Opinion: Labour’s Catastrophic First Six Months

The Labour Party did not win the July 2024 general election; the Conservatives lost it. Such an underwhelming but critical distinction ultimately laid the foundation for this government to turn out to be among the worst in modern British political history.   

For Labour to have earned such a distinguished label in just the first six months of the parliament would be a feat if it wasn’t a prize for having strangled the growth potential of the British macroeconomy, undermined civil liberties and individual freedom, grossly compromised our national security, and inadvertently thrown petrol on the far-right fire through incompetence and hypocrisy.  

After more than fourteen years of consistent failure and abandoned manifestos, fundamentally unconservative governance and rampant sleaze, the electorate was understandably itching for a change from Tory rule. Retrospectively unfortunately for Britain, the primary beneficiary of such undercurrents was Sir Keir Starmer’s Labour Party. 

In the years following Jeremy Corbyn’s historic defeat in December 2019 right through to the July 2024 campaign, Starmer’s Labour has masqueraded as a moderate and pragmatic ‘changed’ party, yet from the moment it attained office with an enormous parliamentary majority of 174, the charade was dropped and it has governed as typical Labour, very much to Britain’s detriment.  

Same Old Labour: fiscal malpractice and class warfare orthodoxy 

Let’s examine first Labour’s hitherto disastrous stewardship of the macroeconomy and their consciously anti-growth policy decisions. First, there is the £22 billion budget deficit that seemingly came out of nowhere following Labour’s win.  

In February 2024, the Treasury projected a £9.5 billion budget shortfall, which according to the new Chancellor had just magically exploded to £22.0 billion by the autumn, by which time Labour had come into power and rapidly committed an additional £11.6 billion in public sector pay rises above what the previous government had set aside. Whilst we can all agree that some level of well-deserved pay rise for the hardworking clinical staff, teachers, police and armed forces workers in Britain was absolutely warranted as inflation continually ate up the spending power of their wages; to instantaneously spend £11.6 billion on top of the funding already set aside for such pay awards (and when the government’s bottom line was already deep in the red) was thoroughly irresponsible and sets a worrying precedent.  

The point being Reeves’ posturing and claims on the deficit have been fundamentally disingenuous on that front; whilst they certainly deserve a proportion of the blame, it is not appropriate to blame the Conservatives exclusively for the £22 billion budget deficit when over half of that comes solely from political choices made by the new Labour government. Reeves then deceitfully held up that Labour-exacerbated deficit to justify raising taxes in the autumn Budget despite repeated explicit promises during the campaign not to do so. The markets are not fooled, and confidence has unsurprisingly collapsed.  

Despite promising to turbocharge growth and unshackle the economy, Labour’s first Budget in October raised taxes on businesses through raising National Insurance from 13.8% to 15% and raising the basic rate of capital gains tax from selling shares from 10% to 18% and the higher rate from 20% to 24%. Nothing screams growth and attraction for investment and expansion than that. Labour is stifling the very entities that will generate the growth and prosperity that they claim to want to encourage. There is probably a lesson in there for them somewhere as to why in the first three months Labour had been in power (the third quarter), macroeconomic growth sat at a measly 0.1%, a serious decline from the 0.5% in the second quarter before they gained power. Britain is now dangerously poised on the edge of recession.  

Despite miraculously finding the money to increase spending by an exorbitant £70 billion each year in one fell swoop in the autumn Budget (and in doing so wiping out the British reputation for fiscal credibility and destabilising the markets), unfortunately for the hardworking pensioners in Britain that had paid into the state their entire lives, there was not enough money to retain the £2.05 billion a year Winter Fuel Allowance without means-testing. An estimated 10 million pensioners will subsequently lose access to the vital benefit this winter. According to a report commissioned years ago by the Labour Party itself, some 3,850 pensioners may freeze to death or die from starvation without it. In opposition in 2017, Labour claimed that doing exactly as they have now done would be the ‘single greatest attack on pensioners in a generation’. 

To help mask the extent of their reckless spending plans which will no doubt continue throughout the parliament irrespective of whether Britain can afford it, Labour have changed various self-imposed fiscal rules to feed their spending addiction and enable them to borrow more each year by changing the definition of what constitutes government debt from ‘public sector net debt’ to ‘public sector net financial liabilities’ (which adds more assets to the equation and veils the true state of public finances and debt). Borrowing increased by £19.6 billion in 2024 and will by an average of £32.3 billion each year for the next five years.  

It is an ill-considered ideological move that has hammered British credibility even further and shocked the markets (which risks making borrowing unaffordable down the line with increases in gilt yields as we are already seeing; they are now at their highest since 2008). Instead of improving the books, Labour is just rewriting them to get their way and spend more. If trusted metrics aren’t going your way, just look at different metrics! Working through the checklist of broken campaign promises, it is yet another Labour have abandoned completely, for they had promised to fund day-to-day spending ‘exclusively through revenues like taxes’.  

