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Chaos returns to Westminster: What next for Keir Starmer and the government?

59m 44s

Chaos returns to Westminster: What next for Keir Starmer and the government?

The webinar discusses the volatility in UK government following Labour’s poor election results, which have triggered calls for Prime Minister Keir Starmer to step down. Andy Burnham, the Mayor of Greater Manchester, is expected to contest the Makerfield by-election and, if successful, challenge Starmer for the Labour leadership. The panel explores scenarios: Burnham winning could lead to a leadership contest, while losing might bolster Starmer’s position. The distraction of internal politics is already affecting government operations, as ministers spend time on factional discussions rather than governance. However, the King’s Speech and departmental work continue. Drawing parallels to Theresa May’s tenure, panelists argue that weakened prime ministers can still govern by focusing on legacy and pushing through decisions, though authority is diminished. Market concerns about instability are partly valid, but the main driver of recent bond yield increases is geopolitical events like the Iran War, not leadership speculation. Ultimately, the panel emphasizes that resolving the leadership crisis—whether through Burnham or Starmer—is crucial for restoring effective governance, as a united party can make decisive decisions and reassure investors. The key lesson for Starmer is to act with urgency, using his remaining time to deliver on policy and leave a lasting legacy.

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Good morning everyone and welcome to this Institute for Government webinar. We thought we'd get together this morning to talk about the volatility that we are seeing in UK Government. Following Labour's disastrous local and devolved election results, which saw more than 80 MPs call for Kierstarmatt to step down as leader and Prime Minister. We've seen where's tweeting, quit as Helseks 3 and launch a scathing attack on Starmatt's premier ship. And also what the circumstances appear to have accelerated and he burned into determination to return to Westminster. With the mayor of Manchester, Greater Manchester now sets to fight a by-election in Macafield and making no secret of the fact that if he does succeed in coming back to Westminster, he intends to challenge Kierstarmatt for the Labour leadership. But as all this drama plays out in the Labour Party, the work of Government continues. So how can a Prime Minister lead a Government if their authority is being questioned by their own MPs? What would a Labour leadership contest a formal one getting underway mean for how Government operates? What's the impact of this uncertainty that we're already seeing on the civil service and on the Government's Legislative Agenda which we just saw set out for this session in the King's speech? And how should Kierstarmatt approach being Prime Minister if his departure from number 10 is confirmed? We've got lots to discuss this morning. I've got my slide out at the ready, so please do send in your questions. Because joining me on this webinar, I've got a fantastic RFG clear. We've been thinking about all these questions having lots of chats in the office which we thought we'd bring to you. So do welcome, RFG's Executive Director for Impact, Alex Thomas and our senior fellow duo, Tathadden and Charles Wilkes. Okay, Kath, I'm going to, as is often traditional, these webinars ask you to kick off by sort of setting out the context for us, given where we are today which feels like a bit more certainty than we had for a lot of last week. What are the scenarios, the key scenarios you can see potentially playing out from here? Yeah, I mean it's worth saying, Andy Burnham is not yet the candidate for the Makerfield by-election, that selection only happens on Thursday. So the local Labour Party have the opportunity to do a very funny thing, but sort of feels like the momentum is not in that direction and it's, you know, being treated as this is almost certainty that he will run. So really, there's lots of different scenarios, but there's two big ones. There's one where Andy Burnham wins the by-election. I mean the truth is, nobody's really talked about what happens in the aftermath of that. As you say, kind of a certainty that he would challenge Keir Starmer for the premiership, that's been talked up ever since, well probably since the Mandelson scandal, it's been talked about sort of vaguely for months, but it's felt like a real certainty in the last week or so, once Burnham got Josh Simon to step down from the seeds and out, he was running. And particularly as he's launched already, his campaign with a slick video out yesterday, which wasn't just talking about obviously the issues facing Makerfield, but was also very much talking about the issues facing the country. But we don't really know how that would play out because what happens is Burnham arrive in Westminster and immediately launch it. He might want to arise for some time with MPs work out, might depend on what's going on in the world because we are potentially on the cusp of a major crisis as the closure of the state of Hormuz leads to the kind of knock-on effects, not just on aviation fuel petrol pumps, but on a whole range of other things. So we could end up finding ourselves in crisis, does Andy Burnham really want to launch leadership crisis then? But the really interesting thing is the very little discussion about what happens if he loses it. Obviously people are talking about it in electoral terms. Where does that leave Keir Starmer? We've got some UGov polling out today that suggests that Burnham is the only real candidate who definitely beats Starmer in a poll amongst Labour membership, who are the people that would choose. Where's Streeting according to this polling? It does extremely badly, but Starmer also at the moment on the base of the current polling slightly eeks out other candidates. So that kind of support Starmer's argument that he's going to stick out that if there is a contest he will sort of launch it, he will contest it. But it's difficult to see how that scenario would then shift their electoral prospects. It's like the entirety of the Labour Party, perhaps not all because there are quite a lot of Starmer loyalists, but a lot of them are treating Andy Burnham as if he's the Messiah and this is now a foregone conclusion, not only that he wins, but also that he fixes everything for them. There is obviously the scenario that he loses, but there is also even if he wins, it's not that easy to just come in and fix government given the context in which government is currently operating. So I think the expectation management that Andy Burnham is facing not just about this by election, but also if he wins it is massive and is going to be a huge problem for him. And I think it's really important in these discussions to try and remember some of those sort of counterfactuals and some of those unspoken things which just aren't being discussed in the media because these things always get a lot of momentum. And of course actually because the Labour-backed benches are quite full right now, they've got a big majority. There's quite a lot of Labour-backed benches who haven't said anything, they haven't signed letters for Starma, they haven't come out and quit a job or said that they want him to be. So there's quite a lot of people who are sitting on their hands at the moment, but what do we know, Catherine, about how this apparent split within Labour and the parliamentary party about whether Kierstarma should stay or go? What do we know about how that is currently affecting government? Well yeah, you're right. I mean there's probably about a third who've actually declared in one way or another either those back benches writing letters or making statements or those ministers who have quickly the government has a result of it. I mean the truth is it's all encompassing, it's going to be affecting them all massively because politics is at heart about having discussions with your colleagues about plotting, about working out which faction supports whom and what policy. And it is also about ministers talking to back benches a lot of the time. So it's worth saying, like ministers will be getting on with the job and actually the government has been doing quite a lot in the last week and I'm sure Alex and Charles can talk about it but they've had some quite good new stories in the last week which no doubt will be frustrating for them in terms of what