Where next for a Labour government?
Following the election results, and announcement of key ministerial positions, Labour’s resounding and decisive majority comes with an interesting paradox — a low vote share, compared to the combined vote share of the remaining parties, and the lowest ever level of voter turnout.
Therefore, the political focus and priority for the immediate future from Labour will likely be two things — first, economic security; delivering a turnaround in economic fortunes for the vast majority of voters (the surge amongst far right political parties overseas as well as in the UK marks a period of deep economic insecurity), and second, democratic renewal; renewing democracy, confidence and people’s relationship with Parliament.
The nation stands at a critical juncture and emergence from polycrisis, following more than a decade of austerity, a world pandemic, a cost of living crisis, climate change, major foreign policy challenges, and disruptions to work and life due to the use of AI. These can be juxtaposed with growing awareness that science and evidence matters, but also that the age of technocracy has failed Britain, with increased citizen demands for more inclusive governance and a more secure and sustainable future .
Against this backdrop and context, in this article, I explore the likely future direction of travel for the Labour Party — and broadly divide these up into what I think will be short term (1–5 Year), medium-term (3–5 Year) and long term priorities (5–10 Year). By short-term, I refer to the immediate, pressing actions in the current election term, taken to ensure and secure a second term of government. By medium term, I refer to the likely issues that both a first and second term will need to engage with. And by long term, I refer to the types of issues that Labour will need to secure a second term for, in order to meaningfully move the dial and effect change.
The Short Term: Economic Policy: Tackling the Cost of Living Crisis
Labour is expected to adopt a measured approach to economic policy, emphasising both predistribution and redistribution, with a focus on maintaining confidence from investors and business by offering stability as well as change. This will be a tricky balance for the party in power to strike. Predistribution aims to improve economic outcomes by altering the distribution of market incomes before taxes and transfers, through policies such as strengthening and raising minimum and living wages, strengthening labour market regulation, and enforcing fair pay, and both Ed Miliband and Rachel Reeves have been deeply influenced by this concept in particular.
This is likely to be a key lever, given that Labour have ruled out hikes in a number of progressive taxation mechanisms (income, VAT, corporation and national insurance) and will be reluctant to renege on electoral pledges early in their government. However, they will continue to freeze tax rates until 2028, which means, alongside inflation, that more people will experience ‘fiscal drag’ and be ‘invisibly’ taxed on increased wages. We are also likely to see increased focus on growth and productivity as key levers for economic security and investment — both have the potential to increase tax revenues without requiring an explicit tax hike as such, and as the Resolution Foundation’s recent Economy 2030 Inquiry illustrates, there remains significant potential for improvement to Britain’s productivity levels, through increased investment in the use and adoption of new technologies, and through targeted investment in cities such as Liverpool, Sheffield, Manchester and Birmingham.
Aside from all the taxation mechanisms that have been ruled out, Labour have been quiet on the notion of wealth taxation, a concept that has gained traction in recent months in left-leaning policy circles, as well as on windfall taxation on fossil fuel giants, also popular amongst left leaning thinkers. We are, however, unlikely to see wealth taxation adopted in a first term, and it seems more likely that Labour will reach more proactively for broader fiscal policy levers such as borrowing and investment in its earlier terms. That will be an incredibly tricky balance to strike as Labour has also committed to reducing debt as a share of the economy by the fifth year of Parliament.
The Short-Term: Citizen Participation and Democracy
The low voter turnout will remind the party of the importance of democratic renewal. The first document Labour will turn to will be the Brown Commission’s recommendations. Sue Gray is also widely expected to play a leading role in shaping the agenda it sets of ‘cleaning up Westminster’, given her formidable reputation as a civil servant over many years in maintaining the integrity of the civil service as a profession. Enhancing citizen participation and strengthening democracy will likely be central to Labour’s vision, and we may see increased deliberation such as citizens’ assemblies form a core part of the government’s agenda yet, despite internal pushback from many within the Labour Party. This will be one dance-off to watch (Technocrats v Democrats), ideally with a large bag of popcorn.