The specific policy choices have been harrowing, irresponsible and in some instances downright cruel. These decisions will do absolutely nothing to bolster growth or prosperity, expand opportunity and dig Britain out of the deep hole it finds itself in. Indeed, they will make it immeasurably worse.  

Labour’s characteristic unabashed class warfare is already materialising: the share of the population of Britain who are millionaires is expected to drop by a fifth over the next five years from 4.55% to 3.62%, yet the rest of the G7 will grow their share. The UK lost 9,500 people ‘with at least $1 million in liquid, investable assets’ in 2024, more than double the figures for 2023. The Adam Smith Institute points out you can thank high (and rising) taxes – especially the abolition of the non-domicile tax status – for this exodus, in what it describes as a ‘hostile culture for wealth creators’ taking shape in Labour Britain.  

It may appear insignificant, but these high-net-worth individuals have disproportionate importance in terms of the fiscal revenue that they account for (if you look right to the top, just sixty people in Britain account for £3 billion in tax revenue each year).  

Whether we like this fiscal dependence or not, Britain ultimately cannot afford to lose these valuable individuals on the scale that we are. If Chancellor Rachel Reeves truly cared about the Treasury’s bottom line and fiscal black holes, she would not be doing everything in her power to wage a crusade on the entities that prevent it being exponentially larger. Indeed, the Institute for Fiscal Studies explicitly warned the Exchequer that just a small number of this group leaving the country would create a ‘relatively big hole in its finances’. 

With all of this mismanagement, broken promises, shattered credibility and left-wing economic orthodoxy, is it any wonder that we are now hearing speculation that the prime minister may sack Reeves imminently in the coming few months, the markets have lost all confidence in Labour’s credibility and capability and by extension that of Britain, the value of the pound has fallen, UK gilt yields have soared to their highest since 2008, and even the Chair of the Confederation of British Industry quipped that the Chancellor has created a ‘black hole’ in the confidence of business in the Labour government? Not really.  

Labour’s unabashed class warfare by the back door is already materialising: the share of the population of Britain who are millionaires is expected to drop by a fifth over the next five years from 4.55% to 3.62%, yet the rest of the G7 will grow their share. The UK lost 9,500 people ‘with at least $1 million in liquid, investable assets’ in 2024, more than double the figures for 2023. The Adam Smith Institute points out you can thank high (and rising) taxes – especially the abolition of the non-domicile tax status – for this exodus, in what it describes as a ‘hostile culture for wealth creators’ taking shape in Labour Britain.  

It may appear insignificant, but these high-net-worth individuals have disproportionate importance in terms of the fiscal revenue that they account for (if you look right to the top, just sixty people in Britain account for £3 billion in tax revenue each year).  

Whether we like this fiscal dependence or not, Britain ultimately cannot afford to lose these valuable individuals on the scale that we are. If Chancellor Rachel Reeves actually cared about the Treasury’s bottom line and fiscal black holes, she would not be doing everything in her power to wage a crusade on the entities that prevent it being exponentially larger. Indeed, the Institute for Fiscal Studies explicitly warned the Exchequer that just a small number of this group leaving the country would create a ‘relatively big hole in its finances’.  

On a side note – and in a testament to their obsession with spending and throwing money at things just because they can – after Labour won the election, the new Prime Minister ordered the Downing Street media room be redecorated from blue walls and carpet supposedly to make it appear ‘politically neutral’. That little vanity project has since cost the taxpayer £80,000 – all because he didn’t like the colour blue. 

Contrary to the shallow Labour fiscal pledges at the general election, it really is evidently the same old Labour; high-tax, high-spend, high borrowing and then say they’ll just simply make some wealthy people pay for it later. Britain cannot afford Labour.  

Same Old Labour: warped ideology and poisonous short-termism over national security 

Unfortunately, the detrimental consequences of Labour’s catastrophic leadership are not confined to the macroeconomy or the budget. There have been extensive horrifying implications for national security. 

First, the Labour Party doesn’t negotiate – they acquiesce, sending dangerous signals overseas about the new British government’s deficiency in security and foreign affairs. There is no clearer evidence of this than the Chagos Islands saga. In October 2024, the government announced that Britain would hand sovereignty of the strategic Chagos archipelago in the central Indian Ocean to Mauritius, an ally of Beijing, despite the inhabitants of the islands not being in favour of the handover. Britain has controlled the islands since 1814 (Mauritius on the other hand has never exercised sovereignty over them), and they host a vital joint UK-US military base on the island of Diego Garcia that the Labour government itself acknowledges ‘plays a crucial role in regional stability and international security’. 