has instead dominated. But there will be a lot of ministers who will be yes getting on with it, there's too much going on in government for you to be able to avoid it but it's still it's that distraction thing. It's those extra time that you've got to spend over in Parliament or those extra meetings that you're having the political meetings not about the business of government or it's just that your mind isn't fully on the job and that will be more so once the election the by-election gets going because there'll be a lot of people that will want to win the seat regardless. There'll be a lot of people who want to win the seat because they won't burn them to win it so they will be wanting to go and campaign their or to support or whatever they can do though. Labour will be throwing everything at this I'm sure. So yeah it's going to be very distracting for them. It doesn't mean they can't govern but it does require them making a concerted effort not to let the politics dominate and particularly all of the behind the scenes kind of discussions and so forth which can just to end up taking up your your whole day if you're not careful. Alex can I come to you now I mean listening to Kathar I mean obviously politics the politics we've got used to is very much about you know inviting and and and processing and so on fundamentally politics is about changing the country I think for most MPs we're hearing a lot of warnings that if a formal leadership campaign gets underway at the lateral contest triggered that the work of government will grind to a halt and Kath's already saying that lots of people are distracted by what's happening already. What do you make of this is this more project fear from from team Starmer saying you know don't don't get to get rid of nerves for fear of something worse or are there actual restrictions on civil servants? Yeah I mean fundamentally politics is about resolving disputes and making decisions isn't it? You could argue that one of the challenges of recent years is that government and British politics hasn't had the capacity to resolve those decisions which is what in part what we're seeing play out now I mean come to project fear in a minute but they're just sort of zooming out on the context a little bit to build on what Kath was saying. I do think in terms of the sort of the governance of Britain things are looking a bit more optimistic now than they were a week ago almost the sort of having found themselves both the government and the Labour Party in this crisis triggered by the local and devolved election results at least now you can sort of see a path whether it's through an anti-burning victory or defeat in the make-of-field by election whether it's through you know all the twists and turns that are going to happen over the coming weeks and months to the best candidates being in the field which might include Kath's and then have a good time. either having a contested or a coronation that leads to a prime minister that has the legitimacy to lead the Labour Party to command the confidence of the House of Commons and to actually get on with it. I think almost the worst of all worlds at times over the last couple of weeks has seemed where we might end up in a kind of stasis with no one able to kind of to cut through that. So however all of this resolves, in terms of governance and governability, a leader who has authority and can actually get stuff through the House of Commons and take those difficult decisions, which is what politics is all about, is what we should want, I think. And maybe the optimism meter has ticked up to 20% or 10% or something at the last week. But sorry, that was a diversion. Project fear. Yes, I do think this will have a summer of stasis. Probably did start. If reading between the lines of the briefings that journalists were getting from number 10, I think it did start as Project fear from Team Starmer. And be careful what you wish for as you said Hannah, as we have learnt over the past decade or so, it's not that unusual for Project fear to turn into reality. So I do think while in the short term, the King's speech happens, as Cath said, ministers and civil servants and getting on with doing stuff in departments, there is a, there's no reason to worry too much about a sort of sudden attack of stasis. But over the next few months or weeks and months, as Cath said, with a preoccupied number 10, where decisions start getting gummed up, where the Prime Minister doesn't have the political authority to drive things through, where he's struggling to command his Cabinet because they're all telling him to set out a timetable to leave and yet staying in their jobs, you could end up with a sort of political and attention coming up. But not importantly, a kind of formal ghost lo or restriction on activity. There is no guidance on civil servants that will say don't do anything at all. There might be an implicit, you know, ask ministers to think twice if they're about to commit to a £10 billion investment that you can't unpick that Andy Burnham might not agree with. But that will be very much at the kind of informal, political level rather than any kind of official guidance. Girls, can I just come to you at this point because you were working in number 10 when Theresa May was PM and she confirmed her departure, what impact did that have on government and on her team at that time? It's a really good parallel because I see quite a lot in common between them and now, at least a popular outside of former mayor kind of sniping away from the outside and seen as the great hope. And one should remember actually in 2019, that did work for Boris Johnson, the new leader came in and the party recovered its popularity. It's something I'm sure Labour people will be thinking about now. Theresa May was arguably doomed from mid 2017 after the loss of her majority of that election and the appalling crisis of Grenfell and just a total sort of loss of authority. So one lesson is that prime ministers that have been badly winged and have lost their authority can hold the long for a long while. In that case, it was about no longer having like sort of command and control or authoritarian model that existed for Theresa May before the election and more of the kind of bargaining afterwards. If you wanted something done, you needed to make sure it was in the interests of everyone around you. So it was a fascinating time for the small people at it. Well, the big people at it was all about Brexit was if you wanted to get the health secretary or the business secretary to get a move on or do the things that you wanted to do, you had to sort of do lots of bargaining. So for me, it was the most interesting two years. But the difference is that she didn't have a commanding majority and that changes everything. When we absolutely knew it was going to end, which was from sort of early 2019 onwards when it was clear that she had lost the confidence of her party and they were trying to get a timetable on her, which seems to be closer to where Pierre Starmer is now going through. My instinct was very much that everybody who goes into politics should be aware that their political longevity is extremely short. They should have the Memento Mori slave whispering in their ear at all times. They should remember that they spend sort of 80% of the time campaigning to be in the position they are now in and they should be trying to get things done. She's just as legitimate as Prime Minister then as she is when she was commanding everything and she was trying to get things done. And we, I think we're taking that kind of steer from her and from her team, like the head of the policy units and so forth. What can we get done in the last six months, which is why I find very aggravating the story briefed in the FT about gridlock. Ministers say, "Oh, now you're going to see that we're just going to slow down." As if they've been a worthy gig of fast decision making that's just been shurning out all sorts of decisions and I'll know you're going to stop it. All of the criticism around the bars and sort of corridors of whitehall in the last few weeks has been that decision making, decision making has gone to Down Street to die and that actually, you know, all of this stuff about, I'm really furious about getting changed done. Tams across is very provocative to the people who have been criticizing the government precisely for not being that way. So I would say if she, if he was to try to emulate the way the Theresa May administration acted in lots of small ways, I mean, apart from that zero, which you could answer, argue is a very