More seriously, the Brown Commission centred the notion of an elected second chamber in lieu of the current House of Lords, but there is much to consider in the detail, as UCL expert Meg Russell illustrates — particularly around the relationship with, and inclusion of devolved administrations. Additionally, Labour is expected to push for increased transparency, greater accountability for public officials, and enhanced mechanisms for direct citizen engagement in policy making processes. It will be important to see the extent to which these are substantive, rather than tokenistic reforms- much has been promised before and not been delivered, and the extent to which these are adequately resourced.
More broadly, however, the promise to change Westminster itself bodes well with the people the new administration brings — an intake of a new generation of MPs promises to inject fresh perspectives and energy into Labour’s ranks. These include prominent thinkers and politicians such as Olivia Bailey, Torsten Bell, Liam Conlon, Damien Egan, Kirsty McNeill, Andrew Pakes and Sarah Sackman. These new MPs, more diverse and representative of modern Britain, come unencumbered by the previous New Labour era, and are widely expected to push for progressive policies and innovative solutions to contemporary challenges. Almost half of the new intake have served as local councillors, a relatively new development in Labour party politics, which has historically been critiqued as being top down. Their influence will likely be seen in areas such as technology, human rights, climate action, and double devolution, and their experience of local government is likely to (unconsciously) reposition the party as being less technocratic and top-down, with strong sympathies for devolved and community administration. But these are also a comparatively inexperienced group who will need to get their heads around the nuts and bolts of parliamentary procedure and process, and there is a risk that the party defaults to its, well….default tendencies, rather than allowing space for the fresh perspectives and change it promised. Starmer promised to change Britain, but how willing is he to allow change within the party?
The Short-Term: (Anti) Immigration Policy
As ever, Labour faces a delicate balancing act on the polarising issue of immigration, given the significant vote share of the Reform Party in key constituencies and the contentious nature of the Rwanda scheme. As a consequence, there are risks that no one really knows what Labour is all about in this area. Starmer has already scrapped the Rwanda scheme — a longstanding Labour pledge, even though the ink on most MPs’ employment papers are not yet dry, following announced plans from Cooper to tackle small boat crossings. Rather than relying on narratives about the ethics of the scheme, or about immigrants contributing or creating value, however, the Rwanda scheme was criticised by Labour leaders for its practical shortcomings. At present the party’s narrative on immigration risks sounding confused and muddled, informed by a wide range of views in the party reaching all the way from Liam Byrne’s strategic invention of the term ‘hostile environment’, longstanding ‘Blue Labour/nostalgia’ leanings through to those core party members who demand the removal of the hostile environment all together and the need to detoxify attitudes towards immigrants. Yvette Cooper, in her new role at the Home Office, has the unenviable task of offering strategic leadership and creating coherence out of the mess.
This mixed and muddled stance will be something that the parties in opposition (whether that be the Greens/Lib Dems, or the Conservatives/Reforms) will be looking to exploit. In recent years, Ipsos/British Futures public attitudes data has shown a progressive shift from many who look favourably on immigration, and a growing aversion to deterrence based policies, so Labour’s historic stance may not necessarily age well. If Labour are to do more to lead and shape the narrative, rather than follow the debate, the polling also illustrates that among those who have become more positive about immigration since the EU referendum, most say it is because of increasing awareness about the contribution of migrants — especially in key health and social care services following the pandemic.