Why, then, is this government hellbent – against all conceivable opposition from every stakeholder involved – on handing the islands away? To top it all off, we will be paying £90 million every year to retain a lease on the Diego Garcia base. The deal will do nothing but harm British (and American) security and both states’ ability to project power in a key region, as the base, home to 2,500 military personnel, ‘has been described as ‘an all but indispensable platform’ for security operations in the Middle East, South Asia and East Africa’. Concurrently, it will provide China with expanded opportunities in the region ‘as it looks for bases of its own in the Indian Ocean’ from which to project its own power. It is no secret – nor is it remotely difficult to see why – Beijing is ‘licking its chops at the prospect of conducting electronic snooping of the base and other nefarious activities’ that the handing over of the sovereignty of the islands will enable them to do.  

Furthermore, because of blatant weakness in negotiations, Mauritius has repeatedly backed out of various revisions of the agreement following the initial October announcement of the intended handover, sensing they can draw more from Britain. A new Prime Minister took office in Mauritius in November and promptly reopened negotiations, all but announcing they could squeeze Labour for more, declaring the current deal (as of November) ‘would not produce the benefits that the nation could expect from such an agreement’.  

In a testament to Labour’s glorious diplomatic abilities, that is exactly what has transpired – with each revision, the terms have only gotten less preferable to Britain, including new speculated changes to the lease length on the critical Diego Garcia base from 99 years down to 50 years (but for the same price no less), and now the UK is reportedly considering front-loading its funding package (again, completely disregarding the fiscal implications of such a decision) so as to ‘sweeten’ the deal – not that it isn’t already a grossly lopsided deal in Mauritius’ favour. Just this morning (15 January), the Mauritius Cabinet once again rejected the latest deal, begging the question of what Labour will offer up next to get it done. Labour is practically begging for Mauritius to take the islands at extraordinary political, fiscal and soft power cost to the UK.    

Keir Starmer and Foreign Secretary David Lammy have capitulated to Mauritius, ignoring the security consequences for Britain and our allies to China’s direct benefit, the economic cost to the Treasury, and once again placed their own warped ideology over the national interest, as the two are apparently inherently incompatible. Labour is giving away on a silver platter a very strategic archipelago in a region of vital geopolitical importance (which will only grow in significance as global polarity further diversifies) to an ally of arguably our second-greatest geopolitical adversary in the world despite the locals being in opposition to the deal – and to top it all off we will pay a fortune for this privilege of undermining our security.  

Closer to home, Labour have demonstrated that they are dominated by dangerous short-termism, as has been made abundantly clear by some other critical policy choices. This has already had terrible quantifiable repercussions for British security, and for the security of Britain down the road.  

Despite near unanimity amongst the scientific and intelligence community that quantum technologies ‘will be the innovation engine’ of the coming century and a vital industry of enormous and growing importance, in August 2024 the new Labour government abruptly cut off £1.3 billion in funding for quantum technology and AI research, including the construction of an exascale computer in Edinburgh (despite some £31 million already having been spent on the facilities to house such a computer). They have unilaterally succeeded in smothering the UK’s emerging quantum and sophisticated technology industries, risking a ‘quantum startup exodus’ (the drivers of the technology that will come to power innovation in the future) and putting Britain firmly on the back foot as it ‘falls behind’ in the global quantum computing race. Once again, Labour consistently makes narrow-minded and self-defeating policy decisions to the detriment of national security whilst simultaneously continuing to make the UK an increasingly unattractive location for technological investment.  

Moreover, whilst Labour declared that it would aim for defence spending to reach 2.5% of GDP (without providing a time frame to be held to account against), it also stated it would not raise defence spending without economic growth. With recent growth sitting at 0.1% under Labour, I think that answers that. Despite an international system increasingly beset by conflict and flare-ups – from Ukraine to Gaza, Lebanon to Sudan, Libya to Myanmar, these de facto defence budget cuts in real terms leaves Britain less secure, less capable and more at risk. Whilst a succession of governments has chronically underfunded the armed forces, eroding its capabilities and diminishing Britain’s role on the global stage in turn, this new Labour administration is sending worrying signals about its commitment, or lack thereof, to Britain’s ability to defend itself and its allies and protect its interests. After all, it was only a couple of years ago during the Corbyn-era that Labour’s leader advocated the UK quitting NATO, scrapping the Trident nuclear deterrent and even floated outright abolishing the British Army.  