big decision. The question they should take is a sort of humble appreciation that they are not very long for this moment of very high executive power and get things done. So, you know, what, things can be pushed through, what decisions can be made, where you maybe start stop being quite so fussy about all of the different trade-offs. I mean, for example, the defence investment plan, which everyone says, I was so terribly delayed and the small companies are complaining that they're not getting the funds they were expecting. A really impatient prime minister wanted to show that he really meant it that he's impatient about change. We'll be trying to get that thing done. And in a sense, his, he and his advisors, whether he lasts years or months, should be saying, let's make sure they miss us. Yeah. And as you say, that is a lesson for every leader all of the time, as well as for Kirstaama right now. Just going back, Charles, to the, to the sort of context of a potential leadership election of going into a formal one, we're hearing a lot of blooming warnings there too about the impact that that might have on the markets, the impact that Andy Bernan winning that the by-election and then entering that leadership contest might have, in fact, already some sorts of people just trigger to talking about sort of changes to what the markets are doing based on what Bernan is already doing. To what extent do you think this should be a factor in decision making for the people of make a fill for the people in Westminster thinking about who they want to leave their party? I would, I am far from being one of those thinkers who says some of you on those at the Guildmarts, who voted for you, they are a very serious risk. Go to our public finance team and look at the implications of what a few basis points rising interest cost means for this government is really real. It's not one of those made up concerns. But there was an excellent piece of research, I think pointed out by the Katie Martin in the unahedged newsletter that said, we've seen a large rising guild yields in the last few months, something like 40 or 50 basis points of that comes from the Iran War and maybe 10 basis points comes from leadership speculation. So that would be my first point that still we do have a boring problem, but it is mostly about exogenous economic events and geopolitical events. Number two, the biggest concern for the bond market in my personal view should be a government that can't command the support of its own members, that can't push through its own measures. And therefore the ultimate confidence that everybody investors should have, which is this is a government in charge of its own affairs and can act decisively if there ever is a problem is undermined. So although people have a concern about the noises that Andy Burnham made a year or two ago about not being in hot to the bond markets, if he or any other leader comes in and is actually able to make the Labour Party act like a government with 400 seats and sort of behaving a united way, that all ultimately to be good for the bond market. So they should very much be aiming for that kind of result. Interesting, Alex, I want you to come in. Yeah, thank you. I was just going to build on something in Jars's previous answer, which is a, you know, personal hobby horse that feels quite relevant at the moment, which is that we sometimes talk about, you know, prime ministers or politicians being obsessed with their legacy as if that's some bad thing. It was actually, I wish politicians were more obsessed with their legacy and actually took the weight of that more seriously. And so really thought exactly to Jars's point about the kind of moment of executive action about what they can do now that might then play out over the course of five, ten years longer. And I think if Kirstalmer had spent a bit more time thinking about his legacy from summer 2024 onwards and before, I guess, then he might not find himself in the state of his in there. Thanks. And, Kath, just also building on what Jars was saying, if, if a prime minister, if Kirstalmer is on his way out, what's your view on, you know, whether they should be passing laws, signing off big, spending decisions or so? What are the considerations from a constitutional point of view? Yeah, so, I mean, look, firstly, it's worth saying there was in some of that briefing, it was put out as if these were the pre-election restrictions that happen in the run up to a general election. They are not, they do not apply in these circumstances. chances, those are about the particular context of fighting a general election when Parliament has been dissolved and so forth. That said, there are concerns if a Prime Minister has demonstrably lost confidence of their MPs, of their party. In 2022, when Boris Johnson had some 50 odd ministers resign from his governments and a huge amount of, you know, letters of no confidence from his back benches and a smaller majority than Stama currently has. That was a concern, but there it was the cabinet who made the decision that they would avoid doing new policy during the leadership contest in order to, you know, not kind of undermine future Prime Ministers, but also not act outside of what they saw as their mandate at that point. Theresa May, obviously a few years earlier, different circumstances and interpreted it differently. So partly it comes down to, you know, the manner of leaving. If Stama gets the point, so Burnham's elected and Stama decides that the writing is on the wall, sets his own timetable, then arguably constitutionally he has not lost the confidence of his MPs. He's just decided to step down. He has all the authority of a Prime Minister, you know, unless and until he resigns from that post and it's worth adding another constitutional pedantry point of mind in recent weeks, resigning as leader and triggering leadership contest is not stop you being Prime Minister for the duration of that. They are two separate jobs. So I think that's different. I think if it got to the point where yet more ministers resigned and he found himself in slightly Boris Johnson territory, then yes, it might be that the cabinet would and the Prime Minister would want to just be a bit cautious about, again, initiating new policy, but that doesn't stop you still pushing on with the policy you've already decided. They've already got a King's speech, they've already got a lot of policy that the cabinet has already agreed collectively. So this isn't just here Stama's policy, it is the collective policy of the Labour cabinet. So they can still get on with that and the other thing that the project, the briefings for putting out was the idea that you wouldn't be able to take urgent action to deal with the crisis stemming from the Iran war. Of course you can, even during the pre-election restrictions, you must take action if it's in the national interest. They were talking about removing the Labour fuel duty rise that that cut wouldn't be able to be, I mean, in fact, we think Rachel Reeves is going to talk about that on Thursday, as well as other measures that she's bringing in to deal with cost of living stuff. So yeah, it was going over the top and I agree with the others, it was counterproductive because if they find themselves in their so-comb status, Stama's going to want to set his own legacy, the government's going to want to act, especially if a huge crisis breaks out. So don't brief yourselves into that position, it's a bad idea and the constitution isn't the barrier for you acting as a government. Alex, you take a very specific point here. One of the things that Kirsta and Major Don in his sort of comeback speech post-Label elections was a draft reset with the EU, getting posted to the EU and there's an upcoming EU summit which is due to GATO and obviously represent the UK. And I mean, one of the definite themes coming through in the questions, interestingly, is, you know, what happens if this all, you know, if Berlin doesn't win the election, if Stama does continue, presumably he needs to be getting on with the things that he thinks are on his agenda because that is also a prospect, right? Yeah, he has to be getting on and the theme of the last sort of few contributions that we've all made is probably his best route to survival is to get on. It's not to brief himself into stasis, it's to kind of crack on with things. I mean, absolutely, there is no reason at all for an EU summit not to go ahead for the Prime Minister not to pursue the agenda there. I mean, in the back of his mind, he might have, you know, historical precedent of Prime