The Medium-Term: A Green New Deal — Energy Policy
The narratives of a just transition and job creation connected to climate action (‘Green New Deal’) have been around for a while in Labour circles. Investment is likely to be expensive through increased borrowing in a Keynesian style multiplication move, so in the short term there will likely be a decision to focus tactically on the ‘quick wins’ needed to effect climate action whilst simultaneously tackling the cost of living crisis, such as the Warm Homes insulation guarantees, balanced by some longer term investments — the Labour manifesto focuses in particular on energy policy, with core measures including investing clean energy to stabilise the cost of fuel bills through ‘Great British Energy’, investing into carbon capture, and more controversially, into green hydrogen. Labour will need to balance these measures up against the implications for large swathes of the UK workforce, who rely for their livelihoods still on the oil and gas industries, considering investment in new green jobs and ensuring that the benefits of the green transition are broadly shared, mitigating any adverse impacts on workers and communities currently dependent on the fossil fuel economy. Some of this will be straight out of Kate Raworth’s model for 21st century economics, seeking the safe and just space for humanity on a social foundation and within an ecological ceiling:
The Long-Term: Rebuilding Social Infrastructure: Investment in Public Services
Historically, the Labour Party has fared well on the issue of public service investment, particularly in relation to the issues of NHS waiting lists, dental care, child poverty, housing, and education. We are likely to see various iterations on the old New Labour theme of public service investment, however — the notion of ‘cradle to grave’ public service will aim to consider levers beyond free at the point of use healthcare from the NHS (although there is plenty to focus on there as well…). Some of these key levers will likely be childcare, investment in early years and on the job/skills focused education (we might well see a reboot of successful, evidence based initiatives and programmes such as Sure Start), as well as in social care and in holistic healthcare reform that takes account of mental health as well as physical health. There will also be a focus on reviving the higher education sector (with 10 year budgets) and taking a balanced approach to prisons — the underinvestment and funding crisis in academia and increasing risks of university insolvencies, as well as overcrowding prisons pose particular political risks to the new government. We are also likely to see renewed focus on lifelong learning and skills — seen as particularly high priorities in an era where a just transition to net zero and increased use and adoption of AI is likely to create new opportunities and demand for new skills.
Conclusion
To conclude, the new government’s path forward is marked by a complex landscape of challenges and opportunities in the era of the polycrisis. The immediate need to address both economic insecurity and democratic renewal opens up the opportunity for transformation, but only if the government manages to follow through. A focus on predistribution as well as tackling the cost of living crisis, growing the economy and increasing productivity in underserved regions will likely be a key focus for policymakers. This practical action will need to be paired with a commitment to enhancing citizen participation and strengthening democracy to address low levels of trust in the political process. On immigration, Labour faces the delicate task of balancing practical solutions with humane and coherent policies that resonate with public sentiment. The abolition of the Rwanda scheme signals a move towards more ethical approaches, but the party needs a much clearer and unified stance to navigate across the polarised landscape effectively.
If successful in the short term in reducing energy bills, a medium-term priority of advancing large scale strategic investment through a Green New Deal has the potential to reflect Labour’s recognition of the urgent need for climate action. By investing in renewable energy and green jobs, Labour will likely seek to foster a just transition that mitigates the economic impact on fossil fuel-dependent communities whilst ensuring the UK can deliver on its net zero targets.
In the long term and if history is anything to go by, Labour’s vision for public services is likely expansive and holistic. A “cradle to grave” approach promises comprehensive support across healthcare, education, and social care, ensuring that public services are robust, equitable, and adaptable to future challenges. Addressing the risks of university insolvencies and promoting lifelong learning will be crucial in preparing the workforce for an evolving economy driven by AI and net zero technologies.
The potential for a new Labour government is great but, as ever, the scale of ambition must be matched by equally effective implementation, thoughtful public engagement, the ability to balance the short and the long term, and the pragmatic skill to navigate the political and economic complexities in the UK and international landscape. This will be a challenging pivot, for a party so used to opposition in 14 years.
Reema Patel has authored this piece in an independent capacity. Formerly, she served as a Labour councillor for 8 years in a marginal constituency, has over a decade’s worth of experience in a wide range of public policy areas, and is an experienced public attitudes social researcher.
