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The Labour leader is in danger of squandering his first 100 days in office. He may never recover
Unlike the UK in 2024, America in 1933 was in a truly dire economic position. One in four people were unemployed and millions lived on meagre charity handouts. The rural economy had collapsed, farmers had lost their land, the stock market was down 75% and the United States was entering its fourth year of crippling recession.
“Will work for food” was a common sandwich board plea carried by those desperate for work.
Franklin D Roosevelt, inaugurated as the new President in March, promised a New Deal and, to deliver it, obliged Congress to sit in special session for nearly 100 days. 15 major acts were passed, banks were reformed, welfare transformed and savers encouraged to put their money back into the desiccated financial system.
“Public works” were backed by federal government funding, including the highway system, bridges, tunnels and dams. Roosevelt – who understood politics – made “national prosperity” his theme. “OK America” adorned badges and posters – and the President reassured an anxious public that “this great nation will endure and prosper”. “The only thing we have to fear,” Roosevelt said, “is fear itself.”
“Wealth for all” was the government’s mission, the President’s popularity soared and by 1936 growth hit 12.9% – a number only bettered once in the subsequent 88 years. He even threw in the repeal of alcohol prohibition laws.
Ever since, the mythology and practicality of the First 100 Days in power has obsessed new leaders. It should. The public is watching closely, one chapter (the party that has just lost power) has closed, and another (the new government) has opened. Mis-step and it can take years to find a route back.
October 12 will mark Sir Keir Starmer’s first 100 days in power. Thrilling it has not been. The tone – after an initial speech on the steps of Number 10 which spoke of national renewal – has been gloomy. The past and attacking the Conservatives have occupied ministers’ minds to the detriment of laying out a compelling plan for Britain’s future. Rachel Reeves spoke of the worst economic inheritance since the Second World War and then of a £22 billion “black hole” in the public finances – an odd analogy given that nothing can escape a black hole, not even thermo-nuclear stars.
The Prime Minister then doubled down and said that things “would get worse”. This week a report on the NHS will say it is “beaten” despite record levels of investment. Reeves announced the scrapping of infrastructure projects and that 10 million pensioners – many on just £13,000 a year – would lose their winter fuel allowance of up to £300 a year.
In his first major television interview of the new political term on Sunday, Starmer told the BBC the government “is going to have to be unpopular” – one of the few things he has achieved with unalloyed success. His personal approval ratings have collapsed. At the same stage in the last Labour government of 1997, Tony Blair’s approval ratings topped 60%.
Starmer’s election campaign was cautious, but even his backers have been surprised and disappointed by what has followed since July 4. Businesses in particular are worried. There has been little talk of backing wealth creation and plenty of talk of taxes rising and more rights for working people, some of which are sensible – the ending of fire and rehire for example – but all of which increase costs.
Government systems to talk to businesses – essential if you are serious about partnership – are not in place. There have been plenty of high-level meetings of the smoked salmon breakfast variety but little detail or official consultation, the difficult bits. Attempts to hire a private sector investment minister have floundered, with the government’s much trumpeted investment summit just over a month away.
Firms are concerned that the deputy prime minister, Angela Rayner, is setting the tone for business-employer relations, not the Chancellor. Starmer floats above the fray and “doesn’t appear to understand or care very much” according to one business leader I spoke to. “Who are we supposed to call?” said another small business representative.
The government, rightly, raised public sector salaries after years of stagnation and decline. But many more people work in the private sector and chief executives and founders want to hear proposals to support higher margins and increase salaries. Labour has a blind spot when it comes to private enterprise, preferring to explore raising capital gains tax on entrepreneurs than encouraging people to take risks and create prosperity.
This week the Labour leader will speak at the annual Trades Union Congress. Firms are looking on with trepidation. A year ago Starmer spoke approvingly of linking billions of pounds of public sector procurement contracts to whether or not companies applying for the lucrative work recognised unions. The minimum wage is set to rise more quickly than in previous years, particularly for young workers. Hospitality will be hit particularly hard. “Day 1 rights” will mean smaller businesses facing more unfair dismissal claims they cannot afford to fight.
It did not need to be this grim. With inflation pressures easing and interest rates on a downward path, markets are looking to invest in government debt. An auction of UK bonds last week saw £110bn of bids for just £8bn worth of gilts, matching the demand record set just before Starmer was elected.
Never did Lucy Powell’s claim that the winter fuel allowance cut was necessary to prevent a run on the pound look more ridiculous. The Leader of the Commons should have ripped up her Treasury “line to take” notes and said something more sensible. The pound is at a 29-month-high against the dollar.
As one former Treasury official told me, there is much more scope to borrow than Reeves likes to admit, particularly if the government announces – as it should – reform of the way Bank of England debt is accounted for. That would bring down the official debt-to-GDP ratio, borrowing for expenditure and investment could be increased and the Chancellor would still comfortably hit her hallowed fiscal rules. Tax rises are a hill she has no need to die on.
So far, so mediocre. Many Labour supporters are biting their lip and saying “give the guy a chance”. There is some merit in such an approach, with government sources telling me that theirs is a long term project and the public will not trust easy answers and quick fixes.
But the public also does not trust politicians who say one thing and then do another. Before the election there were no plans to raise taxes, Labour said. Now tax rises are on their way. Ed Miliband said that energy bills would fall. They are going up. Starmer promised an “enduring partnership with business to deliver the economic growth we need”. We have seen little evidence.
Enoch Powell said that all political lives end in failure. Sir Keir Starmer appears to be making a pretty good fist of ensuring his starts with one.