Minister's being aware of some it's while leadership crisis play out at home, but that's not a reason not to go. I mean, the constraint acting on him is a political constraint. It's not sort of governance constraint or anything else. It's, can he, you know, sell to his party the sorts of decisions that he needs to make? And actually, I mean, it is interesting seeing this sort of EU debate kind of spark up again after comments that were streeting made and Andy Burnham has been positioning himself on that, the kind of, you know, the third rail that's run through British government and politics for, you know, many decades is playing out in the context of the Labour Party at the moment. So that, yes, that is going to cause problems for Kierstommer, given the EU issues maybe becoming more salient, given that there will be a divergence of opinion inside the Labour Party about which direction they should go and whether they should be sort of facing your escapitant called pro-Europe. But Starmars policy so far has been quite careful triangulation and calibration anyway. I suppose the interesting thing will be to see whether he and his government feel they have a bit more license to go further than they have done in the past, but absolutely no reason not to crack on with him. And I imagine you're going to make some of the same points when I ask you about the role of the cabinet secretary in all this Alex because we got excited when we're listening to the King's speech, hearing about plans to sort of think about the effectiveness of the civil service and its accountability and so on and work underway to do that, which I think it's fair to say, you know, there's concern across the political spectrum about whether the civil service has the capability to deliver, there's been a lot of criticism from across the spectrum. So we were pleased to see that commitment in there. Is there any reason why Antenio Remiation be pressing on with that agenda? No, not at all, yeah, and it goes to the sort of good news happening under the bonnet, has often happened with this government that hasn't for all sorts of understandable reasons had that much attention, but that we were delighted by was to see that. I might say we're about to roll the cabinet secretary generally in a second in this sort of crisis, but yeah, to your question, and it's absolutely for Antenio Remioh as the head of the civil service and cabinet secretary to push and lead a reform agenda. It's interesting to see more energy behind that agenda since she came into her job, Chris Wermold and Simon Case, while they talked about the capability of the civil service a bit, I don't think gave it the same sense of agency and priority. One of the things I think we would like to see now, but also anyone who cares about the effectiveness of the government machine would be for, you know, it not to be dependent on Darren Jones or on Kierstammer, particularly doing something to make progress with both the very short-term things that we think need to happen in the civil service around kind of workforce and performance management and so on, but also as, you know, we learn that Antenio Remioh wants to do, pursue a kind of medium-term settlement about the civil service to really think about the accountability of the structures and the nature of it. That is, you know, while all civil servants operate under ministerial authority in the system that we, you know, that we have, it absolutely is incumbent on a cabinet secretary to pursue this sort of agenda because that is their job, you know, as they are also head of the civil service, I do think slightly more kind of, you know, immediately there's a really interesting role for a cabinet secretary in a crisis like this and the way I think of it, you know, having seen I was, while Charles was in number 10, I was Jeremy Haywood's principal private secretary seeing him try to hold the threads together from the cabinet office and that's the analogy I would use. I think there is something about a strong cabinet secretary when other things are uncertain and those across government are looking for a kind of a load star of, you know, what to do and how to approach the nature of decisions or what's going on for a cabinet secretary to kind of hold those threads together and be able to set out, you know, as Cath is been saying, what the kind of constitutional position is, but also to say actually, yeah, the prime minister has given us license to do this and this, but I don't think we can do that. And just to sort of hold all of that kind of complicated set of relationships and to provide such a sense of direction as a civil servant can is a really important role of the moon. I just, while I've got you, Alex, want to talk in one of the questions which has come in and we've got some great questions coming in. Keep sending them and keep up debating the ones that you want to hear, Cath, Alex and Charles answer. But one saying given the uncertainty about Starmer's main time in office and his recent treatment of Oli Robbins, how can the government operate effectively with a disgruntled civil service? Is that your reading of where we are, Alex? I think, you know, somewhat unnerved by the Oli Robbins stuff, I think I'd say frustrated by, you know, aspects of the way that number 10 has operated to Charles's point about decisions going to die. I don't actually think disgruntled. I think, you know, it's slightly meft at times, but the civil service should and normally is kind of, you know, big enough and ugly enough to kind of accept that sometimes they'll get criticism for things. But what the civil service, I think, really wants to see, is kind of agency and direction and movement. And or certainly the best of the civil service does. And so whether it's Kirsta or Andy Berner or anybody else, what the civil service will be desperately hoping is you have a government that can use this big majority to make progress. There are still quite a lot of-- you look at the King's speech. You look at some of the public service reform that we, the government, started to set out a direction, but still has an awful lot of the detail to work through on, you know, how police service reform is going to work or the kind of remaining activity to be done on the abolition of NHS England, the policy decisions around, especially educationally, I could go on and on and on. But all of these things, the things that the civil service will be saying, well, come on, we need some decisions on this. And so that's where the frustration will come. I certainly, for the moment, I don't detect a load of kind of anxiety about more permanent secretary is being sacked or anything. Frankly, I don't think the Prime Minister is strong enough to do it. Yes, you want to come in there. Yeah, just I think one of the most dangerous things for the civil service is almost what happens when everyone knows a big reshuffle is coming. Because remember, this question will Andy Burnham be the next Prime Minister? Isn't just about that change at the top. It's also the knock-on effects that's going to have all of the big jobs we're already hearing lots of chat about, who will be Burnham's go-to chancellor. There'll be-- there are obviously plenty of Burnham supporters in government still amongst the ministers. There are some, no doubt, who were streeting supporters. And there are some who are firmly in the Starmer camp. And there's probably a few who are thinking about the top job themselves if Burnham is unsuccessful. But just getting into all of that speculation of, if you're in a particular department with my minister, be going up or down, or they be in or out, that's really dangerous to suspend your time focusing on that. When it comes to reshuffles, it's not really the civil service's fault that all they can do is sit and refresh X or blue sky or whatever it might be. Because there's not a lot else that anyone can do in those moments. But in this kind of prolonged speculation leading to what could be, even if Starmer's Day is on, we could see a sizable reshuffle in the aftermath of all of this. You've got to get on with the minister that you've got. You've got to get on with the policies that currently exist, because that is the government for now. If that changes in the future, then, yeah, that's when the civil service comes into the fore and does its 180 as it always does. But right now, don't get too distracted by that, because there's a huge else-- a lot else that needs to be got on with. And just building on that, Cath, I want to bring in one of the questions-- is one of the most popular questions we've