweeney and Cabinet Office Minister Pat McFadden — the prime minister is now stealing the clothes of his Tory predecessors and adopting a pragmatic agenda suited to these hard times. Starmer, no visionary, is happy just to do “what works” even if that means disappointing the aspirations of the party faithful.

On Thursday in Hull, the PM gave a speech that echoed the rhetoric of every Conservative prime minister since Margaret Thatcher. The “state has become bigger, but weaker,” he complained; Britain needs a more “agile mission-focused and more productive” civil service. McFadden paved the way for his boss last weekend when he declared that Whitehall “would and can become smaller.” Underperforming officials would be shown the door.

Channeling Elon Musk, the PM also announced that “AI and tech teams” would transform every Whitehall department. “If we push forward with the digitisation of government services there are up to £45 billion of savings and productivity benefits ready to be realized,” he enthused. This would have been music to the ears of Starmer’s tech-bro Tory predecessor, Rishi Sunak, and to Dominic Cummings, Boris Johnson’s former chief adviser, who enthusiastically followed Silicon Valley’s injunction to “move fast and break things.”

Then came Starmer’s great reveal. NHS England, the arms-length body that manages a national health service staff the size of the old Soviet Red Army and oversees a budget amounting to 7.5% of GDP, is for the chop. Its senior leadership has already departed and its numbers will be halved, leading to the loss of 9,500 jobs. Health Secretary Wes Streeting has been guided by the latest business thinking to cut out unnecessary layers of management.

As Streeting gleefully points out, a number of Tory MPs have quietly begged him to scrap this unloved bureaucratic behemoth, created by their own government in 2012. Responsibility for major spending operational and investment decisions will go back to individual healthcare trusts.

A DOGE-like axe is poised over other government bodies. The chair of the Competition and Markets Authority has been sacked for failing to get behind the government’s growth agenda; environmental bodies will lose their powers to halt construction projects. The justice secretary is also at odds with the Sentencing Council for devising guidelines that allegedly favor minorities over white males. How very Tory.

The announcement of a Whitehall revolution provided a temporary distraction from the chancellor’s plans to cut welfare spending. Labour MPs have been urging Starmer and Reeves not to freeze disability benefits, which is also causing unease in the cabinet. Even in the darkest days of austerity following the global financial crisis, the miserly Tories kept personal independence payments for the disabled rising in line with inflation. McSweeney, however, calculates that welfare cuts will resonate with Labour’s working-class voters who loathe social security scroungers.

With 9 million Britons economically inactive, almost 3 million reporting as sick and more than a million young people not in education, training or work, welfare spending is out of control. It’s “indefensible, unsustainable, unfair,” Starmer told a delegation of Labour MPs on Monday. Reeves now threatens to slash £6 billion ($7.7 billion) from the annual welfare bill to fill a black hole in the public finances. As I predicted last week, Labour’s high command could face a sizable rebellion in Parliament; following an unpopular cut to universal winter fuel payments last year, the party’s left and soft-left factions are on the alert for a Treasury-inspired cuts agenda that echoes the austerity imposed by the Tories.

S o are the Conservatives gloating? Hardly. Doubtless a Tory government would have cut the civil service back to pre-pandemic numbers with greater relish, but the shadow cabinet can hardly be comfortable that Labour is championing policies that it knows its party should have implemented in its 14 years in government. Take Labour’s much trumpeted planning reforms –  Boris Johnson had also promised to build more houses and invest in infrastructure, but folded when his NIMBY MPs threatened rebellion. 

And even if Rachel Reeves decides to extend the freeze on thresholds for higher-rate income tax payers — 680,000 more were dragged into the 40% tax bracket last year — then the Tories need only to look in the mirror to remind themselves who imposed the freeze in the first place. When a Labour government is implementing policies that your last five prime ministers dreamed of but never dared to do, what is the point of the Conservative opposition? That’s precisely the question Starmer’s operators, McSweeney and McFadden, intend to leave hanging in the air.

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Martin Ivens is the editor of the Times Literary Supplement. Previously, he was editor of the Sunday Times of London and its chief political commentator.

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