Contemporary Labour rolls out its Minister of State for the Armed Forces Luke Pollard MP every now and again to parrot lines about not being weak on defence and increasing the budget in time, but their policy choices and actions indicate otherwise. From the Chagos deal and the unnecessary manufactured threat to the critical joint base on Diego Garcia, to sweeping into office and swiftly scrapping various Royal Navy vessels and restricting its capabilities to save small amounts of money (which they then blow away at the Budget), Labour are leaving Britain dangerously exposed. In just a few months, they have scrapped two amphibious assault ships, a Type 23 Frigate and 31 helicopters (including 14 chinooks), kneecapping the country’s ability to protect itself.  

Stripping some of the key assets of the armed forces for parts to save pocket change (only to blow that money 140 times over in additional spending at the Autumn Budget) in this time of global instability is grossly irresponsible. As a former Secretary of State for Defence noted in November 2024, ‘Labour is failing in the first duty of any government – the defence of the realm’.  

In addition, on another issue of paramount significance to British security, in this case at home, Labour have wavered and appear mortifyingly poised to make the wrong decision, with potentially catastrophic consequences.  

China is looking to shake up its embassy in central London from its existing plot at Portland Place to an enormous, sprawling 700,000 square foot embassy on the historic Royal Mint Court site (which Beijing already owns having purchased it in 2018). It would be the largest diplomatic compound in Britain and China’s largest embassy in Europe and has been dubbed a ‘super-embassy’. It would be ten times the size of Beijing’s existing embassy in London. The danger arises from the fact that such a massive complex, which would boast such a huge array of facilities and capabilities given its sheer size and shielded by certain protections of international law and diplomatic immunity, could effectively double as a spy centre or even a prison for foreign dissidents Beijing otherwise could not reach.  

If approved, it would ‘significantly boost the country’s espionage capabilities’. Intelligence officials have said it will allow Beijing to ‘station more spies and use increasingly powerful surveillance equipment close to sensitive UK infrastructure’. Given the location of the site very close to the City of London’s financial district, a high-ranking ex-MI6 officer alleged it will ‘inevitably be used for electronic collection’ and provide access for Chinese agents to ‘key fibre-optic cables vital to Britain’s internet network and the City’s sensitive communication lines’. Indeed, any clandestine activity could be more easily veiled by it being situated in one of the busiest areas of London, right next to the Tower of London and Tower Bridge.  

It is a serious security risk for Britain to approve such a complex, to the point that American security officials have warned approving it may force Washington to consider ‘mitigative measures’, including curbing intelligence sharing if they felt Britain was not capable of challenging China.  

Whilst operating a covert Chinese prison on British soil may sound outlandish or conspiratorial, remember we have seen this before. In October 2022, pro-democracy activists were protesting Hong Kong outside the Chinese Consulate in Manchester, when 8 consulate staff wearing helmets and protective vests forcibly dragged one of the protestors inside the diplomatic grounds and beat him. Given it couldn’t be entered without consent, there was little the British authorities were entitled to do to aid the protester, so it is fortunate that he escaped of his own accord. Now imagine this on an immeasurably larger scale with thousands of staff and the facilities to detain dissidents (or worse) – masked by a bustling area in London. No self-respecting democracy could plausibly endorse such plans.  

Enter Labour – to potentially terrible effect. Beijing has been seeking permission for several years to begin construction on the site, but the last national Tory government blocked it. Like many others abroad, they have sensed Labour’s weakness and have appealed to the new government to reverse the previous decision. Labour did not immediately refuse and incredibly is considering approval. In October 2024 they announced the central government would make the final decision by May 2025. The local council voted unanimously to reject the proposals in December 2024.  

Xi Jinping raised the matter with Keir Starmer who in turn announced he had instructed Labour ministers to consider the plans. It apparently didn’t take much if it goes through – a literal whisper in Starmer’s ear and he folds.  

Let’s be clear though: there are no stakeholders involved in this process bar the Chinese state that approve of these plans; not the surrounding residents, not the local council, not the intelligence agencies, not Britain’s allies, nor the previous government. If Labour approves this embassy – it will be a conscious decision to ignore all these entities and explicitly harm British national security, potentially devastatingly. The fact they have not instantaneously rejected Beijing’s renewed request as the previous government did and have gone so far as to schedule an inquiry to explore its feasibility is horrifying and a clear symptom of Labour’s incapacity on national security.  

Generous ‘U’ for Labour’s first biannual report card 

Ultimately, the first biannual report card for the Labour administration is one of unmitigated damage to the British economy and its fiscal credibility and catastrophic failures and entirely preventable own goals on national security. Britain is being set up for failure down the road as it limps along under Labour mismanagement in the present – the inevitable complications of typical Labour’s traditional ideology and worldview.  

Contrary to the prevailing narratives emanating from the Labour government, there is nothing moderate, pragmatic or successful about their time in office so far.  

Image: The Chancellor delivers the Autumn Budget 2024, Lauren Hurley, 2024//CC BY-NC-ND 2.0