got, but also link it to something we were discussing in the office earlier. So the question, none of this question, feel free to tell us who you are when you ask your questions. It's always interesting. "Predeeming Andy Burnham Wins" make field, and then the leadership, has there been any analysis of which bills from Starmer's final King speech last week might clash with or be deprioritised against his indicative agenda? And Cath, you may have thoughts on that, but I just thought it was making me think about this discussion we were having about leaders coming in, parties coming in, and the importance of being able to have enough time to prepare your agenda. It may be that the candidates who think they can take over from Kiss Starmer would like to do so, have put a lot of work into their policy agendas. We haven't seen much evidence of it yet. And of course, when you're changing Prime Minister, the same party is changing Prime Minister, and mid-pollumant, there's always a question of legitimacy around what the party's been elected to do, what they said in the manifesto, how much scope there is to change from that. But what's your view, Cath? Yeah, again, it slightly worries me about the situation that we're in with Burnham as the great hope, and sort of slight expectation that there is just an obvious path for him, because even just the last few days, when this is finally sort of broken out into the open, and we've seen the reality of trying to prepare for potential government, and for trying to prepare your policy positions through an election campaign, even if it's a by-election campaign, because already West Rietting coming out and saying that he wants to rejoin the EU has sort of forced Andy Burnham into a declaration that he does not knowing that Makerfield, how they voted during the Brexit referendum. You know, similarly, he's come out and said that he will stick to Rachel Wries' fiscal rules, that he's going to find himself in lots more positions where he's now, because he's basically declared himself as this is a by-election for his candidacy to reprimalist, you know, all of the other parties and also the journalists are going to be pushing him for what is his exact policy position, and he's presented himself as a straight talking politician, so he can't dodge the questions, you know, so you're now finding that he might have to sort of make up policy on the who far worse than even the situation Labour found themselves in, for which they have been, you know, repeatedly criticised for not having fought through policy positions before 2024, or the trade-offs involved, or, you know, finding themselves backing themselves into a corner or anything like that. So he's got to be really careful and clever in how he runs this election campaign and the kind of policy positions that he puts himself into. I'm sure he's thinking about that, but it's a really, you know, thinking about it all in advance isn't the same as the sort of lived experience, and it could end up getting quite tricky towards the end there for him. I feel like there was another part of the question that I've - or the original question. I wonder - No, but what was the original question from the - - The personal - It was about whether we know what in the King's Speech might be the problem. - Oh, yeah. Well, we'd so our read our excellent King's Speech analysis from multiple IFG's, where we talk a little bit about if it isn't stammer anymore, you know, House or the particular Minister. I mean, you know, Shabbana Mahmoud and the asylum reform is obviously one that is a particular policy sticking point obviously we'll have to see how the new health secretary approaches the health reform plans. There's all sorts of bits and pieces which are, you know, very much stammer's legacy, but again, I could imagine that he would try and push through Hillsborough Law, you know, if his premiership ends up time limited, that is something that he has very closely associated himself with. A lot of them though are things that other ministers have been working on for some years. So it depends. I think it's less going to be about, apart from those big totemic issues, I think it's more going to be about what's the fiscal situation and therefore does he need to try and, you know, weave whatever clever magic that Andy Burnham has to avoid tax rights or spending cuts. But it's also going to be about sheer time. Like the amount of bills there, there were 37 we counted. You know, if there's a new Prime Minister, they're going to want to do things. So automatically, you just can't manage that amount of work so some things will fall by the wayside. So I think there will be a bucket, that are political, but there'll also be a bucket which is just pragmatism for sheer time. Charles, can I ask you to pick up on something, Cath, for 30 there? I mean, in practice, how much flexibility is a new Labour leader going to have to make different policy choices given the state of the country's finances? And if I link that to one of the questions that has come in from the on the slide, a non-unless asking, is the problem that neither Stoom or Tori MPs before, nor those who seek to follow have offered any clear vision of the answer to the big difficult questions that the UK faces, big long term structural, economic, fiscal and social problems? Well, look, we've got the answers. Well, look, there is something to that charge. There's a really strong, steep and bush columns down here about the lack of deep theory and the Labour thinking about trade-offs, but lies at the root of all their current difficulties. So the assumption, I think, that when they came in, by taking the job more seriously, not being quite as sort of a callous as the predecessors, they would somehow make things get better and maybe just hoping for a bit of luck, which they have not had. So yeah, there is that lack of theory. And I don't think anybody can yet detect in Burnham a very, very clear alternative approach for it. But just because I mean wholeheartedly, what I said about the fiscal limits that they should all struggle on, there doesn't mean there's no flexibility whatsoever. For a start, not all policy is fiscal policy. So the idea that absolutely everything involves wondering around putting little bits of money here or there, and otherwise you're just the same as the previous government. No, neither, none of us should ever fall for that. I mean, some of the great reforming governments of all time have done so while putting food periods of austerity in then notably at least, of course. But you wouldn't say that Margaret Factor failed to change the country because she wasn't continuously trying to find ways of spending more money. So that's the first point. The second, within the fiscal envelope, there are really large options that you can pursue. I mean, I wouldn't say that everything in it is good, but people should read the Tribune series of essays that have come out recently under the sort of edictorship of Louis Hay and really others. sort of good MPs, I think one of them. And there's really big tax reformer ideas, like looking at the VAT threshold or changing the way property tax and so forth is done. And the third thing I would say is, a new prime minister was meant to mean a new set of choices, just as it was when Boris Johnson took over from Theresa May, he was able to strike not a very IFG approved, but different set of bargains over Brexit that kind of broke that dead log, which was what his party at least wanted. Likewise, Burnham could come in and say, "Yeah, if it is Burnham, we should keep saying that." I was on a signatory to these pre-election promises. Everyone now agrees that we made some serious mistakes there. We've got a blank sheet now. I'm gonna go about this in a slightly different way. I mean, he could earn a lot of love from the business community for trying to revisit some of the early tax decisions and try to do it in a different way. And this is what the point of political leadership is. It's not to take the existing constraints. So obviously, and I'm sure this is an angle we're gonna point, don't destroy things that are going perfectly well. And don't pretend that this government hasn't achieved things. Like, I for one, would be pleading with a nox, it doesn't mess around with industrial strategy yet again, which seems to happen every time we change prime minister. But, you know, there's real leeway there. And the last thing anyone should go into government for is just thinking that they're gonna be, they're gonna be as able a captain of the ship sailing over the same waterfall. They