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During the 2008 global financial turmoil, Rahm Emanuel, former US President Barack Obama’s chief of staff, said: “Never let a crisis go to waste.” This advice was seized on by UK Prime Minister Keir Starmer last week when he carried out his first major ministerial reshuffle ahead of the UK budget in November.
The change of Cabinet was driven by the resignation of Deputy PM Angela Rayner after an ethics inquiry found that she breached the UK ministerial code by underpaying around £40,000 ($54,000) in tax during a recent property purchase.
Faced with this political shock, Starmer decided that the best form of defense was offense and launched a wide-ranging reshuffle. This resulted in the appointment of a new deputy PM, David Lammy, and new holders of two of the so-called great offices of state, with Yvette Cooper as foreign secretary and Shabana Mahmood as home secretary.
Beyond this, there has been a wider ministerial shakeup. Finance Minister Rachel Reeves and Defense Secretary John Healey were the only Cabinet ministers to retain their portfolios. This reflects the importance of their roles within this government, with the political fate of Reeves, in particular, increasingly tied to that of Starmer.
After a challenging first 15 months in office following Labour’s landslide election victory in 2024, the key question for Starmer is whether his government can recover much of its previous support. It needs to do this in the face of an insurgent Reform UK party, led by Brexiteer Nigel Farage, which has a clear lead in UK-wide opinion surveys of up to around 15 percentage points.
With UK politics in flux, Starmer needs to rejuvenate his government — that is, reverse mid-term political unpopularity to increase seat count at the next election — in a way that no previous Labour leader has been able to do other than Harold Wilson in 1966. In that year, the then prime minister called a snap election because his government, elected 17 months earlier, had only a slim majority in the House of Commons.
Wilson’s gamble paid off when he won a significantly larger majority, boosting his MP seat count from 317 to 364.
However, on other occasions when Labour has been in power, the party has tended to win significantly fewer, or around the same number, of seats as at the previous election.
Certainly, it is difficult for incumbent parties to renew themselves in power in this way. Nevertheless, the Conservatives, sometimes described as the most successful party in the Western world, have managed this feat more often. In 2019, for example, Prime Minister Boris Johnson won a majority in the House of Commons, moving the Conservative seat count up to 365 from 298 at the 2017 election under his predecessor Theresa May. Another example came in 1983 when Margaret Thatcher increased her election-winning tally to 397 seats from the 339 gained four years earlier.
This historical context illustrates the challenge Starmer faces. The next year of his premiership is likely to be defined by two key events — the annual budget, led by Reeves, on Nov. 26, and the UK’s devolved and local elections next May.
Starmer’s government needs new momentum if it is to change the fundamentals in Labour’s favor.
Andrew Hammond
The budget will be a major occasion for the government, which has repeatedly declared economic growth as its leading priority. It comes amid growing warnings that Reeves will need to make significant, further tax increases and/or spending cuts in order to meet her self-imposed borrowing rules. These insist that day-to-day government costs will be paid for by tax income, rather than borrowing, by 2029-30, and also that debt will be falling as a share of national income by the end of this parliament, with the next election no later than 2029.
While these rules may make economic sense, they come with political pain, not least because Reeves has left herself with a fiscal buffer of only around £10 billion, and Labour pledged in its 2024 election manifesto not to increase taxes on “working people,” including income tax and the UK’s value-added consumption tax.
This in an economic landscape, too, where long-term borrowing costs recently rose to the largest level since 1998. So, it is increasingly expensive to repay government debt.
Over the summer, the independent National Institute for Economics and Social Research think tank said that the overall gap in the public finances could reach as much as £50 billion a year. While that may be a significant overestimate, it is clear that Reeves has some big decisions to make on the spending and taxation fronts in November.
The second key moment for Starmer will be May’s devolved elections in Wales and Scotland, plus the local English council ballots.
The Welsh ballots, where Labour has held power in Cardiff for over a quarter of a century since devolution, could be especially challenging. Polls in recent weeks indicate that Labour is now in third place, behind Reform UK and Plaid Cymru, the Welsh nationalist party.
In Scotland, the Scottish National Party is well ahead in polls, with Labour second. So, the governing SNP is favorite to become the largest single party in Holyrood, despite being in power for almost two decades.
Taken together, Starmer now has an unexpected window to get on the front foot ahead of the budget in November. His government badly needs new momentum if it is to change the fundamentals of May's elections in Labour’s favor.
- Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.