Virtually a yr in the past, Sir Keir Starmer proclaimed that “the work of change begins instantly”.
Standing on the steps of Downing Avenue solely hours after turning into prime minister, he laid out daring plans — from reviving the NHS to fixing the British financial system to spurring housebuilding — and requested individuals to evaluate his authorities on “actions, not phrases”.
After a tumultuous first yr in workplace, the Monetary Occasions appears to be like on the Labour authorities’s document thus far.
Kick-start financial development
Labour got here to energy in July 2024, pledging to make development its “primary mission”. However a yr on, enterprise optimism is muted, and the financial system shrank in April at its quickest tempo since 2023, setting the stage for the slowdown economists anticipate to observe the 0.7 per cent enlargement recorded within the first quarter.
The federal government has pledged to make individuals “higher off” and an increase in actual wages since mid-2023 helps family funds. Nonetheless, payroll employment is falling, squeezed by increased labour prices following April’s rise within the nationwide residing wage and employers’ nationwide insurance coverage contributions.
Excessive borrowing prices and lease inflation proceed to weigh on family funds. Productiveness development — important to sustainable enchancment in residing requirements — stays elusive. Companies have taken some coronary heart from commerce pacts with the EU, India and the US, however sentiment stays subdued and funding is constrained by the federal government’s preliminary emphasis on the “black gap” within the public funds and post-election tax rises.
“As an alternative of using the wave of optimism after the election, the chancellor flattened it,” mentioned Paul Dales, chief UK economist at Capital Economics.
Construct an NHS match for the long run
The well being service acquired a £29bn annual increase, whereas many different areas of day-to-day spending confronted real-terms cuts, in chancellor Rachel Reeves’ spending overview in June, underscoring how vital bettering NHS companies is to Labour’s political mission.
There are indicators that that is serving to, with nearly 4.2mn further elective operations, appointments and assessments in England through the first 9 months in workplace. This has contributed to bringing down the ready record to 7.39mn referrals in April, 5 per cent beneath its document excessive in September 2023 however nonetheless far above pre-pandemic ranges.
Nonetheless, Andrew Wishart, economist on the funding financial institution Berenberg, mentioned progress on clearing the backlog had come at a “excessive fiscal price”.
“An enchancment in productiveness, maybe made doable by funding in diagnostics tools, is required to proceed the advance with out recourse to increased tax or borrowing,” he added.
Get Britain constructing once more
Labour pledged to get “Britain constructing once more”, with relaxed planning guidelines and extra funding for homebuilding, because it vowed to construct 1.5mn properties over 5 years.
Whereas a restoration in housebuilding goes to take time because it expands land provide, the most recent information shouldn’t be encouraging, with approvals of planning purposes in England having fallen to their lowest in 13 years.
Consistent with its pledges, Labour has additionally reformed fiscal guidelines to help extra public funding involving over £100bn of further capital expenditure, introduced a 10-year infrastructure technique, launched GB Power to spend money on renewable power and created a Nationwide Wealth Fund to stimulate personal capital in precedence sectors.
These insurance policies have the potential to spice up financial development, consultants say. However “the problem, after all, stays funding”, famous Sandra Horsfield, economist on the monetary companies firm Investec.
Repair the general public funds
Reeves, in her October Finances, vowed to “restore stability to our public funds”, however the actuality has been a sequence of U-turns on welfare and an sudden fiscal consolidation in her Spring Assertion.
Analysts now see a rising prospect of a contemporary spherical of tax rises this autumn, as rising defence spending, weak financial development, and better expenditures on winter gasoline funds and welfare advantages weigh on the general public funds. Labour’s pledge to not increase levies on working individuals leaves a small proportion of the tax base prone to having to choose up the invoice.
“A whole lot of issues should go proper for the federal government to keep away from having to interrupt some manifesto pledges and but ship all of the ‘change’ it needs,” mentioned Horsfield.
Safe Britain’s borders
Labour has arrange a brand new border safety company and strengthened co-operation with France on individuals smuggling.
Returns have reached a seven-year excessive, however small boat arrivals, totalling almost 5,000 migrants within the month ending June 27, are “clearly going within the unsuitable path”, mentioned Peter Walsh, senior researcher on the Migration Observatory on the College of Oxford. Laws introducing new enforcement powers is progressing by way of the Home of Lords.
The federal government additionally pledged to “finish asylum motels, saving the taxpayer billions of kilos”. However the newest official figures for the variety of migrants in motels reveals it’s increased than when Labour got here to energy, standing at 32,345 on March 31 2025 in contrast with 29,585 on June 30 2024.
The federal government has additionally begun reforming immigration guidelines to curb internet migration, which has already began to fall because of actions taken by the earlier authorities. Official estimates recommend Labour’s plans will scale back the variety of arrivals to the UK by about 100,000 a yr, however the influence on internet migration is much less clear.
Bolster public service requirements
Enhancing public companies was on the coronary heart of Labour’s election manifesto, with a variety of commitments to boost requirements and enhance hiring in colleges and policing.
The Residence Workplace has allotted £200mn to ship its pledge of 13,000 extra neighbourhood law enforcement officials, however the Nationwide Police Chiefs’ Council mentioned the settlement for policing within the spending overview “falls far quick” of what’s wanted to fulfill this promise.
The federal government has already ended the VAT exemption for personal colleges, however it’s too early to inform if it’ll obtain extra bold targets akin to halving severe violent crime and guaranteeing 75 per cent of five-year-olds are prepared for college.
Job vacancies in schooling and public administration are down from the spring of 2024, however the Nationwide Audit Workplace has raised questions on whether or not the dedication to rent 6,500 knowledgeable new lecturers goes far sufficient to deal with acute shortages.
Jack Price, lead economist on the Nationwide Basis for Instructional Analysis, mentioned assembly the pledge could be a “appreciable problem”.