can do different things. - Great. I think I might be the first optimistic answer we've had on this podcast. Thank you, Charles. - Thank you. - Charles, can I come back to you and just push a bit on the constitutional side of what Charles was saying there. I mean, do you think we have the right rules about parties changing leaders in the middle of a parliament? We've had a lot of churn of prime ministers over the past decade. A lot of people pointing to the fact that that has caused instability, uncertainty, lots of policy reversals, changes of approach, changes in industrial strategy, as Charles said, all sorts of things which don't necessarily add up to good long term policy direction for the country. Is there a constitutional problem there? - It's hard to say because the logic of where the constitutional change takes you is such a huge change that we'll be thinking about. - But just build up. - Yeah, yeah, just to go through it. So you are prime minister because your party has a majority. You are not elected as prime minister. Now of course general elections give a certain degree of personal mandate to the person who was leading the party into the general elections. And there is some association with that. There is obviously some constitutional importance to the manifesto on which you're elected, particularly in terms of your relationship is the House of Lords. But nonetheless, it is the party that is the party of governments and it is the support of those Labour MPs that makes you prime minister. And once that support is gone, then the party is constitutionally entitled to sort of say we need a different leader because to govern we need to be able to get behind somebody to get. To govern is to be able to get your business through Parliament and to not be voted down by Parliament who is the ultimate sort of arbiter of these things. The changing it is effectively opening the door for should we be having directly elected premiers or presidents or whatever. And that just starts to take you into much greater territory. Now arguably, yeah, maybe that could give you some greater permanence. Maybe we should make it much harder like the US starts to get rid of the sitting leader of the country, but I'm not sure people would look to the US right now for lessons on that front. And I mean it does open up all of these questions that Charles is making. We are not talking about keystarm but potentially stepping down, being replaced because he's doing a perfectly fine job and just people are wanting to replace him for their own sort of careers. Although that is a factor. But Charles is also right. Obviously, Kisdana has done some staff during his premiership, particularly on the international foreign policy security front and in dealing with a very volatile US president. But it doesn't change the fact that, yeah, that's stama and number 10, because it's not just stama. They're worrying about why they got into this situation. They only need to go and look in the mirror. There have been difficulties for at least the last year, which has led to all sorts of examination of, you know, the frustrations, all sorts of resets and so forth. And yet not changing any of the underlying things. Some of which is ultimately about party management. I do think the size of the majority causes you problems that people don't really think through. Probably you just take for granted that you've got a majority. Actually, it just means that managing your party and not just disciplining. You always talk about party discipline. It's not. It's managing your party. It's listening to your party. All of these things are so much more important when you've got a large majority because it isn't the other political parties that are going to cause you problems. It is keeping your own party on side. And it's also just the nature of how stama rose and the sort of, you know, post-corpain era. Labour haven't really exercised though that debate about left versus sort of centre, centre, right of the party. And that's what we're seeing at the moment. It isn't just a personality debate going on. We are also having a policy debate because, you know, the McSweeney Project had managed to sort of get control of the reigns of the party, but it hadn't won the argument. And I think that's the difference. And that's what the next, you know, or the current Prime Minister needs to sort of think about is how do you actually take people with you? How do you persuade people? And with it, how do you persuade the rest of the country? Because, you know, you can't just tack constantly to multiple different positions. Eventually, you've got to start persuading some people. Alex, can I come to you that there's a question that we've been asked repeatedly over the last week or so by journalists so much so that I decide that I should just have to write a comment piece setting out my view. This question is, is the UK becoming ungovernable? But I just want to link that and ask whether you think the frequency with which we have changed leaders in the UK over the last decade is a symptom or a cause in this scenario. Is it because the UK is getting harder to govern that we have had more Prime Ministers or have we had more Prime Ministers because the country that is making the country harder to govern? So I'm going to have my cake and eat it and order more cake on that. Because I think I will, yes, it is a symptom. Yes, it is a cause. I would also like you to dispute the premise that Britain's ungovernable. So sort of all of the above on the ungovernable point and yes, to plug the piece you wrote at the back end of last week, which sets out really well, I thought. No, of course Britain's not ungovernable. Governing is really difficult for all the reasons that we've talked about, but absolutely choices can be made. You know, things can get done. And we are and continue to be a functioning society with a broadly functioning government. I think that the line in your piece and that really landed with me and I think should land is to say, oh my goodness, everything's ungovernable. It's an abdication of responsibility. It's sort of it's just the easy sort of these are all exogenous factors and there's nothing we can do about it. And there we go. It denies agency for all of us in the sort of you know, think tank and kind of Westminster, while adjacent world for ministers as leaders civil servants and others. So I think it's a really unhealthy way of thinking. On the symptom cause, I mean, it's a symptom of some of the challenges of governing over recent years in all sorts of ways. The most obvious one I suppose is going back to 2016 and whatever outcome you wanted from the Brexit referendum, it led to an eruption of, you know, it fundamentally changed the nature of politics. As referendums tend to create a different dividing lines led to an eruption of challenges in parliament. You know, why did David Cameron's premiership end? Why did Theresa May's premiership end? Because of, because of Brexit. And so there are kind of structural and opinion developments that have, you know, of which changing prime ministers is a symptom. Equally, a cause, you know, Boris Johnson achieved many things, but in the end was forced out of achieved some things. But in the end was forced out of office because of, you know, decisions he's made and personal shortcomings and so on. Rishi Sunak, this trust, you know, similarly and more rapidly, Rishi Sunak, because he lost an election, Kierst Dalma for all the reasons that we've been talking about. So again, the kind of, and the reason why the ungovernable thing is so pernicious, is it's the quality of the leaders in various ways. You know, if Theresa May had been a different leader, maybe she would have won that majority in 2017 that would have cut the Brexit Gordian knot that would have set us on a very different, path similarly with all the with all the others. So yeah, that's a long way of saying all of the above I know. Thanks. Charles, I want to come to you. You win the prize to get to answer the most popular question we have on the slide. Also an anonymous question. Do you think there is a broad demand for a change of prime minister among the public or will this exacerbate cynicism in government by aren't about cynicism, I guess it means cynicism about government. By underlining the MPs are more interested in Westminster political drama than in governing the country. Well, you know, this is the interesting thing we don't comment on politics. So we don't want to pretend that what I can say is this is what the British public wants and therefore this is implicitly what we're demanding. But I would say this is more MPs want it's not like, oh, it's quite dull this may. Why do we have a leadership campaign to brighten things up because that's really a lot of fun. This has happened because MP feel they've reached a desperate straight. They feel that they've got a prime minister who doesn't command their confidence and doesn't command the public's confidence. I mean, it's a matter of massive speculation whether a new leader will therefore be much more popular. But when you reach the point where you're worried that the guy that you've put in charge, if you put his face on a policy that you want to happen, it becomes less likely to happen because he's unpopular because he doesn't command MPs support. Then you have a serious problem and they're trying to address it and it could be addressed to it. He could change very rapidly into being the sort of prime minister that they wanted all along or they can get a new leader. But I think emphasizing the point calf made from a constitutional point of view, but it was sort of a moral one, people voted for a party and they voted effectively to get rid of the Tories. We never know what would happen under other leaders, but I think most voters would be saying to themselves right now, we voted to get rid of the Tories. We didn't vote to say you are and should forever be our prime minister until there's another election. That's not the way our system works. I don't think the voters will necessarily be acting like they've had a rug pull here. Hey, I thought we were getting here stung for five years and now we're not. They voted to get rid of the and they were and they voted to get rid of the last government and then we voted for a new one to come in and deliver a big program of government. The prime minister is normally very closely associated with it, but not absolutely the same thing. It's a very good point. Caff, there is a scenario touched on it, but it would be just good to sort of talk it through. This is scenario obviously and it's not an unlikely scenario given the precariousness of the polls, where Andy Vernon doesn't win the Make a Feel by election. What happens then? Yeah, I just don't know. I mean, I think in the short term probably, you know, the Labour Party sits and nurses, it's bruises. You know, the obvious candidate before sort of last week or so was would have been this is the opportunity for where's streeting then, right? That's what we would have been saying a week ago is like, okay, Burnham's out for the count. Streeting is obviously, you know, the next person, but we have seen a near leadership challenge where certainly from number 10 is arguing, streeting didn't have the numbers. Even though 81 MPs at 20% of the party to support him on a challenge, obviously his camp argued they did have the numbers, but nonetheless something went on there. But worse still is the fact that the briefings that have surrounded all of that suggest that there is a lot of stop streeting feeling amongst the party. And now you've got, as I say, new polling out suggesting that Starma is more popular amongst the Labour membership than streeting by quite a way. So it kind of feels like that obvious, you know, second candidate has missed their moment. That again leaves it open for others. We have heard rumblings of, you know, both Ed Miliband and Angela Rainer, you know, only if asked would be willing to serve, only if somebody twisted their arm and just said, like, you know, we must have you. So there's still a lot of, you know, we can't continue with Starma. For the reasons Jarl says, you know, his polling is really, really bad amongst the public and a lot of Labour MPs are looking at their own constituencies seeing the electoral results that reform achieved at the locals and thinking, well, that's me done. So that probably isn't going to change. But there's a good chance that they just all take a breath. You know, particularly as I say, if the sort of crisis looming starts to rear its head more tangibly, you know, particularly world events take over just to simply sort of take stock and so forth. And again, look at the sort of contemplate the abyss that they've been looking at for the last few days or weeks or however long it's been, it feels like forever. And just sort of say, look, maybe we just need a pause on all of this, but it could be that the momentum against Starma has just gone too far and somebody else decides to launch it. I feel like streeting isn't done, no matter what the numbers say. Obviously he's out of government now, so can do much more. So yeah, I'm kind of 50/50 on either. This could suddenly be a turnaround for Keir Starma and consolidation. There are some numbers that suggest there's that opportunity for him. But on the other hand, that's the if you can change thing, and you know, as we know, it's very hard for Prime Minister to change the mood of operating once they've kind of got into, got into the routine of it. Alex, I'm going to give you a last question that's come through on the side, which seems a good one to end on. I mean, we have in this slipped into sometimes, I think, a bit of some of the assumption that there's definitely going to be the leadership election, as Kath says, particularly if Bannon doesn't win the by-lection, then they will not be won at all. We have an anonymous question, maybe we'll week on, from catastrophic election results. The PM remains in number 10 and Wes Streeting, as Kath was saying, failed to mount a successful leadership challenge. Is the reality that the Starma operation has done a relatively good job of keeping him in office? Yes. I mean, he's done the bureaucratic street fighting. He's used the power of Prime Minister. He's sort of that cabinet meeting. We could go today as we're recording this. He sort of stared down or kind of pushed out rivals by virtue of refusing to talk about the question. And in the short term, yeah, that's a good job, I suppose, the concern is that it maintains a position of Stasis where you have this odd position of very senior members of the cabinet sort of quasi expressing no confidence in the Prime Minister, thereby undermining his authority, a good chunk, maybe not the majority, but a good chunk of his parliamentary party who gone public saying we don't have confidence in the Prime Minister, we wanted him to set out a timetable. So the risk is you end up in the worst of all possible worlds. And in a way, you want this process needs to find a moment of catharsis at some point, whether that is a leadership contest in which Kirstalmer might stand and might win, or whether it's some other means of kind of coalescing around Starma or something else. At the moment, it feels uncomfortable unsatisfactory and where, you know, for all we've said about government can continue, the big stuff is going to be very difficult to get done. I suppose the thing, and I'll try and avoid you know, it's strained too far into politics and political analysis, but there are these large parts of the kind of opinion, British public opinion, and opinion within the Labour Party that appear very difficult to reconcile. We talked a bit about the pro EU dynamic, the you know, questions around the size of the state, these other sort of very big questions, socially liberal immigration is a huge sort of issue that causes fissures. Who is the politician? Who is the leader who is going to create a governing coalition in whatever form that can get stuff done? And I suppose to try and remove optimism, whether it's Starma, whether he can change and do that and sort of avoid facing all directions, whether it's Burnham, Milliband, Streeting, anybody else. It feels like we need a moment where the kind of the coalition of forces in the country need to be marshaled, and it's that again, theme that which we often come back to, that governing craft that marries the political and the communication with the administrative and who is the person who can do that, who can kind of take this moment and move on from it. That all sounds a little bit pompous, but I do think that's what is needed at the moment. Brilliant, and a good note to end on. Thank you so much, Alex. Well, I pray that's the end of the webinar for today. Thank you to Cath, Jarls and Alex and to everyone at home for sending in your questions. Suspect, this may be a topic that we will return to in the weeks ahead, so do you keep in touch, keep looking at our website for analysis and follow us on social media. And if you're navigating away through this yourself, thank you and good luck. The IFG is always here to help. Bye everyone.

Podcast Summary

Key Points:

  1. The Labour Party is in turmoil after poor local and devolved election results, with over 80 MPs calling for Keir Starmer to resign and Andy Burnham preparing to run in the Makerfield by-election with the intent to challenge for the leadership.
  2. A leadership contest could distract the government, delaying decision-making and affecting the civil service, but the government continues to function in the short term.
  3. Comparisons are drawn to Theresa May’s final period in office, where she maintained authority despite being weakened, and lessons are offered about focusing on legacy and getting things done.
  4. Market concerns about political instability are noted, but the primary driver of recent bond yield rises is geopolitical events like the Iran War, not leadership speculation.
  5. A leader who can command party unity and govern effectively is seen as beneficial for markets and governance, regardless of who it is.

Summary:

The webinar discusses the volatility in UK government following Labour’s poor election results, which have triggered calls for Prime Minister Keir Starmer to step down. Andy Burnham, the Mayor of Greater Manchester, is expected to contest the Makerfield by-election and, if successful, challenge Starmer for the Labour leadership. The panel explores scenarios: Burnham winning could lead to a leadership contest, while losing might bolster Starmer’s position.

The distraction of internal politics is already affecting government operations, as ministers spend time on factional discussions rather than governance. However, the King’s Speech and departmental work continue. Drawing parallels to Theresa May’s tenure, panelists argue that weakened prime ministers can still govern by focusing on legacy and pushing through decisions, though authority is diminished.

Market concerns about instability are partly valid, but the main driver of recent bond yield increases is geopolitical events like the Iran War, not leadership speculation. Ultimately, the panel emphasizes that resolving the leadership crisis—whether through Burnham or Starmer—is crucial for restoring effective governance, as a united party can make decisive decisions and reassure investors. The key lesson for Starmer is to act with urgency, using his remaining time to deliver on policy and leave a lasting legacy.

FAQs

The volatility is driven by Labour's poor local and devolved election results, with over 80 MPs calling for Keir Starmer to step down. Andy Burnham is set to run in a by-election and may challenge Starmer for the Labour leadership.

A Prime Minister can still govern by focusing on executive decisions and bargaining with colleagues, but it requires concerted effort to avoid distraction from political infighting.

It could slow decision-making and create stasis, as ministers and civil servants become preoccupied with political maneuvering. However, no official restrictions on civil service activity exist.

Civil servants continue working, but distractions from leadership contests may delay decisions and reduce focus on the legislative agenda, like the King's speech.

He should focus on legacy and push through key decisions quickly, similar to Theresa May’s approach in her final months, to ensure meaningful action before leaving.

If Burnham wins, he may challenge Starmer for leadership, but if he loses, it could strengthen Starmer’s position. The outcome is uncertain and depends on broader political and crisis factors.

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